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

held in Metro Manila, on Monday, the twenty-third day of July, two thousand twelve. REPUBLIC ACT NO !"#"$ AN ACT STRENGTHENING THE INSURANCE IN%USTR&' FURTHER A(EN%ING PRESI%ENTIAL %ECREE NO #!)' OTHER*ISE +NO*N AS ,THE INSURANCE CO%E,' AS A(EN%E% B& PRESI%ENTIAL %ECREE NOS !!-!' !)."' !-//' !-#"' !.!- AN% !0.!' AN% BATAS PA(BANSA BLG .$-' AN% FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in ongress asse!bled" Se1tion ! Presidential Decree No. 612, as amended, is hereby further amended to read as follows: ,GENERAL PRO2ISIONS !ection 1. "his Decree shall be #nown as $"he %nsurance &ode'. !ection 2. (hene)er used in this &ode, the followin* terms shall ha)e the respecti)e meanin*s hereinafter set forth or indicated, unless the conte+t otherwise re,uires: -a. / contract of insurance is an a*reement whereby one underta#es for a consideration to indemnify another a*ainst loss, dama*e or liability arisin* from an un#nown or contin*ent e)ent. / contract of suretyship shall be deemed to be an insurance contract, within the meanin* of this &ode, only if made by a surety who or which, as such, is doin* an insurance business as hereinafter pro)ided. -b. "he term doing an insurance business or transacting an insurance business, within the meanin* of this &ode, shall include: -1. Ma#in* or proposin* to ma#e, as insurer, any insurance contract0 -2. Ma#in* or proposin* to ma#e, as surety, any contract of suretyship as a )ocation and not as merely incidental to any other le*itimate business or acti)ity of the surety0 -1. Doin* any #ind of business, includin* a reinsurance business, specifically reco*ni2ed as constitutin* the doin* of an insurance business within the meanin* of this &ode0

-3. Doin* or proposin* to do any business in substance e,ui)alent to any of the fore*oin* in a manner desi*ned to e)ade the pro)isions of this &ode. %n the application of the pro)isions of this &ode, the fact that no profit is deri)ed from the ma#in* of insurance contracts, a*reements or transactions or that no separate or direct consideration is recei)ed therefor, shall not be deemed conclusi)e to show that the ma#in* thereof does not constitute the doin* or transactin* of an insurance business. -c. /s used in this &ode, the term o!!issioner means the #nsurance o!!issioner.

,CHAPTER I ,THE CONTRACT OF INSURANCE ,TITLE ! ,*HAT (A& BE INSURE% !ection 1. /ny contin*ent or un#nown e)ent, whether past or future, which may damnify a person ha)in* an insurable interest, or create a liability a*ainst him, may be insured a*ainst, sub4ect to the pro)isions of this chapter. "he consent of the spouse is not necessary for the )alidity of an insurance policy ta#en out by a married person on his or her life or that of his or her children. /ll ri*hts, title and interest in the policy of insurance ta#en out by an ori*inal owner on the life or health of the person insured shall automatically )est in the latter upon the death of the ori*inal owner, unless otherwise pro)ided for in the policy. !ection 3. "he precedin* section does not authori2e an insurance for or a*ainst the drawin* of any lottery, or for or a*ainst any chance or tic#et in a lottery drawin* a pri2e. !ection 5. /ll #inds of insurance are sub4ect to the pro)isions of this chapter so far as the pro)isions can apply. ,TITLE ) ,PARTIES TO THE CONTRACT !ection 6. 6)ery corporation, partnership, or association, duly authori2ed to transact insurance business as elsewhere pro)ided in this &ode, may be an insurer. !ection 7. /nyone e+cept a public enemy may be insured. !ection 8. 9nless the policy otherwise pro)ides, where a mort*a*or of property effects insurance in his own name pro)idin* that the loss shall be payable to the mort*a*ee, or assi*ns a policy of insurance to a mort*a*ee, the insurance is deemed to be upon the interest of the mort*a*or, who does not cease to be a party to the ori*inal contract, and any act of his, prior to the loss, which would otherwise a)oid the insurance, will ha)e the same effect, althou*h the property is in the hands of the

mort*a*ee, but any act which, under the contract of insurance, is to be performed by the mort*a*or, may be performed by the mort*a*ee therein named, with the same effect as if it had been performed by the mort*a*or. !ection :. %f an insurer assents to the transfer of an insurance from a mort*a*or to a mort*a*ee, and, at the time of his assent, imposes further obli*ations on the assi*nee, ma#in* a new contract with him, the acts of the mort*a*or cannot affect the ri*hts of said assi*nee. ,TITLE 3 ,INSURABLE INTEREST !ection 1;. 6)ery person has an insurable interest in the life and health: -a. <f himself, of his spouse and of his children0 -b. <f any person on whom he depends wholly or in part for education or support, or in whom he has a pecuniary interest0 -c. <f any person under a le*al obli*ation to him for the payment of money, or respectin* property or ser)ices, of which death or illness mi*ht delay or pre)ent the performance0 and -d. <f any person upon whose life any estate or interest )ested in him depends. !ection 11. "he insured shall ha)e the ri*ht to chan*e the beneficiary he desi*nated in the policy, unless he has e+pressly wai)ed this ri*ht in said policy. Notwithstandin* the fore*oin*, in the e)ent the insured does not chan*e the beneficiary durin* his lifetime, the desi*nation shall be deemed irre)ocable. !ection 12. "he interest of a beneficiary in a life insurance policy shall be forfeited when the beneficiary is the principal, accomplice, or accessory in willfully brin*in* about the death of the insured. %n such a case, the share forfeited shall pass on to the other beneficiaries, unless otherwise dis,ualified. %n the absence of other beneficiaries, the proceeds shall be paid in accordance with the policy contract. %f the policy contract is silent, the proceeds shall be paid to the estate of the insured. !ection 11. 6)ery interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril mi*ht directly damnify the insured, is an insurable interest. !ection 13. /n insurable interest in property may consist in: -a. /n e+istin* interest0 -b. /n inchoate interest founded on an e+istin* interest0 or -c. /n e+pectancy, coupled with an e+istin* interest in that out of which the e+pectancy arises.

!ection 15. / carrier or depository of any #ind has an insurable interest in a thin* held by him as such, to the e+tent of his liability but not to e+ceed the )alue thereof. !ection 16. / mere contin*ent or e+pectant interest in any thin*, not founded on an actual ri*ht to the thin*, nor upon any )alid contract for it, is not insurable. !ection 17. "he measure of an insurable interest in property is the e+tent to which the insured mi*ht be damnified by loss or in4ury thereof. !ection 18. No contract or policy of insurance on property shall be enforceable e+cept for the benefit of some person ha)in* an insurable interest in the property insured. !ection 1:. /n interest in property insured must e+ist when the insurance ta#es effect, and when the loss occurs, but need not e+ist in the meantime0 and interest in the life or health of a person insured must e+ist when the insurance ta#es effect, but need not e+ist thereafter or when the loss occurs. !ection 2;. 6+cept in the cases specified in the ne+t four sections, and in the cases of life, accident, and health insurance, a chan*e of interest in any part of a thin* insured unaccompanied by a correspondin* chan*e of interest in the insurance, suspends the insurance to an e,ui)alent e+tent, until the interest in the thin* and the interest in the insurance are )ested in the same person. !ection 21. / chan*e of interest in a thin* insured, after the occurrence of an in4ury which results in a loss, does not affect the ri*ht of the insured to indemnity for the loss. !ection 22. / chan*e of interest in one or more of se)eral distinct thin*s, separately insured by one policy, does not a)oid the insurance as to the others. !ection 21. / chan*e of interest, by will or succession, on the death of the insured, does not a)oid an insurance0 and his interest in the insurance passes to the person ta#in* his interest in the thin* insured. !ection 23. / transfer of interest by one of se)eral partners, 4oint owners, or owners in common, who are 4ointly insured, to the others, does not a)oid an insurance e)en thou*h it has been a*reed that the insurance shall cease upon an alienation of the thin* insured. !ection 25. 6)ery stipulation in a policy of insurance for the payment of loss whether the person insured has or has not any interest in the property insured, or that the policy shall be recei)ed as proof of such interest, and e)ery policy e+ecuted by way of *amin* or wa*erin*, is )oid. ,TITLE ,CONCEAL(ENT !ection 26. / ne*lect to communicate that which a party #nows and ou*ht to communicate, is called a concealment. !ection 27. / concealment whether intentional or unintentional entitles the in4ured party to rescind a contract of insurance.

!ection 28. 6ach party to a contract of insurance must communicate to the other, in *ood faith, all facts within his #nowled*e which are material to the contract and as to which he ma#es no warranty, and which the other has not the means of ascertainin*. !ection 2:. /n intentional and fraudulent omission, on the part of one insured, to communicate information of matters pro)in* or tendin* to pro)e the falsity of a warranty, entitles the insurer to rescind. !ection 1;. Neither party to a contract of insurance is bound to communicate information of the matters followin*, e+cept in answer to the in,uiries of the other: -a. "hose which the other #nows0 -b. "hose which, in the e+ercise of ordinary care, the other ou*ht to #now, and of which the former has no reason to suppose him i*norant0 -c. "hose of which the other wai)es communication0 -d. "hose which pro)e or tend to pro)e the e+istence of a ris# e+cluded by a warranty, and which are not otherwise material0 and -e. "hose which relate to a ris# e+cepted from the policy and which are not otherwise material. !ection 11. Materiality is to be determined not by the e)ent, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in formin* his estimate of the disad)anta*es of the proposed contract, or in ma#in* his in,uiries. !ection 12. 6ach party to a contract of insurance is bound to #now all the *eneral causes which are open to his in,uiry, e,ually with that of the other, and which may affect the political or material perils contemplated0 and all *eneral usa*es of trade. !ection 11. "he ri*ht to information of material facts may be wai)ed, either by the terms of insurance or by ne*lect to ma#e in,uiry as to such facts, where they are distinctly implied in other facts of which information is communicated. !ection 13. %nformation of the nature or amount of the interest of one insured need not be communicated unless in answer to an in,uiry, e+cept as prescribed by !ection 51. !ection 15. Neither party to a contract of insurance is bound to communicate, e)en upon in,uiry, information of his own 4ud*ment upon the matters in ,uestion. ,TITLE / ,REPRESENTATION !ection 16. / representation may be oral or written. !ection 17. / representation may be made at the time of, or before, issuance of the policy.

!ection 18. "he lan*ua*e of a representation is to be interpreted by the same rules as the lan*ua*e of contracts in *eneral. !ection 1:. / representation as to the future is to be deemed a promise, unless it appears that it was merely a statement of belief or e+pectation. !ection 3;. / representation cannot ,ualify an e+press pro)ision in a contract of insurance, but it may ,ualify an implied warranty. !ection 31. / representation may be altered or withdrawn before the insurance is effected, but not afterwards. !ection 32. / representation must be presumed to refer to the date on which the contract *oes into effect. !ection 31. (hen a person insured has no personal #nowled*e of a fact, he may ne)ertheless repeat information which he has upon the sub4ect, and which he belie)es to be true, with the e+planation that he does so on the information of others0 or he may submit the information, in its whole e+tent, to the insurer0 and in neither case is he responsible for its truth, unless it proceeds from an a*ent of the insured, whose duty it is to *i)e the information. !ection 33. / representation is to be deemed false when the facts fail to correspond with its assertions or stipulations. !ection 35. %f a representation is false in a material point, whether affirmati)e or promissory, the in4ured party is entitled to rescind the contract from the time when the representation becomes false. !ection 36. "he materiality of a representation is determined by the same rules as the materiality of a concealment. !ection 37. "he pro)isions of this chapter apply as well to a modification of a contract of insurance as to its ori*inal formation. !ection 38. (hene)er a ri*ht to rescind a contract of insurance is *i)en to the insurer by any pro)ision of this chapter, such ri*ht must be e+ercised pre)ious to the commencement of an action on the contract. /fter a policy of life insurance made payable on the death of the insured shall ha)e been in force durin* the lifetime of the insured for a period of two -2. years from the date of its issue or of its last reinstatement, the insurer cannot pro)e that the policy is )oid ab initio or is rescindable by reason of the fraudulent concealment or misrepresentation of the insured or his a*ent. ,TITLE # ,THE POLIC& !ection 3:. "he written instrument in which a contract of insurance is set forth, is called a policy of insurance.

!ection 5;. "he policy shall be in printed form which may contain blan# spaces0 and any word, phrase, clause, mar#, si*n, symbol, si*nature, number, or word necessary to complete the contract of insurance shall be written on the blan# spaces pro)ided therein. /ny rider, clause, warranty or endorsement purportin* to be part of the contract of insurance and which is pasted or attached to said policy is not bindin* on the insured, unless the descripti)e title or name of the rider, clause, warranty or endorsement is also mentioned and written on the blan# spaces pro)ided in the policy. 9nless applied for by the insured or owner, any rider, clause, warranty or endorsement issued after the ori*inal policy shall be countersi*ned by the insured or owner, which countersi*nature shall be ta#en as his a*reement to the contents of such rider, clause, warranty or endorsement. Notwithstandin* the fore*oin*, the policy may be in electronic form sub4ect to the pertinent pro)isions of Republic /ct No. 87:2, otherwise #nown as the $6lectronic &ommerce /ct' and to such rules and re*ulations as may be prescribed by the &ommissioner. !ection 51. / policy of insurance must specify: -a. "he parties between whom the contract is made0 -b. "he amount to be insured e+cept in the cases of open or runnin* policies0 -c. "he premium, or if the insurance is of a character where the e+act premium is only determinable upon the termination of the contract, a statement of the basis and rates upon which the final premium is to be determined0 -d. "he property or life insured0 -e. "he interest of the insured in property insured, if he is not the absolute owner thereof0 -f. "he ris#s insured a*ainst0 and -*. "he period durin* which the insurance is to continue. !ection 52. &o)er notes may be issued to bind insurance temporarily pendin* the issuance of the policy. (ithin si+ty -6;. days after issue of a co)er note, a policy shall be issued in lieu thereof, includin* within its terms the identical insurance bound under the co)er note and the premium therefor. &o)er notes may be e+tended or renewed beyond such si+ty -6;. days with the written appro)al of the &ommissioner if he determines that such e+tension is not contrary to and is not for the purpose of )iolatin* any pro)isions of this &ode. "he &ommissioner may promul*ate rules and re*ulations *o)ernin* such e+tensions for the purpose of pre)entin* such )iolations and may by such rules and re*ulations dispense with the re,uirement of written appro)al by him in the case of e+tension in compliance with such rules and re*ulations.

!ection 51. "he insurance proceeds shall be applied e+clusi)ely to the proper interest of the person in whose name or for whose benefit it is made unless otherwise specified in the policy. !ection 53. (hen an insurance contract is e+ecuted with an a*ent or trustee as the insured, the fact that his principal or beneficiary is the real party in interest may be indicated by describin* the insured as a*ent or trustee, or by other *eneral words in the policy. !ection 55. "o render an insurance effected by one partner or part=owner, applicable to the interest of his co=partners or other part=owners, it is necessary that the terms of the policy should be such as are applicable to the 4oint or common interest. !ection 56. (hen the description of the insured in a policy is so *eneral that it may comprehend any person or any class of persons, only he who can show that it was intended to include him, can claim the benefit of the policy. !ection 57. / policy may be so framed that it will inure to the benefit of whomsoe)er, durin* the continuance of the ris#, may become the owner of the interest insured. !ection 58. "he mere transfer of a thin* insured does not transfer the policy, but suspends it until the same person becomes the owner of both the policy and the thin* insured. !ection 5:. / policy is either open, )alued or runnin*. !ection 6;. /n open policy is one in which the )alue of the thin* insured is not a*reed upon, and the amount of the insurance merely represents the insurer's ma+imum liability. "he )alue of such thin* insured shall be ascertained at the time of the loss. !ection 61. / )alued policy is one which e+presses on its face an a*reement that the thin* insured shall be )alued at a specific sum. !ection 62. / runnin* policy is one which contemplates successi)e insurances, and which pro)ides that the ob4ect of the policy may be from time to time defined, especially as to the sub4ects of insurance, by additional statements or indorsements. $%wphi$ !ection 61. / condition, stipulation, or a*reement in any policy of insurance, limitin* the time for commencin* an action thereunder to a period of less than one -1. year from the time when the cause of action accrues, is )oid. !ection 63. No policy of insurance other than life shall be cancelled by the insurer e+cept upon prior notice thereof to the insured, and no notice of cancellation shall be effecti)e unless it is based on the occurrence, after the effecti)e date of the policy, of one or more of the followin*: -a. Nonpayment of premium0 -b. &on)iction of a crime arisin* out of acts increasin* the ha2ard insured a*ainst0 -c. Disco)ery of fraud or material misrepresentation0

-d. Disco)ery of willful or rec#less acts or omissions increasin* the ha2ard insured a*ainst0 -e. Physical chan*es in the property insured which result in the property becomin* uninsurable0 -f. Disco)ery of other insurance co)era*e that ma#es the total insurance in e+cess of the )alue of the property insured0 or -*. / determination by the &ommissioner that the continuation of the policy would )iolate or would place the insurer in )iolation of this &ode. !ection 65. /ll notices of cancellation mentioned in the precedin* section shall be in writin*, mailed or deli)ered to the named insured at the address shown in the policy, or to his bro#er pro)ided the bro#er is authori2ed in writin* by the policy owner to recei)e the notice of cancellation on his behalf, and shall state: -a. (hich of the *rounds set forth in !ection 63 is relied upon0 and -b. "hat, upon written re,uest of the named insured, the insurer will furnish the facts on which the cancellation is based. !ection 66. %n case of insurance other than life, unless the insurer at least forty=fi)e -35. days in ad)ance of the end of the policy period mails or deli)ers to the named insured at the address shown in the policy notice of its intention not to renew the policy or to condition its renewal upon reduction of limits or elimination of co)era*es, the named insured shall be entitled to renew the policy upon payment of the premium due on the effecti)e date of the renewal. /ny policy written for a term of less than one -1. year shall be considered as if written for a term of one -1. year. /ny policy written for a term lon*er than one -1. year or any policy with no fi+ed e+piration date shall be considered as if written for successi)e policy periods or terms of one -1. year. ,TITLE $ ,*ARRANTIES !ection 67. / warranty is either e+pressed or implied. !ection 68. / warranty may relate to the past, the present, the future, or to any or all of these. !ection 6:. No particular form of words is necessary to create a warranty. !ection 7;. (ithout pre4udice to !ection 51, e)ery e+press warranty, made at or before the e+ecution of a policy, must be contained in the policy itself, or in another instrument si*ned by the insured and referred to in the policy as ma#in* a part of it. !ection 71. / statement in a policy, of a matter relatin* to the person or thin* insured, or to the ris#, as fact, is an e+press warranty thereof.

!ection 72. / statement in a policy, which imparts that it is intended to do or not to do a thin* which materially affects the ris#, is a warranty that such act or omission shall ta#e place. !ection 71. (hen, before the time arri)es for the performance of a warranty relatin* to the future, a loss insured a*ainst happens, or performance becomes unlawful at the place of the contract, or impossible, the omission to fulfill the warranty does not a)oid the policy. !ection 73. "he )iolation of a material warranty, or other material pro)ision of a policy, on the part of either party thereto, entitles the other to rescind. !ection 75. / policy may declare that a )iolation of specified pro)isions thereof shall a)oid it, otherwise the breach of an immaterial pro)ision does not a)oid the policy. !ection 76. / breach of warranty without fraud merely e+onerates an insurer from the time that it occurs, or where it is bro#en in its inception, pre)ents the policy from attachin* to the ris#. ,TITLE . ,PRE(IU( !ection 77. /n insurer is entitled to payment of the premium as soon as the thin* insured is e+posed to the peril insured a*ainst. Notwithstandin* any a*reement to the contrary, no policy or contract of insurance issued by an insurance company is )alid and bindin* unless and until the premium thereof has been paid, e+cept in the case of a life or an industrial life policy whene)er the *race period pro)ision applies, or whene)er under the bro#er and a*ency a*reements with duly licensed intermediaries, a ninety -:;.=day credit e+tension is *i)en. No credit e+tension to a duly licensed intermediary should e+ceed ninety -:;. days from date of issuance of the policy. !ection 78. 6mployees of the Republic of the Philippines, includin* its political subdi)isions and instrumentalities, and *o)ernment=owned or =controlled corporations, may pay their insurance premiums and loan obli*ations throu*h salary deduction: Provided, "hat the treasurer, cashier, paymaster or official of the entity employin* the *o)ernment employee is authori2ed, notwithstandin* the pro)isions of any e+istin* law, rules and re*ulations to the contrary, to ma#e deductions from the salary, wa*e or income of the latter pursuant to the a*reement between the insurer and the *o)ernment employee and to remit such deductions to the insurer concerned, and collect such reasonable fee for its ser)ices. !ection 7:. /n ac#nowled*ment in a policy or contract of insurance or the receipt of premium is conclusi)e e)idence of its payment, so far as to ma#e the policy bindin*, notwithstandin* any stipulation therein that it shall not be bindin* until the premium is actually paid. !ection 8;. / person insured is entitled to a return of premium, as follows: -a. "o the whole premium if no part of his interest in the thin* insured be e+posed to any of the perils insured a*ainst0

-b. (here the insurance is made for a definite period of time and the insured surrenders his policy, to such portion of the premium as corresponds with the une+pired time, at a pro rata rate, unless a short period rate has been a*reed upon and appears on the face of the policy, after deductin* from the whole premium any claim for loss or dama*e under the policy which has pre)iously accrued: Provided, "hat no holder of a life insurance policy may a)ail himself of the pri)ile*es of this para*raph without sufficient cause as otherwise pro)ided by law. !ection 81. %f a peril insured a*ainst has e+isted, and the insurer has been liable for any period, howe)er short, the insured is not entitled to return of premiums, so far as that particular ris# is concerned. !ection 82. / person insured is entitled to a return of the premium when the contract is )oidable, and subse,uently annulled under the pro)isions of the &i)il &ode0 or on account of the fraud or misrepresentation of the insurer, or of his a*ent, or on account of facts, or the e+istence of which the insured was i*norant of without his fault0 or when by any default of the insured other than actual fraud, the insurer ne)er incurred any liability under the policy. / person insured is not entitled to a return of premium if the policy is annulled, rescinded or if a claim is denied by reason of fraud. !ection 81. %n case of an o)er insurance by se)eral insurers other than life, the insured is entitled to a ratable return of the premium, proportioned to the amount by which the a**re*ate sum insured in all the policies e+ceeds the insurable )alue of the thin* at ris#. !ection 83. /n insurer may contract and accept payments, in addition to re*ular premium, for the purpose of payin* future premiums on the policy or to increase the benefits thereof. ,TITLE 0 ,LOSS !ection 85. /n a*reement not to transfer the claim of the insured a*ainst the insurer after the loss has happened, is )oid if made before the loss e+cept as otherwise pro)ided in the case of life insurance. !ection 86. 9nless otherwise pro)ided by the policy, an insurer is liable for a loss of which a peril insured a*ainst was the pro+imate cause, althou*h a peril not contemplated by the contract may ha)e been a remote cause of the loss0 but he is not liable for a loss of which the peril insured a*ainst was only a remote cause. !ection 87. /n insurer is liable where the thin* insured is rescued from a peril insured a*ainst that would otherwise ha)e caused a loss, if, in the course of such rescue, the thin* is e+posed to a peril not insured a*ainst, which permanently depri)es the insured of its possession, in whole or in part0 or where a loss is caused by efforts to rescue the thin* insured from a peril insured a*ainst.

!ection 88. (here a peril is especially e+cepted in a contract of insurance, a loss, which would not ha)e occurred but for such peril, is thereby e+cepted althou*h the immediate cause of the loss was a peril which was not e+cepted. !ection 8:. /n insurer is not liable for a loss caused by the willful act or throu*h the conni)ance of the insured0 but he is not e+onerated by the ne*li*ence of the insured, or of the insurance a*ents or others. ,TITLE !" ,NOTICE OF LOSS !ection :;. %n case of loss upon an insurance a*ainst fire, an insurer is e+onerated, if written notice thereof be not *i)en to him by an insured, or some person entitled to the benefit of the insurance, without unnecessary delay. >or other non=life insurance, the &ommissioner may specify the period for the submission of the notice of loss. !ection :1. (hen a preliminary proof of loss is re,uired by a policy, the insured is not bound to *i)e such proof as would be necessary in a court of 4ustice0 but it is sufficient for him to *i)e the best e)idence which he has in his power at the time. !ection :2. /ll defects in a notice of loss, or in preliminary proof thereof, which the insured mi*ht remedy, and which the insurer omits to specify to him, without unnecessary delay, as *rounds of ob4ection, are wai)ed. !ection :1. Delay in the presentation to an insurer of notice or proof of loss is wai)ed if caused by any act of him, or if he omits to ta#e ob4ection promptly and specifically upon that *round. !ection :3. %f the policy re,uires, by way of preliminary proof of loss, the certificate or testimony of a person other than the insured, it is sufficient for the insured to use reasonable dili*ence to procure it, and in case of the refusal of such person to *i)e it, then to furnish reasonable e)idence to the insurer that such refusal was not induced by any 4ust *rounds of disbelief in the facts necessary to be certified or testified. ,TITLE !! ,%OUBLE INSURANCE !ection :5. / double insurance e+ists where the same person is insured by se)eral insurers separately in respect to the same sub4ect and interest. !ection :6. (here the insured in a policy other than life is o)er insured by double insurance: -a. "he insured, unless the policy otherwise pro)ides, may claim payment from the insurers in such order as he may select, up to the amount for which the insurers are se)erally liable under their respecti)e contracts0

-b. (here the policy under which the insured claims is a )alued policy, any sum recei)ed by him under any other policy shall be deducted from the )alue of the policy without re*ard to the actual )alue of the sub4ect matter insured0 -c. (here the policy under which the insured claims is an un)alued policy, any sum recei)ed by him under any policy shall be deducted a*ainst the full insurable )alue, for any sum recei)ed by him under any policy0 -d. (here the insured recei)es any sum in e+cess of the )aluation in the case of )alued policies, or of the insurable )alue in the case of un)alued policies, he must hold such sum in trust for the insurers, accordin* to their ri*ht of contribution amon* themsel)es0 -e. 6ach insurer is bound, as between himself and the other insurers, to contribute ratably to the loss in proportion to the amount for which he is liable under his contract. ,TITLE !) ,REINSURANCE !ection :7. / contract of reinsurance is one by which an insurer procures a third person to insure him a*ainst loss or liability by reason of such ori*inal insurance. !ection :8. (here an insurer obtains reinsurance, e+cept under automatic reinsurance treaties, he must communicate all the representations of the ori*inal insured, and also all the #nowled*e and information he possesses, whether pre)iously or subse,uently ac,uired, which are material to the ris#. !ection ::. / reinsurance is presumed to be a contract of indemnity a*ainst liability, and not merely a*ainst dama*e. !ection 1;;. "he ori*inal insured has no interest in a contract of reinsurance. ,CHAPTER II ,CLASSES OF INSURANCE ,TITLE I ,(ARINE INSURANCE ,SUB4TITLE !4A ,%EFINITION !ection 1;1. Marine %nsurance includes: -a. %nsurance a*ainst loss of or dama*e to: -1. ?essels, craft, aircraft, )ehicles, *oods, frei*hts, car*oes, merchandise, effects, disbursements, profits, moneys, securities, choses in action, instruments of debts,

)aluable papers, bottomry, and respondentia interests and all other #inds of property and interests therein, in respect to, appertainin* to or in connection with any and all ris#s or perils of na)i*ation, transit or transportation, or while bein* assembled, pac#ed, crated, baled, compressed or similarly prepared for shipment or while awaitin* shipment, or durin* any delays, stora*e, transhipment, or reshipment incident thereto, includin* war ris#s, marine builder's ris#s, and all personal property floater ris#s0 -2. Person or property in connection with or appertainin* to a marine, inland marine, transit or transportation insurance, includin* liability for loss of or dama*e arisin* out of or in connection with the construction, repair, operation, maintenance or use of the sub4ect matter of such insurance -but not includin* life insurance or surety bonds nor insurance a*ainst loss by reason of bodily in4ury to any person arisin* out of ownership, maintenance, or use of automobiles.0 -1. Precious stones, 4ewels, 4ewelry, precious metals, whether in course of transportation or otherwise0 and -3. @rid*es, tunnels and other instrumentalities of transportation and communication -e+cludin* buildin*s, their furniture and furnishin*s, fi+ed contents and supplies held in stora*e.0 piers, whar)es, doc#s and slips, and other aids to na)i*ation and transportation, includin* dry doc#s and marine railways, dams and appurtenant facilities for the control of waterways. -b. Marine protection and inde!nity insurance , meanin* insurance a*ainst, or a*ainst le*al liability of the insured for loss, dama*e, or e+pense incident to ownership, operation, charterin*, maintenance, use, repair, or construction of any )essel, craft or instrumentality in use of ocean or inland waterways, includin* liability of the insured for personal in4ury, illness or death or for loss of or dama*e to the property of another person. ,SUB4TITLE !4B ,INSURABLE INTEREST !ection 1;2. "he owner of a ship has in all cases an insurable interest in it, e)en when it has been chartered by one who co)enants to pay him its )alue in case of loss: Provided, "hat in this case the insurer shall be liable for only that part of the loss which the insured cannot reco)er from the charterer. !ection 1;1. "he insurable interest of the owner of the ship hypothecated by bottomry is only the e+cess of its )alue o)er the amount secured by bottomry. !ection 1;3. >rei*hta*e, in the sense of a policy of marine insurance, si*nifies all the benefits deri)ed by the owner, either from the charterin* of the ship or its employment for the carria*e of his own *oods or those of others.

!ection 1;5. "he owner of a ship has an insurable interest in e+pected frei*hta*e which accordin* to the ordinary and probable course of thin*s he would ha)e earned but for the inter)ention of a peril insured a*ainst or other peril incident to the )oya*e. !ection 1;6. "he interest mentioned in the last section e+ists, in case of a charter party, when the ship has bro#en *round on the chartered )oya*e. %f a price is to be paid for the carria*e of *oods it e+ists when they are actually on board, or there is some contract for puttin* them on board, and both ship and *oods are ready for the specified )oya*e. !ection 1;7. <ne who has an interest in the thin* from which profits are e+pected to proceed has an insurable interest in the profits. !ection 1;8. "he charterer of a ship has an insurable interest in it, to the e+tent that he is liable to be damnified by its loss. ,SUB4TITLE !4C ,CONCEAL(ENT !ection 1;:. %n marine insurance, each party is bound to communicate, in addition to what is re,uired by !ection 28, all the information which he possesses, material to the ris#, e+cept such as is mentioned in !ection 1;, and to state the e+act and whole truth in relation to all matters that he represents, or upon in,uiry discloses or assumes to disclose. !ection 11;. %n marine insurance, information of the belief or e+pectation of a third person, in reference to a material fact, is material. !ection 111. / person insured by a contract of marine insurance is presumed to ha)e #nowled*e, at the time of insurin*, of a prior loss, if the information mi*ht possibly ha)e reached him in the usual mode of transmission and at the usual rate of communication. !ection 112. / concealment in a marine insurance, in respect to any of the followin* matters, does not )itiate the entire contract, but merely e+onerates the insurer from a loss resultin* from the ris# concealed: -a. "he national character of the insured0 -b. "he liability of the thin* insured to capture and detention0 -c. "he liability to sei2ure from breach of forei*n laws of trade0 -d. "he want of necessary documents0 and -e. "he use of false and simulated papers. ,SUB4TITLE !4% ,REPRESENTATION

!ection 111. %f a representation by a person insured by a contract of marine insurance, is intentionally false in any material respect, or in respect of any fact on which the character and nature of the ris# depends, the insurer may rescind the entire contract. !ection 113. "he e)entual falsity of a representation as to e+pectation does not, in the absence of fraud, a)oid a contract of marine insurance. ,SUB4TITLE !4E ,I(PLIE% *ARRANTIES !ection 115. %n e)ery marine insurance upon a ship or frei*ht, or frei*hta*e, or upon any thin* which is the sub4ect of marine insurance, a warranty is implied that the ship is seaworthy. !ection 116. / ship is seaworthy when reasonably fit to perform the ser)ice and to encounter the ordinary perils of the )oya*e contemplated by the parties to the policy. !ection 117. /n implied warranty of seaworthiness is complied with if the ship be seaworthy at the time of the commencement of the ris#, e+cept in the followin* cases: -a. (hen the insurance is made for a specified len*th of time, the implied warranty is not complied with unless the ship be seaworthy at the commencement of e)ery )oya*e it underta#es durin* that time0 -b. (hen the insurance is upon the car*o which, by the terms of the policy, description of the )oya*e, or established custom of the trade, is to be transhipped at an intermediate port, the implied warranty is not complied with unless each )essel upon which the car*o is shipped, or transhipped, be seaworthy at the commencement of each particular )oya*e. !ection 118. / warranty of seaworthiness e+tends not only to the condition of the structure of the ship itself, but re,uires that it be properly laden, and pro)ided with a competent master, a sufficient number of competent officers and seamen, and the re,uisite appurtenances and e,uipment, such as ballasts, cables and anchors, corda*e and sails, food, water, fuel and li*hts, and other necessary or proper stores and implements for the )oya*e. !ection 11:. (here different portions of the )oya*e contemplated by a policy differ in respect to the thin*s re,uisite to ma#e the ship seaworthy therefor, a warranty of seaworthiness is complied with if, at the commencement of each portion, the ship is seaworthy with reference to that portion. !ection 12;. (hen the ship becomes unseaworthy durin* the )oya*e to which an insurance relates, an unreasonable delay in repairin* the defect e+onerates the insurer on ship or shipowner's interest from liability from any loss arisin* therefrom. !ection 121. / ship which is seaworthy for the purpose of an insurance upon the ship may, ne)ertheless, by reason of bein* unfitted to recei)e the car*o, be unseaworthy for the purpose of insurance upon the car*o.

!ection 122. (here the nationality or neutrality of a ship or car*o is e+pressly warranted, it is implied that the ship will carry the re,uisite documents to show such nationality or neutrality and that it will not carry any documents which cast reasonable suspicion thereon. ,SUB4TITLE !4F ,THE 2O&AGE AN% %E2IATION !ection 121. (hen the )oya*e contemplated by a marine insurance policy is described by the places of be*innin* and endin*, the )oya*e insured is one which conforms to the course of sailin* fi+ed by mercantile usa*e between those places. !ection 123. %f the course of sailin* is not fi+ed by mercantile usa*e, the )oya*e insured by a marine insurance policy is that way between the places specified, which to a master of ordinary s#ill and discretion, would mean the most natural, direct and ad)anta*eous. !ection 125. De)iation is a departure from the course of the )oya*e insured, mentioned in the last two -2. sections, or an unreasonable delay in pursuin* the )oya*e or the commencement of an entirely different )oya*e. !ection 126. / de)iation is proper: -a. (hen caused by circumstances o)er which neither the master nor the owner of the ship has any control0 -b. (hen necessary to comply with a warranty, or to a)oid a peril, whether or not the peril is insured a*ainst0 -c. (hen made in *ood faith, and upon reasonable *rounds of belief in its necessity to a)oid a peril0 or -d. (hen made in *ood faith, for the purpose of sa)in* human life or relie)in* another )essel in distress. !ection 127. 6)ery de)iation not specified in the last section is improper. !ection 128. /n insurer is not liable for any loss happenin* to the thin* insured subse,uent to an improper de)iation. ,SUB4TITLE !4G ,LOSS !ection 12:. / loss may be either total or partial. !ection 11;. 6)ery loss which is not total is partial. !ection 111. / total loss may be either actual or constructi)e.

!ection 112. /n actual total loss is caused by: -a. / total destruction of the thin* insured0 -b. "he irretrie)able loss of the thin* by sin#in*, or by bein* bro#en up0 -c. /ny dama*e to the thin* which renders it )alueless to the owner for the purpose for which he held it0 or -d. /ny other e)ent which effecti)ely depri)es the owner of the possession, at the port of destination, of the thin* insured. !ection 111. / constructi)e total loss is one which *i)es to a person insured a ri*ht to abandon, under !ection 131. !ection 113. /n actual loss may be presumed from the continued absence of a ship without bein* heard of. "he len*th of time which is sufficient to raise this presumption depends on the circumstances of the case. !ection 115. (hen a ship is pre)ented, at an intermediate port, from completin* the )oya*e, by the perils insured a*ainst, the liability of a marine insurer on the car*o continues after they are thus reshipped. Nothin* in this section shall pre)ent an insurer from re,uirin* an additional premium if the ha2ard be increased by this e+tension of liability. !ection 116. %n addition to the liability mentioned in the last section, a marine insurer is bound for dama*es, e+penses of dischar*in*, stora*e, reshipment, e+tra frei*hta*e, and all other e+penses incurred in sa)in* car*o reshipped pursuant to the last section, up to the amount insured. Nothin* in this or in the precedin* section shall render a marine insurer liable for any amount in e+cess of the insured )alue or, if there be none, of the insurable )alue. !ection 117. 9pon an actual total loss, a person insured is entitled to payment without notice of abandonment. !ection 118. (here it has been a*reed that an insurance upon a particular thin*, or class of thin*s, shall be free from particular a)era*e, a marine insurer is not liable for any particular a)era*e loss not depri)in* the insured of the possession, at the port of destination, of the whole of such thin*, or class of thin*s, e)en thou*h it becomes entirely worthless0 but such insurer is liable for his proportion of all *eneral a)era*e loss assessed upon the thin* insured. !ection 11:. /n insurance confined in terms to an actual loss does not co)er a constructi)e total loss, but co)ers any loss, which necessarily results in depri)in* the insured of the possession, at the port of destination, of the entire thin* insured.

SUB4TITLE !4H ,ABAN%ON(ENT !ection 13;. /bandonment, in marine insurance, is the act of the insured by which, after a constructi)e total loss, he declares the relin,uishment to the insurer of his interest in the thin* insured. !ection 131. / person insured by a contract of marine insurance may abandon the thin* insured, or any particular portion thereof separately )alued by the policy, or otherwise separately insured, and reco)er for a total loss thereof, when the cause of the loss is a peril insured a*ainst: -a. %f more than three=fourths -A. thereof in )alue is actually lost, or would ha)e to be e+pended to reco)er it from the peril0 -b. %f it is in4ured to such an e+tent as to reduce its )alue more than three=fourths -A.0 -c. %f the thin* insured is a ship, and the contemplated )oya*e cannot be lawfully performed without incurrin* either an e+pense to the insured of more than three=fourths -A. the )alue of the thin* abandoned or a ris# which a prudent man would not ta#e under the circumstances0 or -d. %f the thin* insured, bein* car*o or frei*hta*e, and the )oya*e cannot be performed, nor another ship procured by the master, within a reasonable time and with reasonable dili*ence, to forward the car*o, without incurrin* the li#e e+pense or ris# mentioned in the precedin* subpara*raph. @ut frei*hta*e cannot in any case be abandoned unless the ship is also abandoned. !ection 132. /n abandonment must be neither partial nor conditional. !ection 131. /n abandonment must be made within a reasonable time after receipt of reliable information of the loss, but where the information is of a doubtful character, the insured is entitled to a reasonable time to ma#e in,uiry. !ection 133. (here the information upon which an abandonment has been made pro)es incorrect, or the thin* insured was so far restored when the abandonment was made that there was then in fact no total loss, the abandonment becomes ineffectual. !ection 135. /bandonment is made by *i)in* notice thereof to the insurer, which may be done orally, or in writin*: Provided, "hat if the notice be done orally, a written notice of such abandonment shall be submitted within se)en -7. days from such oral notice. !ection 136. / notice of abandonment must be e+plicit, and must specify the particular cause of the abandonment, but need state only enou*h to show that there is probable cause therefor, and need not be accompanied with proof of interest or of loss. !ection 137. /n abandonment can be sustained only upon the cause specified in the notice thereof.

!ection 138. /n abandonment is e,ui)alent to a transfer by the insured of his interest to the insurer, with all the chances of reco)ery and indemnity. !ection 13:. %f a marine insurer pays for a loss as if it were an actual total loss, he is entitled to whate)er may remain of the thin* insured, or its proceeds or sal)a*e, as if there had been a formal abandonment. !ection 15;. 9pon an abandonment, acts done in *ood faith by those who were a*ents of the insured in respect to the thin* insured, subse,uent to the loss, are at the ris# of the insurer, and for his benefit. !ection 151. (here notice of abandonment is properly *i)en, the ri*hts of the insured are not pre4udiced by the fact that the insurer refuses to accept the abandonment. !ection 152. "he acceptance of an abandonment may be either e+press or implied from the conduct of the insurer. "he mere silence of the insurer for an unreasonable len*th of time after notice shall be construed as an acceptance. !ection 151. "he acceptance of an abandonment, whether e+press or implied, is conclusi)e upon the parties, and admits the loss and the sufficiency of the abandonment. !ection 153. /n abandonment once made and accepted is irre)ocable, unless the *round upon which it was made pro)es to be unfounded. !ection 155. <n an accepted abandonment of a ship, frei*hta*e earned pre)ious to the loss belon*s to the insurer of said frei*hta*e0 but frei*hta*e subse,uently earned belon*s to the insurer of the ship. !ection 156. %f an insurer refuses to accept a )alid abandonment, he is liable as upon an actual total loss, deductin* from the amount any proceeds of the thin* insured which may ha)e come to the hands of the insured. !ection 157. %f a person insured omits to abandon, he may ne)ertheless reco)er his actual loss.

,SUB4TITLE !4I ,(EASURE OF IN%E(NIT& !ection 158. / )aluation in a policy of marine insurance is conclusi)e between the parties thereto in the ad4ustment of either a partial or total loss, if the insured has some interest at ris#, and there is no fraud on his part0 e+cept that when a thin* has been hypothecated by bottomry or respondentia, before its insurance, and without the #nowled*e of the person actually procurin* the insurance, he may show the real )alue. @ut a )aluation fraudulent in fact, entitles the insurer to rescind the contract.

!ection 15:. / marine insurer is liable upon a partial loss, only for such proportion of the amount insured by him as the loss bears to the )alue of the whole interest of the insured in the property insured. !ection 16;. (here profits are separately insured in a contract of marine insurance, the insured is entitled to reco)er, in case of loss, a proportion of such profits e,ui)alent to the proportion which the )alue of the property lost bears to the )alue of the whole. !ection 161. %n case of a )alued policy of marine insurance on frei*hta*e or car*o, if a part only of the sub4ect is e+posed to ris#, the )aluation applies only in proportion to such part. !ection 162. (hen profits are )alued and insured by a contract of marine insurance, a loss of them is conclusi)ely presumed from a loss of the property out of which they are e+pected to arise, and the )aluation fi+es their amount. !ection 161. %n estimatin* a loss under an open policy of marine insurance the followin* rules are to be obser)ed: -a. "he )alue of a ship is its )alue at the be*innin* of the ris#, includin* all articles or char*es which add to its permanent )alue or which are necessary to prepare it for the )oya*e insured0 -b. "he )alue of the car*o is its actual cost to the insured, when laden on board, or where the cost cannot be ascertained, its mar#et )alue at the time and place of ladin*, addin* the char*es incurred in purchasin* and placin* it on board, but without reference to any loss incurred in raisin* money for its purchase, or to any drawbac# on its e+portation, or to the fluctuation of the mar#et at the port of destination, or to e+penses incurred on the way or on arri)al0 -c. "he )alue of frei*hta*e is the *ross frei*hta*e, e+clusi)e of prima*e, without reference to the cost of earnin* it0 and -d. "he cost of insurance is in each case to be added to the )alue thus estimated. !ection 163. %f car*o insured a*ainst partial loss arri)es at the port of destination in a dama*ed condition, the loss of the insured is deemed to be the same proportion of the )alue which the mar#et price at that port, of the thin* so dama*ed, bears to the mar#et price it would ha)e brou*ht if sound. !ection 165. / marine insurer is liable for all the e+penses attendant upon a loss which forces the ship into port to be repaired0 and where it is stipulated in the policy that the insured shall labor for the reco)ery of the property, the insurer is liable for the e+pense incurred thereby, such e+pense, in either case, bein* in addition to a total loss, if that afterwards occurs. !ection 166. / marine insurer is liable for a loss fallin* upon the insured, throu*h a contribution in respect to the thin* insured, re,uired to be made by him towards a *eneral a)era*e loss called for by a peril insured a*ainst: Provided, "hat the liability of the insurer shall be limited to the proportion of

contribution attachin* to his policy )alue where this is less than the contributin* )alue of the thin* insured. !ection 167. (hen a person insured by a contract of marine insurance has a demand a*ainst others for contribution, he may claim the whole loss from the insurer, subro*atin* him to his own ri*ht to contribution. @ut no such claim can be made upon the insurer after the separation of the interests liable to contribution, nor when the insured, ha)in* the ri*ht and opportunity to enforce contribution from others, has ne*lected or wai)ed the e+ercise of that ri*ht. !ection 168. %n the case of a partial loss of ship or its e,uipment, the old materials are to be applied towards payment for the new. 9nless otherwise stipulated in the policy, a marine insurer is liable for only two=thirds -2B1. of the remainin* cost of repairs after such deduction, e+cept that anchors must be paid in full. ,TITLE ) ,FIRE INSURANCE !ection 16:. /s used in this &ode, the term fire insurance shall include insurance a*ainst loss by fire, li*htnin*, windstorm, tornado or earth,ua#e and other allied ris#s, when such ris#s are co)ered by e+tension to fire insurance policies or under separate policies. !ection 17;. /n alteration in the use or condition of a thin* insured from that to which it is limited by the policy made without the consent of the insurer, by means within the control of the insured, and increasin* the ris#s, entitles an insurer to rescind a contract of fire insurance. !ection 171. /n alteration in the use or condition of a thin* insured from that to which it is limited by the policy, which does not increase the ris#, does not affect a contract of fire insurance. !ection 172. / contract of fire insurance is not affected by any act of the insured subse,uent to the e+ecution of the policy, which does not )iolate its pro)isions, e)en thou*h it increases the ris# and is the cause of the loss. !ection 171. %f there is no )aluation in the policy, the measure of indemnity in an insurance a*ainst fire is the e+pense it would be to the insured at the time of the commencement of the fire to replace the thin* lost or in4ured in the condition in which it was at the time of the in4ury0 but if there is a )aluation in a policy of fire insurance, the effect shall be the same as in a policy of marine insurance. !ection 173. (hene)er the insured desires to ha)e a )aluation named in his policy, insurin* any buildin* or structure a*ainst fire, he may re,uire such buildin* or structure to be e+amined by an independent appraiser and the )alue of the insured's interest therein may then be fi+ed as between the insurer and the insured. "he cost of such e+amination shall be paid for by the insured. / clause shall be inserted in such policy statin* substantially that the )alue of the insured's interest in such buildin* or structure has been thus fi+ed. %n the absence of any chan*e increasin* the ris# without the consent of the insurer or of fraud on the part of the insured, then in case of a total loss under such policy, the whole amount so insured upon the insured's interest in such buildin* or structure, as stated in the policy upon which the insurers ha)e recei)ed a premium, shall be paid, and in case of a

partial loss the full amount of the partial loss shall be so paid, and in case there are two -2. or more policies co)erin* the insured's interest therein, each policy shall contribute pro rata to the payment of such whole or partial loss. @ut in no case shall the insurer be re,uired to pay more than the amount thus stated in such policy. "his section shall not pre)ent the parties from stipulatin* in such policies concernin* the repairin*, rebuildin* or replacin* of buildin*s or structures wholly or partially dama*ed or destroyed. !ection 175. No policy of fire insurance shall be pled*ed, hypothecated, or transferred to any person, firm or company who acts as a*ent for or otherwise represents the issuin* company, and any such pled*e, hypothecation, or transfer hereafter made shall be )oid and of no effect insofar as it may affect other creditors of the insured. ,TITLE 3 ,CASUALT& INSURANCE !ection 176. &asualty insurance is insurance co)erin* loss or liability arisin* from accident or mishap, e+cludin* certain types of loss which by law or custom are considered as fallin* e+clusi)ely within the scope of other types of insurance such as fire or marine. %t includes, but is not limited to, employer's liability insurance, motor )ehicle liability insurance, plate *lass insurance, bur*lary and theft insurance, personal accident and health insurance as written by non=life insurance companies, and other substantially similar #inds of insurance. ,TITLE ,SURET&SHIP !ection 177. / contract of suretyship is an a*reement whereby a party called the surety *uarantees the performance by another party called the principal or obli*or of an obli*ation or underta#in* in fa)or of a third party called the obli*ee. %t includes official reco*ni2ances, stipulations, bonds or underta#in*s issued by any company by )irtue of and under the pro)isions of /ct No. 516, as amended by /ct No. 22;6. !ection 178. "he liability of the surety or sureties shall be 4oint and se)eral with the obli*or and shall be limited to the amount of the bond. %t is determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obli*or and the obli*ee. !ection 17:. "he surety is entitled to payment of the premium as soon as the contract of suretyship or bond is perfected and deli)ered to the obli*or. No contract of suretyship or bondin* shall be )alid and bindin* unless and until the premium therefor has been paid, e+cept where the obli*ee has accepted the bond, in which case the bond becomes )alid and enforceable irrespecti)e of whether or not the premium has been paid by the obli*or to the surety: Provided, "hat if the contract of suretyship or bond is not accepted by, or filed with the obli*ee, the surety shall collect only a reasonable amount, not e+ceedin* fifty percent -5;C. of the premium due thereon as ser)ice fee plus the cost of stamps or other ta+es imposed for the issuance of the contract or bond: Provided, however, "hat if the nonacceptance of the bond be due to the fault or ne*li*ence of the surety, no such ser)ice fee, stamps or ta+es shall be collected.

%n the case of a continuin* bond, the obli*or shall pay the subse,uent annual premium as it falls due until the contract of suretyship is cancelled by the obli*ee or by the &ommissioner or by a court of competent 4urisdiction, as the case may be. !ection 18;. Pertinent pro)isions of the &i)il &ode of the Philippines shall be applied in a suppletory character whene)er necessary in interpretin* the pro)isions of a contract of suretyship.

,TITLE / ,LIFE INSURANCE !ection 181. Dife insurance is insurance on human li)es and insurance appertainin* thereto or connected therewith. 6)ery contract or underta#in* for the payment of annuities includin* contracts for the payment of lump sums under a retirement pro*ram where a life insurance company mana*es or acts as a trustee for such retirement pro*ram shall be considered a life insurance contract for purposes of this &ode. !ection 182. /n insurance upon life may be made payable on the death of the person, or on his sur)i)in* a specified period, or otherwise contin*ently on the continuance or cessation of life. 6)ery contract or pled*e for the payment of endowments or annuities shall be considered a life insurance contract for purposes of this &ode. %n the absence of a 4udicial *uardian, the father, or in the latter's absence or incapacity, the mother, of any minor, who is an insured or a beneficiary under a contract of life, health, or accident insurance, may e+ercise, in behalf of said minor, any ri*ht under the policy, without necessity of court authority or the *i)in* of a bond, where the interest of the minor in the particular act in)ol)ed does not e+ceed >i)e hundred thousand pesos -P5;;,;;;.;;. or in such reasonable amount as may be determined by the &ommissioner. !uch ri*ht may include, but shall not be limited to, obtainin* a policy loan, surrenderin* the policy, recei)in* the proceeds of the Policy, and *i)in* the minor's consent to any transaction on the policy. %n the absence or in case of the incapacity of the father or mother, the *randparent, the eldest brother or sister at least ei*hteen -18. years of a*e, or any relati)e who has actual custody of the minor insured or beneficiary, shall act as a *uardian without need of a court order or 4udicial appointment as such *uardian, as lon* as such person is not otherwise dis,ualified or incapacitated. Payment made by the insurer pursuant to this section shall relie)e such insurer of any liability under the contract. !ection 181. "he insurer in a life insurance contract shall be liable in case of suicide only when it is committed after the policy has been in force for a period of two -2. years from the date of its issue or of its last reinstatement, unless the policy pro)ides a shorter period: Provided, however, "hat suicide committed in the state of insanity shall be compensable re*ardless of the date of commission.

!ection 183. / policy of insurance upon life or health may pass by transfer, will or succession to any person, whether he has an insurable interest or not, and such person may reco)er upon it whate)er the insured mi*ht ha)e reco)ered. !ection 185. Notice to an insurer of a transfer or be,uest thereof is not necessary to preser)e the )alidity of a policy of insurance upon life or health, unless thereby e+pressly re,uired. !ection 186. 9nless the interest of a person insured is susceptible of e+act pecuniary measurement, the measure of indemnity under a policy of insurance upon life or health is the sum fi+ed in the policy. ,TITLE # ,(ICROINSURANCE !ection 187. Microinsurance is a financial product or ser)ice that meets the ris# protection needs of the poor where: -a. "he amount of contributions, premiums, fees or char*es, computed on a daily basis, does not e+ceed se)en and a half percent -7.5C. of the current daily minimum wa*e rate for nona*ricultural wor#ers in Metro Manila0 and -b. "he ma+imum sum of *uaranteed benefits is not more than one thousand -1,;;;. times of the current daily minimum wa*e rate for nona*ricultural wor#ers in Metro Manila. !ection 188. No insurance company or mutual benefit association shall en*a*e in the business of microinsurance unless it possesses all the re,uirements as may be prescribed by the &ommissioner. "he &ommissioner shall issue such rules and re*ulations *o)ernin* microinsurance. ,CHAPTER II4A ,FINANCIAL REPORTING FRA(E*OR+ !ection 18:. /ll companies re*ulated by the &ommission, unless otherwise re,uired by law, should comply with the financial reportin* framewor#s adopted by the &ommission for purposes of creatin* the statutory financial reports and the annual statements to be submitted to the &ommission. >inancial reportin* framewor# means a set of accountin* and reportin* principles, standards, interpretations and pronouncements that must be adopted in the preparation and submission of the statutory financial statements and reports re,uired by the &ommission. "his financial reportin* framewor# is not the same as the financial reportin* framewor# used to prepare the financial statements that the !ecurities and 6+chan*e &ommission may re,uire. "he main purpose of the statutory statements is to present important information about the le)el of ris# and sol)ency situation of insurers. %n prescribin* the applicable statutory financial reportin* framewor#, the &ommissioner shall ta#e into account international standards concernin* sol)ency and insurance company reportin* as well as *enerally accepted actuarial principles concernin* financial reportin* promul*ated by the /ctuarial !ociety of the Philippines. "he assets and in)estments discussed in !ections 2;3 to 215 shall be accounted for in accordance with this section.

"he )aluation of reser)es shall be accounted for in accordance with "itle 5 of this &ode. ,CHAPTER III ,THE BUSINESS OF INSURANCE ,TITLE ! ,INSURANCE CO(PANIES' ORGANI5ATION' CAPITALI5ATION AN% AUTHORI5ATION !ection 1:;. >or purposes of this &ode, the term insurer or insurance co!pany shall include all partnerships, associations, cooperati)es or corporations, includin* *o)ernment=owned or =controlled corporations or entities, en*a*ed as principals in the insurance business, e+ceptin* mutual benefit associations. 9nless the conte+t otherwise re,uires, the term shall also include professional reinsurers defined in !ection 288. &o!estic co!pany shall include companies formed, or*ani2ed or e+istin* under the laws of the Philippines. 'oreign co!pany when used without limitation shall include companies formed, or*ani2ed, or e+istin* under any laws other than those of the Philippines. !ection 1:1. "he pro)isions of the &orporation &ode, as amended, shall apply to all insurance corporations now or hereafter en*a*ed in business in the Philippines insofar as they do not conflict with the pro)isions of this chapter. !ection 1:2. No corporation, partnership, or association of persons shall transact any insurance business in the Philippines e+cept as a*ent of a corporation, partnership or association authori2ed to do the business of insurance in the Philippines, unless possessed of the capital and assets re,uired of an insurance corporation doin* the same #ind of business in the Philippines and in)ested in the same manner0 unless the &ommissioner shall ha)e *ranted it a certificate to the effect that it has complied with all the pro)isions of this &ode. 6)ery entity recei)in* any such certificate of authority shall be sub4ect to the insurance and other applicable laws of the Philippines and to the 4urisdiction and super)ision of the &ommissioner. !ection 1:1. No insurance company shall transact any insurance business in the Philippines until after it shall ha)e obtained a certificate of authority for that purpose from the &ommissioner upon application therefor and payment by the company concerned of the fees hereinafter prescribed. "he &ommissioner may refuse to issue a certificate of authority to any insurance company if, in his 4ud*ment, such refusal will best promote the interest of the people of this country. No such certificate of authority shall be *ranted to any such company until the &ommissioner shall ha)e satisfied himself by such e+amination as he may ma#e and such e)idence as he may re,uire that such company is ,ualified by the laws of the Philippines to transact business therein, that the *rant of such authority appears to be 4ustified in the li*ht of local economic re,uirements, and that the direction and administration, as well as the inte*rity and responsibility of the or*ani2ers and administrators, the financial or*ani2ation and the amount of capital, reasonably assure the safety of the interests of the policyholders and the public.

%n order to maintain the ,uality of the mana*ement of the insurance companies and afford better protection to policyholders and the public in *eneral, any person of *ood moral character, un,uestioned inte*rity and reco*ni2ed competence may be elected or appointed director or officer of insurance companies in accordance with the pertinent pro)isions contained in the corporate *o)ernance circulars prescribed by the &ommissioner. %n addition hereto, the &ommissioner shall prescribe the ,ualifications of directors, e+ecuti)e officers and other #ey officials of insurance companies for purposes of this section. No person shall concurrently be a Director andBor <fficer of an insurance company and an ad4ustment company. @efore issuin* such certificate of authority, the &ommissioner must be satisfied that the name of the company is not that of any other #nown company transactin* a similar business in the Philippines, or a name so similar as to be calculated to mislead the public. "he &ommissioner may issue rules and re*ulations on the use of names of insurance companies and other super)ised persons or entities. "he certificate of authority issued by the &ommissioner shall e+pire on the last day of December, three -1. years followin* its date of issuance, and shall be renewable e)ery three -1. years thereafter, sub4ect to the company's continuin* compliance with the pro)isions of this &ode, circulars, instructions, rulin*s or decisions of the &ommission. 6)ery company recei)in* any such certificates of authority shall be sub4ect to the pro)isions of this &ode and other related laws and to the 4urisdiction and super)ision of the &ommissioner. No insurance company may be authori2ed to transact in the Philippines the business of life and non= life insurance concurrently, unless specifically authori2ed to do so by the &ommissioner: Provided, "hat the terms life and non=life insurance shall be deemed to include health, accident and disability insurance. No insurance company shall ha)e e,uity in an ad4ustment company and neither shall an ad4ustment company ha)e e,uity in an insurance company. No insurance company issued with a )alid certificate of authority to transact insurance business anywhere in the Philippines by the %nsurance &ommissioner, shall be barred, pre)ented, or disenfranchised from issuin* any insurance policy or from transactin* any insurance business within the scope or co)era*e of its certificate of authority, anywhere in the Philippines, by any local *o)ernment unit or authority, for whate)er *uise or reason whatsoe)er, includin* under any #ind of ordinance, accreditation system, or scheme. /ny local ordinance or local *o)ernment unit re*ulatory issuance imposin* such restriction or disenfranchisement on any insurance company shall be deemed null and )oid ab initio. !ection 1:3. 6+cept as pro)ided in !ection 28:, no new domestic life or non=life insurance company shall, in a stoc# corporation, en*a*e in business in the Philippines unless possessed of a paid=up capital e,ual to at least <ne billion pesos -P1,;;;,;;;,;;;.;;.: Provided, "hat a domestic insurance company already doin* business in the Philippines shall ha)e a net worth by Eune 1;, 2;11 of "wo hundred fifty million pesos -P25;,;;;,;;;.;;.. >urthermore, said company must ha)e by December

11, 2;16, an additional "hree hundred million pesos -P1;;,;;;,;;;.;;. in net worth0 by December 11, 2;1:, an additional "hree hundred fifty million pesos -P15;,;;;,;;;.;;. in net worth0 and by December 11, 2;22, an additional >our hundred million pesos -P3;;,;;;,;;;.;;. in net worth. "he &ommissioner may, as a pre=licensin* re,uirement of a new insurance company, in addition to the paid=up capital stoc#, re,uire the stoc#holders to pay in cash to the company in proportion to their subscription interests a contributed surplus fund of not less than <ne hundred million pesos -P1;;,;;;,;;;.;;.. Fe may also re,uire such company to submit to him a business plan showin* the company's estimated receipts and disbursements, as well as the basis therefor, for the ne+t succeedin* three -1. years. %f or*ani2ed as a mutual company, in lieu of such net worth, it must ha)e a)ailable total members e,uity in an amount to be determined by the %nsurance &ommission abo)e all liabilities for losses reported0 e+penses, ta+es, le*al reser)e, and reinsurance of all outstandin* ris#s, and the contributed surplus fund e,ual to the amounts re,uired of stoc# corporations. / stoc# insurance company doin* business in the Philippines may, sub4ect to the pertinent law and re*ulation which now or hereafter may be in force, alter its or*ani2ation and transform itself into a mutual insurance company. "he !ecretary of >inance may, upon recommendation of the &ommissioner, increase such minimum paid=up capital stoc# or cash assets re,uirement under such terms and conditions as he may impose, to an amount which, in his opinion, would reasonably assure the safety of the interests of the policyholders and the public. "he minimum paid=up capital and net worth re,uirement must remain unimpaired for the continuance of the license. "he &ommissioner may re,uire the adoption of the ris#=based capital approach and other internationally accepted forms of capital framewor#. >or the purpose of this section, net worth shall consist of: -a. Paid=up capital0 -b. Retained earnin*s0 -c. 9nimpaired surplus0 and -d. Re)aluation of assets as may be appro)ed by the &ommissioner. "he &ommission may adopt for purposes of compliance with capital build up re,uirement under this &ode the reco*nition as part of the capital account, capital notes or debentures which are subordinate to all credits and senior only to common capital stoc#s. "he President of the Philippines may order a periodic re)iew e)ery two -2. years the capital structure set out abo)e to determine the capital ade,uacy of the local insurance industry from and after the inte*ration and liberali2ation of the financial ser)ices, includin* insurance, in the /!6/N Re*ion. >or this purpose, a re)iew committee consistin* of representati)es from the Department of >inance -D<>., the %nsurance &ommission -%&., the National 6conomic and De)elopment /uthority -N6D/., the !ecurities and 6+chan*e &ommission -!6&. and other a*encies which the President may

desi*nate shall conduct the re)iew and may recommend to the President to adopt for implementation the necessary capital ad4ustment. !ection 1:5. 6)ery company must, before en*a*in* in the business of insurance in the Philippines, file with the &ommissioner the followin*: -a. / certified copy of the last annual statement or a )erified financial statement e+hibitin* the condition and affairs of such company0 -b. %f incorporated under the laws of the Philippines, a copy of the articles of incorporation and bylaws, and any amendments to either, certified by the !ecurities and 6+chan*e &ommission to be a copy of that which is filed in its <ffice0 -c. %f incorporated under any laws other than those of the Philippines, a certificate from the !ecurities and 6+chan*e &ommission showin* that it is duly re*istered in the mercantile re*istry of that &ommission in accordance with the &orporation &ode. / copy of the articles of incorporation and bylaws, and any amendments to either, if or*ani2ed or formed under any law re,uirin* such to be filed, duly certified by the officer ha)in* the custody of same, or if not so or*ani2ed, a copy of the law, charter or deed of settlement under which the deed of or*ani2ation is made, duly certified by the proper custodian thereof, or pro)ed by affida)it to be a copy0 also, a certificate under the hand and seal of the proper officer of such state or country ha)in* super)ision of insurance business therein, if any there be, that such corporation or company is or*ani2ed under the laws of such state or country, with the amount of capital stoc# or assets and le*al reser)e re,uired by this &ode0 -d. %f not incorporated and of forei*n domicile, aside from the certificate mentioned in para*raph -c. of this section, a certificate settin* forth the nature and character of the business, the location of the principal office, the name of the indi)idual or names of the persons composin* the partnership or association, the amount of actual capital employed or to be employed therein, and the names of all officers and persons by whom the business is or may be mana*ed. "he certificate must be )erified by the affida)it of the chief officer, secretary, a*ent, or mana*er of the company0 and if there are any written articles of a*reement of the company, a copy thereof must accompany such certificate. !ection 1:6. "he &ommissioner must re,uire as a condition precedent to the transaction of insurance business in the Philippines by any forei*n insurance company, that such company file in his office a written power of attorney desi*natin* some person who shall be a resident of the Philippines as its *eneral a*ent, on whom any notice pro)ided by law or by any insurance policy, proof of loss, summons and other le*al processes may be ser)ed in all actions or other le*al proceedin*s a*ainst such company, and consentin* that ser)ice upon such *eneral a*ent shall be admitted and held as )alid as if ser)ed upon the forei*n company at its home office. /ny such forei*n company shall, as further condition precedent to the transaction of insurance business in the Philippines, ma#e and file with the &ommissioner an a*reement or stipulation, e+ecuted by the proper authorities of said company in form and substance as follows:

"he -name of company. does hereby stipulate and a*ree in consideration of the permission *ranted by the %nsurance &ommissioner to transact business in the Philippines, that if at any time said company shall lea)e the Philippines, or cease to transact business therein, or shall be without any a*ent in the Philippines on whom any notice, proof of loss, summons, or le*al process may be ser)ed, then in any action or proceedin* arisin* out of any business or transaction which occurred in the Philippines, ser)ice of any notice pro)ided by law, or insurance policy, proof of loss, summons, or other le*al process may be made upon the %nsurance &ommissioner, and that such ser)ice upon the %nsurance &ommissioner shall ha)e the same force and effect as if made upon the company. (hene)er such ser)ice of notice, proof of loss, summons, or other le*al process shall be made upon the &ommissioner, he must, within ten -1;. days thereafter, transmit by mail, posta*e paid, a copy of such notice, proof of loss, summons, or other le*al process to the company at its home or principal office. "he sendin* of such copy by the &ommissioner shall be a necessary part of the ser)ice of the notice, proof of loss, or other le*al process. !ection 1:7. No insurance company or*ani2ed or e+istin* under the *o)ernment or laws other than those of the Philippines shall en*a*e in business in the Philippines unless possessed of unimpaired capital or assets and reser)e of not less than <ne billion pesos -P1,;;;,;;;,;;;.;;., nor until it shall ha)e deposited with the &ommissioner for the benefit and security of the policyholders and creditors of such company in the Philippines, securities satisfactory to the &ommissioner consistin* of *ood securities of the Philippines, includin* new issues of stoc# of re*istered enterprises, as this term is defined in 6+ecuti)e <rder No. 226 of 1:87, as amended, to the actual mar#et )alue of not less than the amount herein re,uired: Provided, "hat at least fifty percent -5;C. of such securities shall consist of bonds or other instruments of debt of the Go)ernment of the Philippines, its political subdi)isions and instrumentalities, or of *o)ernment=owned or =controlled corporations and entities, includin* the @an*#o !entral n* Pilipinas: Provided, further, "hat the total in)estment of a forei*n insurance company in any re*istered enterprise shall not e+ceed twenty percent -2;C. of the net worth of said forei*n insurance company nor twenty percent -2;C. of the capital of the re*istered enterprise, unless pre)iously authori2ed in writin* by the &ommissioner. "he &ommissioner may, as a pre=licensin* re,uirement of a new branch office of a forei*n insurance company, in addition to the re,uired asset or net worth, re,uire the company to ha)e an additional surplus fund in an amount to be determined by the %nsurance &ommission. >or purposes of this &ode, the net worth of a forei*n insurance company shall refer only to its net worth in the Philippines. !ection 1:8. "he &ommissioner shall hold the securities, deposited as re,uired in the immediately precedin* section, for the benefit and security of all the policyholders and creditors of the company depositin* the same: Provided, "hat the &ommissioner may as lon* as the company is sol)ent, permit the company to collect the interest or di)idends on the securities so deposited, and, from time to time, with his assent, to withdraw any of such securities, upon depositin* with said &ommissioner other li#e securities, the mar#et )alue of which shall be e,ual to the mar#et )alue of such as may be withdrawn. %n the e)ent of any company ceasin* to do business in the Philippines, the securities deposited as aforesaid shall be returned to the company upon the &ommissioner's written appro)al

and only after the company has duly pro)en in its application therefor that it has no further liability whatsoe)er under any of its policies nor to any of its creditors in the Philippines. !ection 1::. 6)ery forei*n company doin* business in the Philippines shall set aside an amount correspondin* to the le*al reser)es of the policies written in the Philippines and in)est and #eep the same therein in accordance with the pro)isions of this section. "he le*al reser)e therein re,uired to be set aside shall be in)ested only in the classes of Philippine securities described in !ection 2;6: Provided, however, "hat no in)estment in stoc#s or bonds of any sin*le entity shall, in the a**re*ate e+ceed twenty percent -2;C. of the net worth of the in)estin* company or twenty percent -2;C. of the capital of the issuin* company, whiche)er is the lesser, unless otherwise appro)ed in writin* by the &ommissioner. "he securities purchased and #ept in the Philippines under this section, shall not be sent out of the territorial 4urisdiction of the Philippines without the written consent of the &ommissioner. ,TITLE ) ,SOL2ENC& !ection 2;;. /n insurance company doin* business in the Philippines shall at all times maintain the minimum paid=up capital, and net worth re,uirements as prescribed by the &ommissioner. !uch sol)ency re,uirements shall be based on internationally accepted sol)ency framewor#s and adopted only after due consultation with the insurance industry associations. (hene)er the aforementioned re,uirement be found to be less than that herein re,uired to be maintained, the &ommissioner shall forthwith direct the company to ma#e *ood any such deficiency by cash, to be contributed by all stoc#holders of record in proportion to their respecti)e interests, and paid to the treasurer of the company, within fifteen -15. days from receipt of the order: Provided, "hat the company in the interim shall not be permitted to ta#e any new ris# of any #ind or character unless and until it ma#e *ood any such deficiency: Provided( further, "hat a stoc#holder who aside from payin* the contribution due from him, pays the contribution due from another stoc#holder by reason of the failure or refusal of the latter to do so, shall ha)e a lien on the certificates of stoc# of the insurance company concerned appearin* in its boo#s in the name of the defaultin* stoc#holder on the date of default, as well as on any interests or di)idends that ha)e accrued or will accrue to the said certificates of stoc#, until the correspondin* payment or reimbursement is made by the defaultin* stoc#holder. !ection 2;1. No domestic insurance corporation shall declare or distribute any di)idend on its outstandin* stoc#s unless it has met the minimum paid=up capital and net worth re,uirements under !ection 1:3 and e+cept from profits attested in a sworn statement to the &ommissioner by the president or treasurer of the corporation to be remainin* on hand after retainin* unimpaired: -a. "he entire paid=up capital stoc#0 -b. "he sol)ency re,uirements defined by !ection 2;;0 -c. %n the case of life insurance corporations, the le*al reser)e fund re,uired by !ection 2170

-d. %n the case of corporations other than life, the le*al reser)e fund re,uired by !ection 21:0 and -e. / sum sufficient to pay all net losses reported, or in the course of settlement, and all liabilities for e+penses and ta+es. /ny di)idend declared or distributed under the precedin* para*raph shall be reported to the &ommissioner within thirty -1;. days after such declaration or distribution. %f the &ommissioner finds that any such corporation has declared or distributed any such di)idend in )iolation of this section, he may order such corporation to cease and desist from doin* business until the amount of such di)idend or the portion thereof in e+cess of the amount allowed under this section has been restored to said corporation. "he &ommissioner shall prescribe sol)ency re,uirements for branches of forei*n insurance companies operatin* in the Philippines. ,TITLE 3 ,ASSETS !ection 2;2. %n any determination of the financial condition of any insurance company doin* business in the Philippines, there shall be allowed and admitted as assets only such assets le*ally or beneficially owned by the insurance company concerned as determined by the &ommissioner which consist of: -a. &ash in the possession of the insurance company or in transit under its control, and the true and duly )erified balance of any deposit of such company in a financially sound ban# or trust company duly authori2ed by the @an*#o !entral n* Pilipinas. -b. %n)estments in securities, includin* money mar#et instruments, and in real property ac,uired or held in accordance with and sub4ect to the applicable pro)isions of this &ode and the income reali2ed therefrom or accrued thereon. -c. Doans *ranted by the insurance company concerned to the e+tent of that portion thereof ade,uately secured by non=speculati)e assets with readily reali2able )alues in accordance with and sub4ect to the limitations imposed by applicable pro)isions of this &ode. -d. Policy loans and other policy assets and liens on policies, contracts or certificates of a life insurance company, in an amount not e+ceedin* le*al reser)es and other policy liabilities carried on each indi)idual life insurance policy, contract or certificate. -e. "he net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurance company which carries the full mean tabular reser)e liability. -f. Reinsurance reco)erable by the cedin* insurer:

-1. >rom an insurer authori2ed to transact business in this country, the full amount thereof0 or -2. >rom an insurer not authori2ed in this country, in an amount not e+ceedin* the liabilities carried by the cedin* insurer for amounts withheld under a reinsurance treaty with such unauthori2ed insurer as security for the payment of obli*ations thereunder if such funds are held sub4ect to withdrawal by, and under the control of, the cedin* insurer. "he &ommissioner may prescribe the conditions under which a cedin* insurer may be allowed credit, as an asset or as a deduction from loss and unearned premium reser)es, for reinsurance reco)erable from an insurer not authori2ed in this country but which presents satisfactory e)idence that it meets the applicable standards of sol)ency re,uired in this country. -*. >unds withheld by a cedin* insurer under a reinsurance treaty, pro)ided reser)es for unpaid losses and unearned premiums are ade,uately pro)ided. -h. Deposits or amounts reco)erable from underwritin* associations, syndicates and reinsurance funds, or from any suspended ban#in* institution, to the e+tent deemed by the &ommissioner to be a)ailable for the payment of losses and claims and )alues to be determined by him. -i. 6lectronic data processin* machines, as may be authori2ed by the &ommissioner to be ac,uired by the insurance company concerned, the ac,uisition cost of which to be amorti2ed in e,ual annual amounts within a period of fi)e -5. years from the date of ac,uisition thereof. -4. %n)estments in mutual funds, real estate in)estment trusts, salary loans, unit in)estment trust funds and special deposit accounts, sub4ect to the conditions as may be pro)ided for by the &ommissioner. -#. <ther assets, not inconsistent with the pro)isions of para*raphs -a. to -4. hereof, which are deemed by the &ommissioner to be readily reali2able and a)ailable for the payment of losses and claims at )alues to be determined by him in a circular, rule or re*ulation. !ection 2;1. %n addition to such assets as the &ommissioner may from time to time determine to be non=admitted assets of insurance companies doin* business in the Philippines, the followin* assets shall in no case be allowed as admitted assets of an insurance company doin* business in the Philippines, in any determination of its financial condition: -a. Goodwill, trade names, and other li#e intan*ible assets. -b. Prepaid or deferred char*es for e+penses and commissions paid by such insurance company. -c. /d)ances to officers -other than policy loans., which are not ade,uately secured and which are not pre)iously authori2ed by the &ommissioner, as well as ad)ances to employees, a*ents, and other persons on mere personal security.

-d. !hares of stoc# of such insurance company, owned by it, or any e,uity therein as well as loans secured thereby, or any proportionate interest in such shares of stoc# throu*h the ownership by such insurance company of an interest in another corporation or business unit. -e. >urniture, furnishin*, fi+tures, safes, e,uipment, library, stationery, literature, and supplies. -f. %tems of ban# credits representin* chec#s, drafts or notes returned unpaid after the date of statement. -*. "he amount, if any, by which the a**re*ate )alue of in)estments as carried in the led*er assets of such insurance company e+ceeds the a**re*ate )alue thereof as determined in accordance with the pro)isions of this &ode andBor the rules of the &ommissioner. /ll non=admitted assets and all other assets of doubtful )alue or character included as led*er or non= led*er assets in any statement submitted by an insurance company to the &ommissioner, or in any insurance e+aminer's report to him, shall also be reported, to the e+tent of the )alue disallowed as deductions from the *ross assets of such insurance company, e+cept where the &ommissioner permits a reser)e to be carried amon* the liabilities of such insurance company in lieu of any such deduction. ,TITLE ,IN2EST(ENTS !ection 2;3. / life insurance company may lend to any of its policyholders upon the security of the )alue of its policy such sum as may be determined pursuant to the pro)isions of the policy. No insurance company shall loan any of its money or deposits to any person, corporation or association, e+cept upon the security of any of the followin*: -a. >irst mort*a*e or deeds of trust of re*istered, unencumbered, impro)ed or unimpro)ed real estate, includin* condominiums0 -b. >irst mort*a*es or deeds of trust of actually culti)ated, impro)ed and unencumbered a*ricultural lands in the Philippines0 -c. Purchase money mort*a*es, lease purchase a*reements or similar securities e+ecuted or recei)ed by it on account of the sale or e+chan*e of real property ac,uired pursuant to !ections 2;6 and 2;80 -d. @onds or other instruments of indebtedness issued or *uaranteed by the Go)ernment of the Philippines or its political subdi)isions authori2ed by law to incur such obli*ations or issue such *uarantees or of *o)ernment=owned or =controlled corporations and instrumentalities includin* the @an*#o !entral n* Pilipinas0 or

-e. <bli*ations issued or *uaranteed by uni)ersal ban#s, commercial ban#s, offshore ban#in* units, in)estment houses or other financial intermediaries duly re*istered with the @an*#o !entral n* Pilipinas0 or -f. <bli*ations issued or *uaranteed by forei*n ban#s or corporations, each of which shall ha)e total net worth of at least <ne hundred fifty million 9! dollars -H9!15;,;;;,;;;.;;. or such other hi*her net worth as may be prescribed by the %nsurance &ommission, as shown in their financial statements as of the immediately precedin* fiscal year0 or -*. /ssi*nments of monetary instruments such as cash deposits, deposit certificates or other similar instruments of uni)ersal ban#s, commercial ban#s, in)estment houses or other financial intermediaries duly re*istered with the @an*#o !entral n* Pilipinas0 or -h. Pled*es of shares of stoc#, bonds or other instruments of indebtedness specified in !ection 2;:0 or -i. &hattel mort*a*es o)er e,uipment not more than three -1. years old0 and -4. !uch other security as may be appro)ed by the &ommissioner. "he loans pro)ided in the precedin* subsection shall be sub4ect to the followin* conditions: -1. "he amount of loan secured by real estate mort*a*e o)er a non=a*ricultural land shall not e+ceed se)enty percent -7;C. of its appraised )alue, and in the case of a loan secured by a real estate mort*a*e o)er an a*ricultural land, the amount of loan shall not e+ceed forty percent -3;C. of its mar#et )alue: Provided, "hat, in no case shall such loan ha)e a maturity period in e+cess of twenty=fi)e -25. years0 -2. 9nless appro)ed by the &ommissioner, no loan may be *ranted upon the security of a mort*a*e on impro)ed real estate if the impro)ements thereon do not belon* to the owner of the land, and the owner of the impro)ements does not si*n the deed of mort*a*e. Fowe)er, if the owner of the land is the Go)ernment of the Philippines or any of its political subdi)isions and a lon*=term lease has been e+ecuted in fa)or of the owner of the impro)ements, the owner of the land need not be a party to the deed of mort*a*e. "he e+piration date of the lease shall not, howe)er, precede the maturity of the loan. "he phrase $impro)ed real estate' as used herein shall mean land with permanent buildin* or buildin*s erected thereon0 -1. Dease=a*reements or similar securities recei)ed on the sale of real estate property shall not e+ceed one hundred percent -1;;C. of the sellin* price of said property, or one hundred percent -1;;C. of its mar#et )alue at the time of its disposition, whiche)er amount is lower. Fowe)er, in no case shall such a*reement ha)e a maturity period not e+ceedin* thirty -1;. years0 -3. Doans secured by shares of stoc# of sol)ent corporations or institutions shall not e+ceed fifty percent -5;C. of:

-i. "he wei*hted a)era*e mar#et price for the one hundred ei*hty -18;. days precedin* the appro)al of the loan for shares listed in the stoc# e+chan*e0 and -ii. >or unlisted shares, the ad4usted boo# )alue of such shares. -5. Doans secured by the chattel mort*a*es o)er e,uipment shall not e+ceed se)enty percent -7;C. of the mar#et )alue of said e,uipment. !ection 2;5. No loan by any insurance company on the security of real estate shall be made unless the title to such real estate shall ha)e first been re*istered in accordance with the e+istin* Dand Re*istration /ct, or shall ha)e been pre)iously re*istered under the pro)isions of the e+istin* Mort*a*e Daw and the lien or interest of the insurance company as mort*a*ee has been re*istered. !ection 2;6. -a. /n insurance company may purchase, hold, own and con)ey such property, real and personal, as may ha)e been mort*a*ed, pled*ed, or con)eyed to it in *ood faith in trust for its benefit by reason of money loaned by it in pursuance of the re*ular business of the company, and such real or personal property as may ha)e been purchased by it at sales under pled*es, mort*a*es or deeds of trust for its benefit on account of money loaned by it0 and such real and personal property as may ha)e been con)eyed to it by borrowers in satisfaction and dischar*e of loans made by the company in payment or by reason of any loan made by the company in payment or by reason of any loan made by it shall be sold by the company within twenty -2;. years after the title thereto has been )ested in it. -b. /n insurance company may purchase, hold, and own the followin*: -1. Real properties which ser)e as its main place of business andBor branch offices: Provided, "hat such in)estment shall not in the o)erall e+ceed twenty percent -2;C. of its net worth as shown by its latest financial statement appro)ed by the &ommissioner. -2. @onds or other instruments of indebtedness of the Go)ernment of the Philippines or its political subdi)isions authori2ed by law to issue bonds at the reasonable mar#et )alue thereof. -1. @onds or other instruments of debt of *o)ernment=owned or =controlled corporations and entities, includin* the @an*#o !entral n* Pilipinas. -3. @onds, debentures or other instruments of indebtedness of any sol)ent corporation or institution created or e+istin* under the laws of the Philippines: Provided, however, "hat the issuin*, assumin* or *uaranteein* entity or its predecessors shall not ha)e defaulted in the payment of interest on any of its securities and that durin* each of any three -1. includin* the last two -2. of the fi)e -5. fiscal years ne+t precedin* the date of ac,uisition by such insurance company of such bonds, debentures, or other instruments of indebtedness, the net earnin*s of the issuin*, assumin* or *uaranteein* institution a)ailable for its fi+ed char*es, as hereinafter defined, shall ha)e been not less than one and one=,uarter -1I. times the total of its fi+ed char*es for such year: Provided, further, "hat no life insurance company shall

in)est in or loan upon the obli*ations of any one institution in the #inds permitted under this subsection an amount in e+cess of twenty=fi)e percent -25C. of the total admitted assets of such insurer as of December thirty=first ne+t precedin* the date of such in)estment. /s used in this subsection the term net earnings available for fi)ed charges shall mean net income after deductin* operatin* and maintenance e+penses, ta+es other than income ta+es, depreciation and depletion0 but e+cludin* e+traordinary nonrecurrin* items of income or e+pense appearin* in the re*ular financial statement of the issuin*, assumin* or *uaranteein* institution. "he term fi)ed charges shall include interest on funded and unfunded debt, amorti2ation of debt discount, and rentals for leased properties. -5. Preferred or *uaranteed stoc#s of any sol)ent corporation or institution created or e+istin* under the laws of the Philippines: Provided, "hat if the stoc#s are *uaranteed, the amount of stoc#s so *uaranteed is not in e+cess of fifty percent -5;C. of the amount of the preferred or common stoc#s, as the case may be, of the *uaranteein* corporation: Provided, finally, "hat no life insurance company shall in)est in or loan upon obli*ations of any one institution in the #inds permitted under this subsection an amount in e+cess of ten percent -1;C. of the total admitted assets of such insurer as of December thirty=first ne+t precedin* the date of such in)estment. -6. &ommon stoc#s of any sol)ent corporation or institution created or e+istin* under the laws of the Philippines: Provided, however, "hat no life insurance company shall in)est in or loan upon the obli*ations of any one corporation or institution in the #inds permitted under this subsection an amount in e+cess of ten percent -1;C. of the total admitted assets of such insurer as of December thirty=first ne+t precedin* the date of such in)estment. -7. !ecurities issued by a re*istered enterprise, as this term is defined in 6+ecuti)e <rder No. 226, otherwise #nown as the <mnibus %n)estments &ode of 1:87, as amended: Provided, "hat the total in)estment of a domestic non=life insurance company in any re*istered enterprise shall not e+ceed twenty percent -2;C. of the net worth of said insurance company as shown by its aforesaid financial statement unless pre)iously authori2ed by the &ommissioner. -8. &ertificates, notes and other obli*ations issued by the trustees or recei)ers of any institution created or e+istin* under the laws of the Philippines which, or the assets of which, are bein* administered under the direction of any court ha)in* 4urisdiction: Provided, however, "hat such certificates, notes or other obli*ations are ade,uately secured as to principal and interests. -:. 6,uipment trust obli*ations or certificates which are ade,uately secured or other ade,uately secured instruments e)idencin* an interest in e,uipment wholly or in part within the Philippines: Provided, however, "hat there is a ri*ht to recei)e determined portions of rental, purchase or other fi+ed obli*atory payments for the use or purchase of such e,uipment.

-1;. /ny obli*ation of any corporation or institution created or e+istin* under the laws of the Philippines which is, on the date of ac,uisition by the insurer, ade,uately secured and has ,ualities and characteristics wherein the speculati)e elements are not predominant. -11. !uch other securities as may be appro)ed by the &ommissioner. -c. /ny domestic insurer which has outstandin* insurance, annuity or reinsurance contracts in currencies other than the national currency of the Philippines may in)est in, or otherwise ac,uire or loan upon securities and in)estments in such currency which are substantially of the same #inds, classes and in)estment *rades as those eli*ible for in)estment under the fore*oin* subdi)isions of this section0 but the a**re*ate amount of such in)estments and of such cash in such currency which is at any time held by such insurer shall not e+ceed one and one=half -1J. times the amount of its reser)es and other obli*ations under such contracts or the amount which such insurer is re,uired by the law of any country or possession outside the Republic of the Philippines to be in)ested in such country or possession, whiche)er shall be *reater. !ection 2;7. /n insurance company may: -1. %n)est in e,uities of other financial institutions0 and -2. 6n*a*e in the buyin* and sellin* of lon*=term debt instruments: Provided, "hat any or all of such in)estments shall be with the prior appro)al of the &ommissioner. %nsurance companies may, howe)er, in)est in listed e,uities of other financial institutions without need of prior appro)al by the &ommissioner. !ection 2;8. /ny life insurance company may: -a. /c,uire or construct housin* pro4ects and, in connection with any such pro4ect, may ac,uire land or any interest therein by purchase, lease or otherwise, or use land ac,uired pursuant to any other pro)ision of this &ode. !uch company may thereafter own, maintain, mana*e, collect or recei)e income from, or sell and con)ey, any land or interest therein so ac,uired and any impro)ements thereon. "he a**re*ate boo# )alue of the in)estments of any such company in all such pro4ects shall not e+ceed at the time of such in)estments twenty=fi)e percent -25C. of the total admitted assets of such company on the thirty=first day of December ne+t precedin*: Provided, "hat the funds of the company for the payment of pendin* claims and obli*ations shall not be used for such in)estments. -b. /c,uire real property, other than property to be used primarily for pro)idin* housin* and property for accommodation of its own business, as an in)estment for the production of income, or may ac,uire real property to be impro)ed or de)eloped for such in)estment purpose pursuant to a pro*ram therefor, sub4ect to the condition that the cost of each parcel of real property so ac,uired under the authority of this para*raph -b., includin* the estimated cost to the company of the impro)ement or de)elopment thereof, when added to the boo# )alue of all other real property held by it pursuant to this para*raph -b., shall not e+ceed twenty=fi)e percent -25C. of its admitted assets as of the thirty=first day of December ne+t precedin*.

!ection 2;:. 6)ery domestic insurance company shall, to the e+tent of an amount e,ual in )alue to twenty=fi)e percent -25C. of the minimum net worth re,uired under !ection 1:3, in)est its funds only in securities, satisfactory to the &ommissioner, consistin* of bonds or other instruments of debt of the Go)ernment of the Philippines or its political subdi)isions or instrumentalities, or of *o)ernment= owned or =controlled corporations and entities, includin* the @an*#o !entral n* Pilipinas: Provided, "hat such in)estments shall at all times be maintained free from any lien or encumbrance: Provided, further, "hat such securities shall be deposited with and held by the &ommissioner for the faithful performance by the depositin* insurer of all its obli*ations under its insurance contracts. "he pro)isions of !ection 1:8 shall, so far as practicable, apply to the securities deposited under this section. 6+cept as otherwise pro)ided in this &ode, no 4ud*ment creditor or other claimant shall ha)e the ri*ht to le)y upon any of the securities of the insurer held on deposit under this section or held on deposit pursuant to the re,uirement of the &ommissioner. !ection 21;. /fter satisfyin* the re,uirements contained in the precedin* section, any domestic non= life insurance company, shall in)est, to an amount prescribed below, its funds in, or otherwise, ac,uire or loan upon, only the classes of in)estments described in !ection 2;6, includin* securities issued by any re*istered enterprise, as this term is defined in 6+ecuti)e <rder No. 226, otherwise #nown as $"he <mnibus %n)estments &ode of 1:87K and such other classes of in)estments as may be authori2ed by the &ommissioner for purposes of this section: Provided, "hat: -a. No more than twenty percent -2;C. of the net worth of such company as shown by its latest financial statement appro)ed by the &ommissioner shall be in)ested in the lot and buildin* in which the insurance company conducts its business0 and -b. "he total in)estment of an insurance company in any re*istered enterprise shall not e+ceed twenty percent -2;C. of the net worth of said insurance company as shown by its aforesaid financial statement nor twenty percent -2;C. of the paid=up capital of the re*istered enterprise e+cludin* the intended in)estment, unless pre)iously authori2ed by the &ommissioner: Provided, further, "hat such in)estments, free from any lien or encumbrance, shall be at least e,ual in amount to the a**re*ate amount of: -1. its le*al reser)e, as pro)ided in !ection 21:, and -2. its reser)e fund held for reinsurance as pro)ided for in the pertinent treaty pro)ision in the case of reinsurance ceded to authori2ed insurers. !ection 211. /fter satisfyin* the re,uirements contained in !ections 1:7, 1::, 2;: and 21;, any non=life insurance company may in)est any portion of its funds representin* earned surplus in any of the in)estments described in !ections 2;3, 2;6 and 2;7, or in any securities issued by a re*istered enterprise mentioned in the precedin* sections: Provided, "hat no in)estment in stoc#s or bonds of any sin*le entity shall in the a**re*ate, e+ceed twenty percent -2;C. of the net worth of the insurance company as shown in its latest financial statement appro)ed by the &ommissioner or twenty percent -2;C. of the paid=up capital of the issuin* company, whiche)er is lesser, unless otherwise appro)ed by the &ommissioner. !ection 212. /fter satisfyin* the minimum capital in)estment re,uired in !ection 2;:, any life insurance company may in)est its le*al policy reser)e, as pro)ided in !ection 217 or in !ection 218,

in any of the classes of securities or types of in)estments described in !ections 2;3, 2;6, 2;7 and 2;8, sub4ect to the limitations therein contained, and in any securities issued by any re*istered enterprise mentioned in !ection 21;, free from any lien or encumbrance, in such amounts as may be appro)ed by the &ommissioner. !uch company may li#ewise in)est any portion of its earned surplus in the aforesaid securities or in)estments sub4ect to the aforesaid limitations. !ection 211. /ny in)estment made in )iolation of the applicable pro)isions of this title shall be considered non=admitted assets. !ection 213. -a. /ll bonds or other instruments of indebtedness ha)in* a fi+ed term and rate of interest and held by any life insurance company authori2ed to do business in this country, if amply secured and if not in default as to principal or interest, shall be )alued based on their amorti2ed cost usin* effecti)e interest method less impairment and unreco)erable amount based on appropriate measurement methods which are *enerally accepted in the industry and accepted by the &ommissioner. "he &ommissioner shall ha)e the power to determine the eli*ibility of any such in)estments for )aluation on the basis of amorti2ation, and may by re*ulation prescribe or limit the classes of securities so eli*ible for amorti2ation. /ll bonds or other instruments of indebtedness which in the 4ud*ment of the &ommissioner are not amply secured shall not be eli*ible for amorti2ation and shall be )alued in accordance with para*raph two. "he &ommissioner may, if he finds that the interest of policyholders so permit or re,uire, by official re*ulation permit or re,uire any class or classes of insurers, other than life insurance companies authori2ed to do business in this country, to )alue their bonds or other instruments of indebtedness in accordance with the fore*oin* rule. -b. "he in)estments of all insurers authori2ed to do business in this country, e+cept securities sub4ect to amorti2ation and e+cept as otherwise pro)ided in this chapter, shall be )alued, in the discretion of the &ommissioner, at their amorti2ed cost usin* effecti)e interest method less impairment and unreco)erable amount or at )aluation representin* their fair mar#et )alue. %f the &ommissioner finds that in )iew of the character of in)estments of any insurer authori2ed to do business in this country it would be prudent for such insurer to establish a special reser)e for possible losses or fluctuations in the )alues of its in)estments, he may re,uire such insurer to establish such reser)e, reasonable in amount, and include a report thereon in any statement or report of the financial condition of such insurer. "he &ommissioner may, in connection with any e+amination or re,uired financial statement of an authori2ed insurer, re,uire such insurer to furnish him complete financial statements and audited report of the financial condition of any corporation of which the securities are owned wholly or partly by such insurer and may cause an e+amination to be made of any subsidiary or affiliate of such insurer as appropriate to specific in)estments as pro)ided in appropriate circulars issued by the &ommissioner. -c. %n)estments in e,uity of an insurance company shall be )alued as follows: -1. Disted stoc#s shall be )alued at mar#et )alue and periodically ad4usted to reflect mar#et chan*es throu*h a special )aluation account to reflect their reali2able )alue when sold0 -2. 9nlisted stoc#s shall be )alued at ad4usted boo# )alue based on the latest un,ualified audited financial statements of the company which issued such stoc#s0 and

-1. !toc#s of a corporation under the control of the insurer shall be )alued usin* the e,uity method which is the cost plus or minus the share of the controllin* company in the earnin*s or losses of the controlled company after ac,uisition of such stoc#s. -d. "he stoc# of an insurance company shall be )alued at the lesser of its mar#et )alue or its boo# )alue as shown by its last appro)ed audited financial statement or the last report on e+amination, whiche)er is more recent. "he boo# )alue of a share of common stoc# of an insurance company shall be ascertained by di)idin* -1. the amount of its capital and surplus less the )alue of all of its preferred stoc#, if any, outstandin*, by -2. the number of shares of its common stoc# issued and outstandin*. Notwithstandin* the fore*oin* pro)isions, an insurer may, at its option, )alue its holdin*s of stoc# in a subsidiary insurance company in an amount not less than ac,uisition cost if such ac,uisition cost is less than the )alue determined as hereinbefore pro)ided. -e. Real estate ac,uired by foreclosure or by deed in lieu thereof, in the absence of a recent appraisal deemed by the &ommissioner to be reliable, shall not be )alued at an amount *reater than the unpaid principal of the defaulted loan at the date of such foreclosure or deed, to*ether with any ta+es and e+penses paid or incurred by such insurer at such time in connection with such ac,uisition, and the cost of additions or impro)ements thereafter paid by such insurer and any amount or amounts thereafter paid by such insurer or any assessments le)ied for impro)ements in connection with the property. -f. Purchase money mort*a*es recei)ed on dispositions of real property held pursuant to !ection 2;8 shall be )alued in an amount e,ui)alent to ninety percent -:;C. of the )alue of such real property. Purchase money mort*a*es recei)ed on disposition of real property otherwise held shall be )alued in an amount not e+ceedin* ninety percent -:;C. of the )alue of such real property as determined by an appraisal made by an appraiser at or about the time of disposition of such real property. -*. "he stoc# of a subsidiary of an insurer shall be )alued on the basis of the *reater of: -1. "he )alue of only such of the assets of such subsidiary as would constitute lawful in)estments for the insurer if ac,uired or held directly by the insurer0 or -2. !uch other )alue determined pursuant to standards and cumulati)e limitations, contained in a re*ulation to be promul*ated by the &ommissioner. -h. Notwithstandin* any pro)ision contained in this section or elsewhere in this chapter, if the &ommissioner finds that the interests of policyholders so permit or re,uire, he may permit or re,uire any class or classes of insurers authori2ed to do business in this country to )alue their in)estments or any class or classes thereof as of any date heretofore or hereafter in accordance with any applicable )aluation or method. !ection 215. %t shall be the duty of the officers of the insurance company to report within the first fifteen -15. days of e)ery month all such in)estments as may be made by them durin* the precedin* month, and the &ommissioner may, if such in)estments or any of them seem in4udicious to him,

re,uire the sale or disposal of the same. "he report shall also include a list of in)estments sold or disposed of by the company durin* the same period. ,TITLE / ,RESER2ES !ection 216. 6)ery life insurance company, doin* business in the Philippines, shall annually ma#e a )aluation of all policies, additions thereto, unpaid di)idends, and all other obli*ations outstandin* on the thirty=first day of December of the precedin* year. /ll such )aluations shall be made accordin* to the standard adopted by the company, as prescribed by the &ommissioner in accordance with internationally accepted actuarial standards, which standard shall be stated in its annual report. !uch standard of )aluations shall be accordin* to a standard table of mortality with interest to be determined by the %nsurance &ommissioner. (hen the preliminary term basis is used, the term insurance shall be limited to the first policy year. "he results of such )aluations shall be reported to the &ommissioner on or before the thirtieth day of /pril of each year accompanied by a sworn statement of a desi*nated company officer and statin* the methods and assumptions used in arri)in* at the )alues reported. !ection 217. "he a**re*ate net )alue so ascertained of the policies of such company shall be deemed its reser)e liability, to pro)ide for which it shall hold funds in secure in)estments e,ual to such net )alue, abo)e all its other liabilities0 and it shall be the duty of the &ommissioner, after ha)in* )erified, to such an e+tent as he may deem necessary, the )aluation of all policies in force, to satisfy himself that the company has such amount in safe le*al securities after all other debts and claims a*ainst it ha)e been pro)ided for. "he reser)e liability for )ariable contracts defined in !ection 218 shall be established in accordance with actuarial procedures that reco*ni2e the )ariable nature of the benefits pro)ided, and shall be appro)ed by the &ommissioner. !ection 218. 6)ery life insurance company, conducted on the mutual plan or a plan in which policyholders are by the terms of their policies entitled to share in the profits or surplus shall, on all policies of life insurance heretofore or hereafter issued, under the conditions of which the distribution of surplus is deferred to a fi+ed or specified time and contin*ent upon the policy bein* in force and the insured li)in* at that time, annually ascertain the amount of the surplus to which all such policies as a separate class are entitled, and shall annually apportion to such policies as a class the amount of the surplus so ascertained, and carry the amount of such apportioned surplus, plus the actual interest earnin*s and accretions to such fund, as a distinct and separate liability to such class of policies on and for which the same was accumulated, and no company or any of its officers shall be permitted to use any part of such apportioned surplus fund for any purpose whatsoe)er other than for the e+press purpose for which the same was accumulated. !ection 21:. 6)ery insurance company, other than life, shall maintain a reser)e for unearned premiums on its policies in force, which shall be char*ed as a liability in any determination of its financial condition. !uch reser)e shall be calculated based on the twenty=fourth -23 th. method.

!ection 22;. %n addition to its liabilities and reser)es on contracts of insurance issued by it, e)ery insurance company shall be char*ed with the estimated amount of all of its other liabilities, includin* ta+es, e+penses and other obli*ations due or accrued at the date of statement, and includin* any special reser)es re,uired by the &ommissioner pursuant to the pro)isions of this &ode. TITLE # ,LI(IT OF SINGLE RIS+ !ection 221. No insurance company other than life, whether forei*n or domestic, shall retain any ris# on any one sub4ect of insurance in an amount e+ceedin* twenty percent -2;C. of its net worth. >or purposes of this section, the term sub*ect of insurance shall include all properties or ris#s insured by the same insurer that customarily are considered by non=life company underwriters to be sub4ect to loss or dama*e from the same occurrence of any ha2ard insured a*ainst. "he &ommissioner may issue re*ulations pro)idin* for a ma+imum limit on the o)erall retained ris#s of insurers to ser)e as a catastrophe co)er re,uirement for the same. Reinsurance ceded as authori2ed under the succeedin* title shall be deducted in determinin* the ris# retained. /s to surety ris#, deduction shall also be made of the amount assumed by any other company authori2ed to transact surety business and the )alue of any security mort*a*ed, pled*ed, or held sub4ect to the surety's control and for the surety's protection. ,TITLE $ ,REINSURANCE TRANSACTIONS !ection 222. /n insurance company doin* business in the Philippines may accept reinsurances only of such ris#s, and retain ris# thereon within such limits, as it is otherwise authori2ed to insure. !ection 221. No insurance company doin* business in the Philippines shall cede all or part of any ris#s situated in the Philippines by way of reinsurance directly to any forei*n insurer not authori2ed to do business in the Philippines unless such forei*n insurer or, if the ser)ices of a nonresident bro#er are utili2ed, such nonresident bro#er is represented in the Philippines by a resident a*ent duly re*istered with the &ommissioner as re,uired in this &ode. "he resident a*ent of such unauthori2ed forei*n insurer or nonresident bro#er shall immediately upon re*istration furnish the &ommissioner with the annual statement of such insurer, or of such company or companies where such bro#er may place Philippine business as of the year precedin* such re*istration, and annually thereafter as soon as a)ailable. !ection 223. /ll insurance companies, both life and non=life, authori2ed to do business in the Philippines shall cede their e+cess ris#s to other companies similarly authori2ed to do business in the Philippines in such amounts and under such arran*ements as would be consistent with sound underwritin* practices before they enter into reinsurance arran*ements with unauthori2ed forei*n insurers.

!ection 225. /ny insurance company doin* business in the Philippines desirin* to cede their e+cess ris#s to forei*n insurance or reinsurance companies not authori2ed to transact business in the Philippines may do so under such terms and conditions which the &ommissioner may prescribe. !hould any reinsurance a*reement be for any reason cancelled or terminated, the cedin* company concerned shall inform the &ommissioner in writin* of such cancellation or termination within thirty -1;. days from the date of such cancellation or termination or from the date notice or information of such cancellation or termination is recei)ed by such company as the case may be. !ection 226. 6)ery insurance company authori2ed to do business in the Philippines shall report to the &ommissioner on forms prescribed by him the particulars of reinsurance treaties or any new treaties or chan*es in e+istin* treaties within three -1. months from their effecti)ity. !ection 227. No credit shall be allowed as an admitted asset or as a deduction from liability, to any cedin* insurer for reinsurance made, ceded, renewed, or otherwise becomin* effecti)e after Eanuary 1, 1:75, unless the reinsurance shall be payable by the assumin* insurer on the basis of the liability of the cedin* insurer under the contract or contracts reinsured without diminution because of the insol)ency of the cedin* insurer nor unless under the contract or contracts of reinsurance the liability for such reinsurance is assumed by the assumin* insurer or insurers as of the same effecti)e date0 nor unless the reinsurance a*reement pro)ides that payments by the assumin* insurer shall be made directly to the cedin* insurer or to its li,uidator, recei)er, or statutory successor e+cept: -a. (here the contract specifically pro)ides another payee of such reinsurance in the e)ent of the insol)ency of the cedin* insurer0 and -b. (here the assumin* insurer with the consent of the direct insured or insureds has assumed such policy obli*ations of the cedin* insurer as direct obli*ations of the assumin* insurer to the payees under such policies and in substitution for the obli*ations of the cedin* insurer to such payees. !ection 228. No life insurance company doin* business in the Philippines shall reinsure its whole ris# on any indi)idual life or 4oint li)es, or substantially all of its insurance in force, without ha)in* first obtained the written permission of the &ommissioner. ,TITLE ,ANNUAL STATE(ENT !ection 22:. 6)ery insurance company doin* business in the Philippines shall terminate its fiscal period on the thirty=first day of December e)ery year, and shall annually on or before the thirtieth day of /pril of each year render to the &ommissioner a statement si*ned and sworn to by the chief officer of such company showin*, in such form and details as may be prescribed by the &ommissioner, the e+act condition of its affairs on the precedin* thirty=first day of December. "he annual statement shall be prepared in accordance with the financial reportin* framewor# as determined by the &ommissioner. %n addition, the &ommissioner may re,uire other rele)ant

information. "he form and details of such other rele)ant information shall be prescribed by the &ommissioner and shall form part of the supplementary schedules to the annual statement. /ny entry in the statement which is found to be false shall constitute a misdemeanor and the officer si*nin* such statement shall be sub4ect to the penalty pro)ided for under !ection 332. !ection 21;. 6)ery insurance company authori2ed under "itle 1; of this chapter to issue, deli)er or use )ariable contracts shall annually file with the &ommissioner separate annual statement of its separate )ariable accounts. !uch statement shall be on a form prescribed or appro)ed by the &ommissioner and shall include details as to all of the income, disbursements, assets and liability items of and associated with the said separate )ariable accounts. !aid statement shall be under oath of two -2. officers of the company and shall be filed simultaneously with the annual statement re,uired by the precedin* section. !ection 211. (ithin thirty -1;. days after receipt of the annual statement appro)ed by the &ommissioner, e)ery insurance company doin* business in the Philippines shall publish in a newspaper of *eneral circulation, a full synopsis of its annual financial statement showin* fully the conditions of its business, and settin* forth its resources and liabilities in accordance with such form prescribed by the &ommissioner. "he &ommissioner shall ha)e the authority to ma#e, amend, and rescind such accountin* rules and re*ulations as may be necessary to carry out the pro)isions of this &ode, and define accountin*, technical and trade terms used in this &ode: Provided, "hat such shall be in accordance with internationally accepted accountin* standards. /mon* other thin*s, the &ommissioner may prescribe the form or forms in which re,uired information shall be set forth, the items or details to be shown in the balance sheet and income statement, and the methods to be followed in the preparation of accounts, appraisal or )aluation of assets and liabilities, determination of recurrin* and nonrecurrin* income, differentiation of in)estment and operatin* income, and in the preparation, where the &ommissioner deems it necessary or desirable, of consolidated balance sheets or income accounts of any person directly or indirectly controllin* or controlled by the insurance company. ,TITLE 0 ,POLIC& FOR(S !ection 212. No policy, certificate or contract of insurance shall be issued or deli)ered within the Philippines unless in the form pre)iously appro)ed by the &ommissioner, and no application form shall be used with, and no rider, clause, warranty or endorsement shall be attached to, printed or stamped upon such policy, certificate or contract unless the form of such application, rider, clause, warranty or endorsement has been appro)ed by the &ommissioner. !ection 211. %n the case of indi)idual life or endowment insurance, the policy shall contain in substance the followin* conditions: -a. / pro)ision that the policyholder is entitled to a *race period either of thirty -1;. days or of one -1. month within which the payment of any premium after the first may be made, sub4ect at the option of the insurer to an interest char*e not in e+cess of si+ percent -6C. per annum for

the number of days of *race elapsin* before the payment of the premium, durin* which period of *race the policy shall continue in full force, but in case the policy becomes a claim durin* the said period of *race before the o)erdue premium is paid, the amount of such premium with interest may be deducted from the amount payable under the policy in settlement0 -b. / pro)ision that the policy shall be incontestable after it shall ha)e been in force durin* the lifetime of the insured for a period of two -2. years from its date of issue as shown in the policy, or date of appro)al of last reinstatement, e+cept for nonpayment of premium and e+cept for )iolation of the conditions of the policy relatin* to military or na)al ser)ice in time of war0 -c. / pro)ision that the policy shall constitute the entire contract between the parties, but if the company desires to ma#e the application a part of the contract it may do so pro)ided a copy of such application shall be indorsed upon or attached to the policy when issued, and in such case the policy shall contain a pro)ision that the policy and the application therefor shall constitute the entire contract between the parties0 -d. / pro)ision that if the a*e of the insured is considered in determinin* the premium and the benefits accruin* under the policy, and the a*e of the insured has been misstated, the amount payable under the policy shall be such as the premium would ha)e purchased at the correct a*e0 -e. %f the policy is participatin*, a pro)ision that the company shall periodically ascertain and apportion any di)isible surplus accruin* on the policy under conditions specified therein0 -f. / pro)ision specifyin* the options to which the policyholder is entitled to in the e)ent of default in a premium payment after three -1. full annual premiums shall ha)e been paid. !uch option shall consist of: -1. / cash surrender )alue payable upon surrender of the policy which shall not be less than the reser)e on the policy, the basis of which shall be indicated, for the then current policy year and any di)idend additions thereto, reduced by a surrender char*e which shall not be more than one=fifth -1B5. of the entire reser)e or two and one=half percent -2JC. of the amount insured and any di)idend additions thereto0 and -2. <ne or more paid=up benefits on a plan or plans specified in the policy of such )alue as may be purchased by the cash surrender )alue. -*. / pro)ision that at any time after a cash surrender )alue is a)ailable under the policy and while the policy is in force, the company will ad)ance, on proper assi*nment or pled*e of the policy and on sole security thereof, a sum e,ual to, or at the option of the owner of the policy, less than the cash surrender )alue on the policy, at a specified rate of interest, not more than the ma+imum allowed by law, to be determined by the company from time to time, but not more often than once a year, sub4ect to the appro)al of the &ommissioner0 and that the company will deduct from such loan )alue any e+istin* indebtedness on the policy and any unpaid balance of the premium for the current policy year, and may collect interest in ad)ance

on the loan to the end of the current policy year, which pro)ision may further pro)ide that such loan may be deferred for not e+ceedin* si+ -6. months after the application therefor is made0 -h. / table showin* in fi*ures cash surrender )alues and paid=up options a)ailable under the policy each year upon default in premium payments, durin* at least twenty -2;. years of the policy be*innin* with the year in which the )alues and options first become a)ailable, to*ether with a pro)ision that in the e)ent of the failure of the policyholder to elect one of the said options within the time specified in the policy, one of said options shall automatically ta#e effect and no policyholder shall e)er forfeit his ri*ht to same by reason of his failure to so elect0 -i. %n case the proceeds of a policy are payable in installments or as an annuity, a table showin* the minimum amounts of the installments or annuity payments0 -4. / pro)ision that the policyholder shall be entitled to ha)e the policy reinstated at any time within three -1. years from the date of default of premium payment unless the cash surrender )alue has been duly paid, or the e+tension period has e+pired, upon production of e)idence of insurability satisfactory to the company and upon payment of all o)erdue premiums and any indebtedness to the company upon said policy, with interest rate not e+ceedin* that which would ha)e been applicable to said premiums and indebtedness in the policy years prior to reinstatement. /ny of the fore*oin* pro)isions or portions thereof not applicable to sin*le premium or term policies shall to that e+tent not be incorporated therein0 and any such policy may be issued and deli)ered in the Philippines which in the opinion of the &ommissioner contains pro)isions on any one or more of the fore*oin* re,uirements more fa)orable to the policyholder than hereinbefore re,uired. "his section shall not apply to policies of *roup life or industrial life insurance. !ection 213. No policy of *roup life insurance shall be issued and deli)ered in the Philippines unless it contains in substance the followin* pro)isions, or pro)isions which in the opinion of the &ommissioner are more fa)orable to the persons insured, or at least as fa)orable to the persons insured and more fa)orable to the policyholders: -a. / pro)ision that the policyholder is entitled to a *race period of either thirty -1;. days or of one -1. month for the payment of any premium due after the first, durin* which *race period the death benefit co)era*e shall continue in force, unless the policyholder shall ha)e *i)en the insurer written notice of discontinuance in ad)ance of the date of discontinuance and in accordance with the terms of the policy. "he policy may pro)ide that the policyholder shall be liable for the payment of a pro rata premium for the time the policy is in force durin* such *race period0 -b. / pro)ision that the )alidity of the policy shall not be contested, e+cept for nonpayment of premiums after it has been in force for two -2. years from its date of issue0 and that no statement made by any insured under the policy relatin* to his insurability shall be used in contestin* the )alidity of the insurance with respect to which such statement was made after

such insurance has been in force prior to the contest for a period of two -2. years durin* such person's lifetime nor unless contained in a written instrument si*ned by him0 -c. / pro)ision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by persons insured shall be deemed representations and not warranties, and that no statement made by any insured shall be used in any contest unless a copy of the instrument containin* the statement is or has been furnished to such person or to his beneficiary0 -d. / pro)ision settin* forth the conditions, if any, under which the insurer reser)es the ri*ht to re,uire a person eli*ible for insurance to furnish e)idence of indi)idual insurability satisfactory to the insurer as a condition to part or all of his co)era*e0 -e. / pro)ision specifyin* an e,uitable ad4ustment of premiums or of benefits or of both to be made in the e)ent that the a*e of a person insured has been misstated, such pro)ision to contain a clear statement of the method of ad4ustment to be used0 -f. / pro)ision that any sum becomin* due by reason of death of the person insured shall be payable to the beneficiary desi*nated by the insured, sub4ect to the pro)isions of the policy in the e)ent that there is no desi*nated beneficiary, as to all or any part of such sum, li)in* at the death of the insured, and sub4ect to any ri*ht reser)ed by the insurer in the policy and set forth in the certificate to pay at its option a part of such sum not e+ceedin* >i)e hundred pesos -P5;;.;;. to any person appearin* to the insurer to be e,uitably entitled thereto by reason of ha)in* incurred funeral or other e+penses incident to the last illness or, death of the person insured0 -*. / pro)ision that the insurer will issue to the policyholder for deli)ery to each person insured a statement as to the insurance protection to which he is entitled, to whom the insurance benefits are payable, and the ri*hts set forth in para*raphs -h., -i. and -4. followin*0 -h. / pro)ision that if the insurance, or any portion of it, on a person co)ered under the policy ceases because of termination of employment or of membership in the class or classes eli*ible for co)era*e under the policy, such person shall be entitled to ha)e issued to him by the insurer, without e)idence of insurability, an indi)idual policy of life insurance without disability or other supplementary benefits, pro)ided application for the indi)idual policy and payment of the first premium to the insurer shall be made within thirty -1;. days after such termination, and pro)ided further that: -1. "he indi)idual policy shall be on any one of the forms, e+cept term insurance, then customarily issued by the insurer at the a*e and for an amount not in e+cess of the co)era*e under the *roup policy0 and -2. "he premium on the indi)idual policy shall be at the insurer's then customary rate applicable to the form and amount of the indi)idual policy, to the class of ris# to which such person then belon*s, and to his a*e attained on the effecti)e date of the indi)idual policy.

-i. / pro)ision that if the *roup policy terminates or is amended so as to terminate the insurance of any class of insured persons, e)ery person insured thereunder at the date of such termination whose insurance terminates and who has been so insured for fi)e -5. years prior to such termination date shall be entitled to ha)e issued to him by the insurer an indi)idual policy of life insurance sub4ect to the same limitations as set forth in para*raph -h., e+cept that the *roup policy may pro)ide that the amount of such indi)idual policy shall not e+ceed the amount of the person's life insurance protection ceasin*0 -4. / pro)ision that if a person insured under the *roup policy dies durin* the thirty -1;.=day period within which he would ha)e been entitled to an indi)idual policy issued to him in accordance with para*raphs -h. and -i. abo)e and before such indi)idual policy shall ha)e become effecti)e, the amount of life insurance which he would ha)e been entitled to ha)e issued to him as an indi)idual policy shall be payable as a claim under the *roup policy whether or not application for the indi)idual policy or the payment of the first premium has been made0 -#. %n the case of a policy issued to a creditor to insure debtors of such creditor, a pro)ision that the insurer will furnish to the policyholder for deli)ery to each debtor insured under the policy a form which will contain a statement that the life of the debtor is insured under the policy and that any death benefit paid thereunder by reason of his death shall be applied to reduce or e+tin*uish indebtedness. "he pro)isions of para*raphs -f. to -4. shall not apply to policies issued to a creditor to insure his debtors. %f a *roup life policy is on a plan of insurance other than term, it shall contain a non=forfeiture pro)ision or pro)isions which in the opinion of the &ommissioner is or are e,uitable to the insured or the policyholder: Provided, "hat nothin* herein contained shall be so construed as to re,uire *roup life policies to contain the same non=forfeiture pro)isions as are re,uired of indi)idual life policies. !ection 215. "he term industrial life insurance as used in this &ode shall mean that form of life insurance under which the premiums are payable either monthly or oftener, if the face amount of insurance pro)ided in any policy is not more than fi)e hundred times that of the current statutory minimum daily wa*e in the &ity of Manila, and if the words industrial policy are printed upon the policy as part of the descripti)e matter. /n industrial life policy shall not lapse for nonpayment of premium if such nonpayment was due to the failure of the company to send its representati)e or a*ent to the insured at the residence of the insured or at some other place indicated by him for the purpose of collectin* such premium: Provided, "hat the pro)isions of this para*raph shall not apply when the premium on the policy remains unpaid for a period of three -1. months or twel)e -12. wee#s after the *race period has e+pired. !ection 216. %n the case of industrial life insurance, the policy shall contain in substance the followin* pro)isions: -a. / pro)ision that the insured is entitled to a *race period of four -3. wee#s within which the payment of any premium after the first may be made, e+cept that where premiums are payable monthly, the period of *race shall be either one -1. month or thirty -1;. days0 and that durin*

the period of *race, the policy shall continue in full force, but if durin* such *race period the policy becomes a claim, then any o)erdue and unpaid premiums may be deducted from any amount payable under the policy in settlement0 -b. / pro)ision that the policy shall be incontestable after it has been in force durin* the lifetime of the insured for a specified period, not more than two -2. years from its date of issue, e+cept for nonpayment of premiums and e+cept for )iolation of the conditions of the policy relatin* to na)al or military ser)ice, or ser)ices au+iliary thereto, and e+cept as to pro)isions relatin* to benefits in the e)ent of disability as defined in the policy, and those *rantin* additional insurance specifically a*ainst death by accident or by accidental means, or to additional insurance a*ainst loss of, or loss of use of, specific members of the body0 -c. / pro)ision that the policy shall constitute the entire contract between the parties, or if a copy of the application is endorsed upon and attached to the policy when issued, a pro)ision that the policy and the application therefor shall constitute the entire contract between the parties, and in the latter case, a pro)ision that all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties0 -d. / pro)ision that if the a*e of the person insured, or the a*e of any person, considered in determinin* the premium, or the benefits accruin* under the policy, has been misstated, any amount payable or benefit accruin* under the policy shall be such as the premium paid would ha)e purchased at the correct a*e0 -e. / pro)ision that if the policy is a participatin* policy, the company shall periodically ascertain and apportion any di)isible surplus accruin* on the policy under the conditions specified therein0 -f. / pro)ision that in the e)ent of default in premium payments after three -1. full years' premiums ha)e been paid, the policy shall be con)erted into a stipulated form of insurance, and that in the e)ent of default in premium payments after fi)e -5. full years' premiums ha)e been paid, a specified cash surrender )alue shall be a)ailable, in lieu of the stipulated form of insurance, at the option of the policyholder. "he net )alue of such stipulated form of insurance and the amount of such cash )alue shall not be less than the reser)e on the policy and di)idend additions thereto, if any, at the end of the last completed policy year for which premiums shall ha)e been paid -the policy to specify the mortality table, rate of interest and method of )aluation adopted to compute such reser)e., e+clusi)e of any reser)e on disability benefits and accidental death benefits, less an amount not to e+ceed two and one=half percent -2JC. of the ma+imum amount insured by the policy and di)idend additions thereto, if any, when the issue a*e is under ten -1;. years, and less an amount not to e+ceed two and one= half percent -2JC. of the current amount insured by the policy and di)idend additions thereto, if any, if the issue a*e is ten -1;. years or older, and less any e+istin* indebtedness to the company on or secured by the policy0 -*. / pro)ision that the policy may be surrendered to the company at its home office within a period of not less than si+ty -6;. days after the due date of a premium in default for the

specified cash )alue: Provided, "hat the insurer may defer payment for not more than si+ -6. months after the application therefor is made0 -h. / table that shows in fi*ures the nonforfeiture benefits a)ailable under the policy e)ery year upon default in payment of premiums durin* at least the first twenty -2;. years of the policy, such table to be*in with the year in which such )alues become a)ailable, and a pro)ision that the company will furnish upon re,uest an e+tension of such table beyond the year shown in the policy0 -i. / pro)ision that specifies which one of the stipulated forms of insurance pro)ided for under the pro)ision of para*raph -f. of this section shall ta#e effect in the e)ent of the insured's failure, within si+ty -6;. days from the due date of the premium in default, to notify the insurer in writin* as to which one of such forms he has selected0 -4. / pro)ision that the policy may be reinstated at any time within two -2. years from the due date of the premium in default unless the cash surrender )alue has been paid or the period of e+tended term insurance e+pired, upon production of e)idence of insurability satisfactory to the company and payment of arrears of premiums with interest at a rate not e+ceedin* si+ percent -6C. per annum payable annually0 -#. / pro)ision that when a policy shall become a claim by death of the insured, settlement shall be made upon receipt of due proof of death, or not later than two -2. months after receipt of such proof0 -l. / title on the face and on the bac# of the policy correctly describin* its form0 -m. / space on the front or the bac# of the policy for the name of the beneficiary desi*nated by the insured with a reser)ation of the insured's ri*ht to desi*nate or chan*e the beneficiary after the issuance of the policy. "he policy may also pro)ide that no desi*nation or chan*e of beneficiary shall be bindin* on the insurer until endorsed on the policy by the insurer, and that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to ha)e an insurable interest in the life of the insured. !uch policy may also contain a pro)ision that if the beneficiary desi*nated in the policy does not surrender the policy with due proof of death within the period stated in the policy, which shall not be less than thirty -1;. days after the death of the insured, or if the beneficiary is the estate of the insured, or is a minor, or dies before the insured, or is not le*ally competent to *i)e )alid release, then the insurer may ma#e any payment thereunder to the e+ecutor or administrator of the insured, or to any of the insured's relati)es by blood or le*al adoption or connections by marria*e or to any person appearin* to the insurer to be e,uitably entitled thereto by reason of ha)in* incurred e+pense for the maintenance, medical attention or burial of the insured0 and -n. / pro)ision that when an industrial life insurance policy is issued pro)idin* for accidental or health benefits, or both, in addition to life insurance, the fore*oin* pro)isions shall apply only to the life insurance portion of the policy.

/ny of the fore*oin* pro)isions or portions thereof not applicable to nonparticipatin* or term policies shall to that e+tent not be incorporated therein. "he fore*oin* pro)isions shall not apply to policies issued or *ranted pursuant to the nonforfeiture pro)isions prescribed in pro)isions of para*raphs -f. and -i. of this section, nor shall pro)isions of para*raphs -f., -*., -h., and -i. hereof be re,uired in term insurance of twenty -2;. years or less but such term policies shall specify the mortality table, rate of interest, and method of computin* reser)es. !ection 217. No policy of industrial life insurance shall be issued or deli)ered in the Philippines if it contains any of the followin* pro)isions: -a. / pro)ision that *i)es the insurer the ri*ht to declare the policy )oid because the insured has had any disease or ailment, whether specified or not, or because the insured has recei)ed institutional, hospital, medical or sur*ical treatment or attention, e+cept a pro)ision which *i)es the insurer the ri*ht to declare the policy )oid if the insured has, within two -2. years prior to the issuance of the policy, recei)ed institutional, hospital, medical or sur*ical treatment or attention and if the insured or the claimant under the policy fails to show that the condition occasionin* such treatment or attention was not of a serious nature or was not material to the ris#0 -b. / pro)ision that *i)es the insurer the ri*ht to declare the policy )oid because the insured has been re4ected for insurance, unless such ri*ht be conditioned upon a showin* by the insurer that #nowled*e of such re4ection would ha)e led to a refusal by the insurer to ma#e such contract0 -c. / pro)ision that allows the company to pay the proceeds of the policy at the death of the insured to any person other than the named beneficiary, e+cept in accordance with a standard pro)ision as specified under the pro)isions of para*raph -m. of the precedin* section0 -d. / pro)ision that limits the time within which any action at law or in e,uity may be commenced to less than si+ -6. years after the cause of action shall accrue0 and -e. / pro)ision that specifies any mode of settlement at maturity of less )alue than the amount insured by the policy plus di)idend additions, if any, less any indebtedness to the company on the policy and less any premium that may by the terms of the policy be deducted, payments to be made in accordance with the terms of the policy. Nothin* contained in this section nor in the pro)ision of para*raph -b. of the precedin* section, relatin* to incontestability, shall be construed as prohibitin* the life insurance company from placin* in its industrial life policies pro)isions limitin* its liability with respect to: -1. Death resultin* from a)iation other than as a fare=payin* passen*er on a re*ularly scheduled route between definitely established airports0 and -2. Military or na)al ser)ice: Provided, "hat if the liability of the company is limited as herein pro)ided, such liability shall in no e)ent be fi+ed at an amount less than the reser)e on the policy -e+cludin* the reser)e for any additional benefits in the e)ent of death by accident or

accidental means or for benefits in the e)ent of any type of disability., less any indebtedness on or secured by such policy0 nor shall any pro)ision of this section apply to any pro)ision in an industrial life insurance policy for additional benefits in the e)ent of death by accident or accidental means. ,TITLE !" ,2ARIABLE CONTRACTS !ection 218. -a. No insurance company authori2ed to transact business in the Philippines shall issue, deli)er, sell or use any )ariable contract in the Philippines, unless and until such company shall ha)e satisfied the &ommissioner that its financial and *eneral condition and its methods of operations, includin* the issue and sale of )ariable contracts, are not and will not be ha2ardous to the public or to its policy and contract owners. No forei*n insurance company shall be authori2ed to issue, deli)er or sell any )ariable contract in the Philippines, unless it is li#ewise authori2ed to do so by the laws of its domicile. -b. "he term variable contract shall mean any policy or contract on either a *roup or on an indi)idual basis issued by an insurance company pro)idin* for benefits or other contractual payments or )alues thereunder to )ary so as to reflect in)estment results of any se*re*ated portfolio of in)estments or of a desi*nated separate account in which amounts recei)ed in connection with such contracts shall ha)e been placed and accounted for separately and apart from other in)estments and accounts. "his contract may also pro)ide benefits or )alues incidental thereto payable in fi+ed or )ariable amounts, or both. %t shall not be deemed to be a security or securities as defined in "he !ecurities /ct, as amended, or in the %n)estment &ompany /ct, as amended, nor sub4ect to re*ulations under said /cts. -c. %n determinin* the ,ualifications of a company re,uestin* authority to issue, deli)er, sell or use )ariable contracts, the &ommissioner shall always consider the followin*: -1. "he history, financial and *eneral condition of the company: Provided, "hat such company, if a forei*n company, must ha)e deposited with the &ommissioner for the benefit and security of its )ariable contract owners in the Philippines, securities satisfactory to the &ommissioner consistin* of bonds of the Go)ernment of the Philippines or its instrumentalities with an actual mar#et )alue of "wo million pesos -P2,;;;,;;;.;;.0 -2. "he character, responsibility and fitness of the officers and directors of the company0 and -1. "he law and re*ulation under which the company is authori2ed in the state of domicile to issue such contracts. -d. %f after notice and hearin*, the &ommissioner shall find that the company is ,ualified to issue, deli)er, sell or use )ariable contracts in accordance with this &ode and the re*ulations and rules issued thereunder, the correspondin* order of authori2ation shall be issued. /ny decision or order denyin* authority to issue, deli)er, sell or use )ariable contracts shall clearly and distinctly state the reasons and *rounds on which it is based.

!ection 21:. /ny insurance company issuin* )ariable contracts pursuant to this &ode may in its discretion issue contracts pro)idin* a combination of fi+ed amount and )ariable amount of benefits and for option lump=sum payment of benefits. !ection 23;. 6)ery )ariable contract form deli)ered or issued for deli)ery in the Philippines, and e)ery certified form e)idencin* )ariable benefits issued pursuant to any such contract on a *roup basis, and the application, rider and endorsement forms applicable thereto and used in connection therewith, shall be sub4ect to the prior appro)al of the &ommissioner. !ection 231. %llustration of benefits payable under any )ariable contract shall not include or in)ol)e pro4ections of past in)estment e+perience into the future and shall conform with the rules and re*ulations promul*ated by the &ommissioner. !ection 232. ?ariable contracts may be issued on the industrial life basis, pro)ided that the pertinent pro)isions of this &ode and of the rules and re*ulations of the &ommissioner *o)ernin* )ariable contracts are complied with in connection with such contracts. !ection 231. 6)ery life insurance company authori2ed under the pro)isions of this &ode to issue, deli)er, sell or use )ariable contracts shall, in connection with the same, establish one or more separate accounts to be #nown as separate )ariable accounts. /ll amounts recei)ed by the company in connection with any such contracts which are re,uired by the terms thereof, to be allocated or applied to one or more desi*nated separate )ariable accounts shall be placed in such desi*nated account or accounts. "he assets and liabilities of each such separate )ariable account shall at all times be clearly identifiable and distin*uishable from the assets and liabilities in all other accounts of the company. Notwithstandin* any pro)ision of law to the contrary, the assets held in any such separate )ariable account shall not be char*eable with liabilities arisin* out of any other business the company may conduct but shall be held and applied e+clusi)ely for the benefit of the owners or beneficiaries of the )ariable contracts applicable thereto. %n the e)ent of the insol)ency of the company, the assets of each such separate )ariable account shall be applied to the contractual claims of the owners or beneficiaries of the )ariable contracts applicable thereto. 6+cept as otherwise specifically pro)ided by the contract, no sale, e+chan*e or other transfer of assets may be made by a company, between any of its separate accounts or between any other in)estment account and one or more of its separate accounts, unless in the case of a transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made, or in case of a transfer from a separate account, such transfer would not cause the remainin* assets of the account to become less than the reser)es and other contract liabilities with respect to such separate account. !uch transfer, whether into or from a separate account, shall be made by a transfer of cash, or by a transfer of securities ha)in* a )aluation which could be readily determined in the mar#et place: Provided, "hat such transfer of securities is appro)ed by the &ommissioner. "he &ommissioner may authori2e other transfers amon* such accounts, if, in his opinion, such transfers would not be ine,uitable. /ll amounts and assets allocated to any such separate )ariable account shall be owned by the company and with respect to the same the company shall not be nor hold itself out to be a trustee. !ection 233. /ny insurance company which has established one or more separate )ariable accounts pursuant to the precedin* section may in)est and rein)est all or any part of the assets allocated to

any such account in the securities and in)estments authori2ed by !ections 2;3, 2;6, 2;7 and 2;8 for any of the funds of an insurance company in such amount or amounts as may be appro)ed by the &ommissioner. %n addition thereto, such company may also in)est in common stoc#s or other e,uities which are listed on or admitted to tradin* in a securities e+chan*e located in the Philippines, or which are publicly held and traded in the o)er=the=counter mar#et as defined by the &ommissioner and as to which mar#et ,uotations ha)e been a)ailable: Provided, however, "hat no such company shall in)est in e+cess of ten percent -1;C. of the assets of any such separate )ariable accounts in any one corporation issuin* such common stoc#. "he assets and in)estments of such separate )ariable accounts shall not be ta#en into account in applyin* the ,uantitati)e in)estment limitations applicable to other in)estments of the company. %n the purchase of common capital stoc# or other e,uities, the insurer shall desi*nate to the bro#er, or to the seller if the purchase is not made throu*h a bro#er, the specific )ariable account for which the in)estment is made. !ection 235. /ssets allocated to any separate )ariable account shall be )alued at their mar#et )alue on the date of any )aluation, or if there is no readily a)ailable mar#et )alue then in accordance with the terms of the )ariable contract applicable to such assets, or if there are no such contract terms then in such manner as may be prescribed by the rules and re*ulations of the &ommissioner. !ection 236. "he reser)e liability for )ariable contracts shall be established in accordance with actuarial procedures that reco*ni2e the )ariable nature of the benefits pro)ided, and shall be appro)ed by the &ommissioner. ,TITLE !! ,CLAI(S SETTLE(ENT !ection 237. -a. No insurance company doin* business in the Philippines shall refuse, without 4ust cause, to pay or settle claims arisin* under co)era*es pro)ided by its policies, nor shall any such company en*a*e in unfair claim settlement practices. /ny of the followin* acts by an insurance company, if committed without 4ust cause and performed with such fre,uency as to indicate a *eneral business practice, shall constitute unfair claim settlement practices: -1. Lnowin*ly misrepresentin* to claimants pertinent facts or policy pro)isions relatin* to co)era*e at issue0 -2. >ailin* to ac#nowled*e with reasonable promptness pertinent communications with respect to claims arisin* under its policies0 -1. >ailin* to adopt and implement reasonable standards for the prompt in)esti*ation of claims arisin* under its policies0 -3. Not attemptin* in *ood faith to effectuate prompt, fair and e,uitable settlement of claims submitted in which liability has become reasonably clear0 or -5. &ompellin* policyholders to institute suits to reco)er amounts due under its policies by offerin* without 4ustifiable reason substantially less than the amounts ultimately reco)ered in suits brou*ht by them.

-b. 6)idence as to numbers and types of )alid and 4ustifiable complaints to the &ommissioner a*ainst an insurance company, and the &ommissioner's complaint e+perience with other insurance companies writin* similar lines of insurance shall be admissible in e)idence in an administrati)e or 4udicial proceedin* brou*ht under this section. -c. %f it is found, after notice and an opportunity to be heard, that an insurance company has )iolated this section, each instance of noncompliance with para*raph -a. may be treated as a separate )iolation of this section and shall be considered sufficient cause for the suspension or re)ocation of the company's certificate of authority. !ection 238. "he proceeds of a life insurance policy shall be paid immediately upon maturity of the policy, unless such proceeds are made payable in installments or as an annuity, in which case the installments, or annuities shall be paid as they become due: Provided, however, "hat in the case of a policy maturin* by the death of the insured, the proceeds thereof shall be paid within si+ty -6;. days after presentation of the claim and filin* of the proof of death of the insured. Refusal or failure to pay the claim within the time prescribed herein will entitle the beneficiary to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceilin* prescribed by the Monetary @oard, unless such failure or refusal to pay is based on the *round that the claim is fraudulent. "he proceeds of the policy maturin* by the death of the insured payable to the beneficiary shall include the discounted )alue of all premiums paid in ad)ance of their due dates, but are not due and payable at maturity. !ection 23:. "he amount of any loss or dama*e for which an insurer may be liable, under any policy other than life insurance policy, shall be paid within thirty -1;. days after proof of loss is recei)ed by the insurer and ascertainment of the loss or dama*e is made either by a*reement between the insured and the insurer or by arbitration0 but if such ascertainment is not had or made within si+ty -6;. days after such receipt by the insurer of the proof of loss, then the loss or dama*e shall be paid within ninety -:;. days after such receipt. Refusal or failure to pay the loss or dama*e within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceilin* prescribed by the Monetary @oard, unless such failure or refusal to pay is based on the *round that the claim is fraudulent. !ection 25;. %n case of any liti*ation for the enforcement of any policy or contract of insurance, it shall be the duty of the &ommissioner or the &ourt, as the case may be, to ma#e a findin* as to whether the payment of the claim of the insured has been unreasonably denied or withheld0 and in the affirmati)e case, the insurance company shall be ad4ud*ed to pay dama*es which shall consist of attorney's fees and other e+penses incurred by the insured person by reason of such unreasonable denial or withholdin* of payment plus interest of twice the ceilin* prescribed by the Monetary @oard of the amount of the claim due the insured, from the date followin* the time prescribed in !ection 238 or in !ection 23:, as the case may be, until the claim is fully satisfied: Provided, "hat failure to pay any such claim within the time prescribed in said sections shall be considered pri!a facie e)idence of unreasonable delay in payment. !ection 251. %t is unlawful to:

-a. Present or cause to be presented any fraudulent claim for the payment of a loss under a contract of insurance0 and -b. >raudulently prepare, ma#e or subscribe any writin* with intent to present or use the same, or to allow it to be presented in support of any such claim. /ny person who )iolates this section shall be punished by a fine not e+ceedin* twice the amount claimed or imprisonment of two -2. years, or both, at the discretion of the court. ,TITLE !) ,E6A(INATION OF CO(PANIES !ection 252. "he &ommissioner shall re,uire e)ery insurance company doin* business in the Philippines to #eep its boo#s, records, accounts and )ouchers in such manner that he or his authori2ed representati)es may readily )erify its annual statements and ascertain whether the company is sol)ent and has complied with the pro)isions of this &ode or the circulars, instructions, rulin*s or decisions of the &ommissioner. !ection 251. "he &ommissioner shall at least once a year and whene)er he considers the public interest so demands, cause an e+amination to be made into the affairs, financial condition and method of business of e)ery insurance company authori2ed to transact business in the Philippines and of any other person, firm or corporation mana*in* the affairs andBor property of such insurance company. !uch company, as well as such mana*in* person, firm or corporation, shall submit to the e+aminer all such boo#s, papers and securities as he may re,uire and such e+aminer shall also ha)e the power to e+amine the officers of such company under oath touchin* its business and financial condition, and the authority to transact business in the Philippines of any such company shall be suspended by the &ommissioner if such e+amination is refused and such company shall not thereafter be allowed to transact further business in the Philippines until it has fully complied with the pro)isions of this section. Go)ernment=owned or =controlled corporations or entities en*a*ed in social or pri)ate insurance shall similarly be sub4ect to such e+amination by the &ommissioner unless their respecti)e charters otherwise pro)ide. ,TITLE !3 ,SUSPENSION OR RE2OCATION OF AUTHORIT& !ection 253. %f the &ommissioner is of the opinion upon e+amination of other e)idence that any domestic or forei*n insurance company is in an unsound condition, or that it has failed to comply with the pro)isions of law or re*ulations obli*atory upon it, or that its condition or method of business is such as to render its proceedin*s ha2ardous to the public or to its policyholders, or that its net worth re,uirement, in the case of a domestic stoc# company, or its a)ailable cash assets, in the case of a domestic mutual company, or its security deposits, in the case of a forei*n company, is impaired or deficient, or that the mar*in of sol)ency re,uired of such company is deficient, the &ommissioner is authori2ed to suspend or re)o#e all certificates of authority *ranted to such insurance company, its officers and a*ents, and no new business shall thereafter be done by such company or for such company by its a*ent in the Philippines while such suspension, re)ocation or disability continues or

until its authority to do business is restored by the &ommissioner. @efore restorin* such authority, the &ommissioner shall re,uire the company concerned to submit to him a business plan showin* the company's estimated receipts and disbursements, as well as the basis therefor, for the ne+t succeedin* three -1. years. ,TITLE !,APPOINT(ENT OF CONSER2ATOR !ection 255. %f at any time before, or after, the suspension or re)ocation of the certificate of authority of an insurance company as pro)ided in the precedin* title, the &ommissioner finds that such company is in a state of continuin* inability or unwillin*ness to maintain a condition of sol)ency or li,uidity deemed ade,uate to protect the interest of policyholders and creditors, he may appoint a conser)ator to ta#e char*e of the assets, liabilities, and the mana*ement of such company, collect all moneys and debts due to said company and e+ercise all powers necessary to preser)e the assets of said company, reor*ani2e the mana*ement thereof, and restore its )iability. "he said conser)ator shall ha)e the power to o)errule or re)o#e the actions of the pre)ious mana*ement and board of directors of the said company, any pro)ision of law, or of the articles of incorporation or bylaws of the company, to the contrary notwithstandin*, and such other powers as the &ommissioner shall deem necessary. "he conser)ator may be another insurance company doin* business in the Philippines, any officer or officers of such company, or any other competent and ,ualified person, firm or corporation. "he remuneration of the conser)ator and other e+penses attendant to the conser)ation shall be borne by the insurance company concerned. "he conser)ator shall not be sub4ect to any action, claim or demand by, or liability to, any person in respect of anythin* done or omitted to be done in *ood faith in the e+ercise, or in connection with the e+ercise, of the powers conferred on the conser)ator. "he conser)ator appointed shall report and be responsible to the &ommissioner until such time as the &ommissioner is satisfied that the insurance company can continue to operate on its own and the conser)atorship shall li#ewise be terminated should the &ommissioner, on the basis of the report of the conser)ator or of his own findin*s, determine that the continuance in business of the insurance company would be ha2ardous to policyholders and creditors, in which case the pro)isions of "itle 15 shall apply. No insurance company, life or non=life, or any professional reinsurer, ordered to be li,uidated by the &ommissioner under the pro)isions hereunder may be rehabilitated or authori2ed to transact anew, insurance or reinsurance business, as the case may be. ,TITLE !/ ,PROCEE%INGS UPON INSOL2ENC& !ection 256. (hene)er, upon e+amination or other e)idence, it shall be disclosed that the condition of any insurance company doin* business in the Philippines is one of insol)ency, or that its continuance in business would be ha2ardous to its policyholders and creditors, the &ommissioner

shall forthwith order the company to cease and desist from transactin* business in the Philippines and shall desi*nate a recei)er to immediately ta#e char*e of its assets and liabilities, as e+peditiously as possible collect and *ather all the assets and administer the same for the benefit of its policyholders and creditors, and e+ercise all the powers necessary for these purposes includin*, but not limited to, brin*in* suits and foreclosin* mort*a*es in the name of the insurance company. "he &ommissioner shall thereupon determine within ninety -:;. days whether the insurance company may be reor*ani2ed or otherwise placed in such condition so that it may be permitted to resume business with safety to its policyholders and creditors and shall prescribe the conditions under which such resumption of business shall ta#e place as well as the time for fulfillment of such conditions. %n such case, the e+penses and fees in the collection and administration of the insurance company shall be determined by the &ommissioner and shall be paid out of the assets of such company. %f the &ommissioner shall determine and confirm within the said period that the insurance company is insol)ent, as defined hereunder, or cannot resume business with safety to its policyholders and creditors, he shall, if the public interest re,uires, order its li,uidation, indicate the manner of its li,uidation and appro)e a li,uidation plan and implement it immediately. "he &ommissioner shall desi*nate a competent and ,ualified person as li,uidator who shall ta#e o)er the functions of the recei)er pre)iously desi*nated and, with all con)enient speed, reinsure all its outstandin* policies, con)ert the assets of the insurance company to cash, or sell, assi*n or otherwise dispose of the same to the policyholders, creditors and other parties for the purpose of settlin* the liabilities or payin* the debts of such company and he may, in the name of the company, institute such actions as may be necessary in the appropriate court to collect and reco)er accounts and assets of the insurance company, and to do such other acts as may be necessary to complete the li,uidation as ordered by the &ommissioner. "he pro)isions of any law to the contrary notwithstandin*, the actions of the &ommissioner under this section shall be final and e+ecutory, and can be set aside by the court upon petition by the company and only if there is con)incin* proof that the action is plainly arbitrary and made in bad faith. "he &ommissioner, throu*h the !olicitor General, shall then file the correspondin* answer recitin* the proceedin* ta#en and prayin* the assistance of the court in the li,uidation of the company. No restrainin* order or in4unction shall be issued by the court en4oinin* the &ommissioner from implementin* his actions under this section, unless there is con)incin* proof that the action of the &ommissioner is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with the &ler# or Eud*e of the &ourt in which the action is pendin* a bond e+ecuted in fa)or of the &ommissioner in an amount to be fi+ed by the court. "he restrainin* order or in4unction shall be refused or, if *ranted, shall be dissol)ed upon filin* by the &ommissioner, if he so desires, of a bond in an amount twice the amount of the bond of the petitioner or plaintiff conditioned that it will pay the dama*es which the petition or plaintiff may suffer by the refusal or the dissolution of the in4unction. "he pro)isions of Rule 58 of the New Rules of &ourt insofar as they are applicable shall *o)ern the issuance and dissolution of the restrainin* order or in4unction contemplated in this section. /ll proceedin*s under this title shall be *i)en preference in the courts. "he &ommissioner shall not be re,uired to pay any fee to any public officer for filin*, recordin*, or in any manner authenticatin* any paper or instrument relatin* to the proceedin*s.

/s used in this title, the term #nsolvency shall mean the inability of an insurance company to pay its lawful obli*ations as they fall due in the usual and ordinary course of business as may be shown by its failure to maintain the sol)ency re,uirements under !ection 2;; of this &ode. !ection 257. "he recei)er or the li,uidator, as the case may be, desi*nated under the pro)isions of this title, shall not be sub4ect to any action, claim or demand by, or liability to, any person in respect of anythin* done or omitted to be done in *ood faith in the e+ercise, or in connection with the e+ercise, of the powers conferred on such recei)er or li,uidator. ,TITLE !# ,CONSOLI%ATION AN% (ERGER OF INSURANCE CO(PANIES !ection 258. 9pon prior notice to the &ommissioner, two -2. or more domestic insurance companies, actin* throu*h their respecti)e boards of directors, may ne*otiate to mer*e into a sin*le corporation which shall be one of the constituent corporations, or consolidate into a sin*le corporation which shall be a new corporation to be formed by the consolidation. / common a*reement of the proposed mer*er or consolidation shall be drawn up for submission to the stoc#holders or members of the constituent companies for adoption and appro)al in accordance with the pro)isions of the respecti)e bylaws of the constituent companies and all e+istin* laws that may be pertinent. !ection 25:. !uch a*reement shall include, aside from the proposed mer*er or consolidation, pro)isions relati)e to the manner of transfer of assets to and assumption of liabilities by the absorbin* or ac,uirin* company from the absorbed or dissol)ed company or companies0 the proposed articles of mer*er or consolidation and bylaws of the sur)i)in* or ac,uirin* company0 the corporate name to be adopted which should not be that of any other e+istin* company transactin* similar business or one so similar as to be calculated to mislead the public0 the ri*hts of the stoc#holders or members of the absorbed or dissol)ed companies0 date of effecti)ity of the mer*er or consolidation0 and such particulars as may be necessary to e+plain and ma#e manifest the ob4ects and purposes of the absorbin* or ac,uirin* company. !ection 26;. 9pon e+ecution of such a*reement to mer*e or consolidate by and between or amon* the boards of directors of the constituent companies, notice thereof shall be mailed immediately to their policyholders and creditors. "he company or companies to be absorbed or dissol)ed shall dischar*e all its accrued liabilities0 otherwise, such liabilities shall, with the consent of its creditors, be transferred to and assumed by the absorbin* or ac,uirin* company, or such liabilities be reinsured by the latter. %n the case of such policies as are sub4ect to cancellation by the company or companies to be absorbed or dissol)ed, same may be cancelled pursuant to the terms thereof in lieu of such transfer, assumption, or reinsurance. !ection 261. 9pon appro)al or adoption in the meetin*s of the stoc#holders or members called for the purpose in each of the constituent companies of the a*reement to mer*e or consolidate, all stoc#holders or members dissentin* or ob4ectin* to the mer*er or consolidation shall be paid the )alue of their shares by the company concerned in accordance with the bylaws thereof.

!ection 262. 9pon appro)al or adoption of the a*reement to mer*e or consolidate by the stoc#holders or members of the constituent companies, the correspondin* articles of mer*er or of consolidation shall be duly e+ecuted by the presidents and attested by the corporate secretaries and shall bear the corporate seals of the mer*in* or consolidatin* companies settin* forth: -a. "he plan of mer*er or the plan of consolidation0 -b. /s to each corporation, the number of shares outstandin*, or in case of mutual corporations, the number of members0 and -c. /s to each corporation, the number of shares or members )oted for and a*ainst such plan, respecti)ely. "hereafter, a certified copy of such articles of mer*er or consolidation, to*ether with a certificate of appro)al or adoption by the stoc#holders or members of such articles of mer*er or consolidation, )erified by affida)its of such officers and under the seal of the constituent companies, shall be submitted to the &ommissioner, to*ether with such other papers or documents which the &ommissioner may re,uire, for his consideration. !ection 261. "he articles of mer*er or of consolidation, si*ned and )erified as hereinabo)e re,uired, shall be filed with the !ecurities and 6+chan*e &ommission for its e+amination and appro)al. !ection 263. 9pon receipt from the !ecurities and 6+chan*e &ommission of the certificate of mer*er or of consolidation, the constituent companies shall surrender to the &ommissioner their respecti)e certificates of authority to transact insurance business. "he absorbin* or sur)i)in* company in case of mer*er, or the newly formed company in case of consolidation, shall immediately file with the &ommissioner the correspondin* application for issuance of a new certificate of authority to transact insurance business, to*ether with a certified copy of the certificate of mer*er or of consolidation, and of the certificate of increase of stoc#s, if there is any, issued by the !ecurities and 6+chan*e &ommission. !ection 265. Nothin* in this title shall be construed to enlar*e the powers of the absorbin* or sur)i)in* company in case of mer*er, or the newly formed company in case of consolidation, e+cept those conferred by the certificate of mer*er or of consolidation and the articles of mer*er or of consolidation, or the amended articles of incorporation, as re*istered with the !ecurities and 6+chan*e &ommission. !ection 266. No director, officer, or stoc#holder of any such constituent companies shall recei)e any fee, commission, compensation, or other )aluable consideration whatsoe)er, directly or indirectly, or in any manner aidin*, promotin* or assistin* in such mer*er or consolidation. !ection 267. "he mer*er or consolidation of companies under this &ode shall be sub4ect to the pro)isions of the &orporation &ode, and, in those cases specified in Republic /ct No. 5355, as amended, be further sub4ect to the pro)isions of said law. TITLE !$ ,(UTUALI5ATION OF STOC+ LIFE INSURANCE CO(PANIES

!ection 268. /ny domestic stoc# life insurance company doin* business in the Philippines may con)ert itself into an incorporated mutual life insurer. "o that end it may pro)ide and carry out a plan for the ac,uisition of the outstandin* shares of its capital stoc# for the benefit of its policyholders, or any class or classes of its policyholders, by complyin* with the re,uirements of this chapter. !ection 26:. !uch plan shall include appropriate proceedin*s for amendin* the insurer's articles of incorporation to *i)e effect to the ac,uisition, by said insurer, for the benefit of its policyholders or any class or classes thereof, of the outstandin* shares of its capital stoc# and the con)ersion of the insurer from a stoc# corporation into a nonstoc# corporation for the benefit of its members. "he members of such nonstoc# corporation shall be the policyholders from time to time of the class or classes for whose benefit the stoc# of the insurer was ac,uired, and the policyholders of such other class or classes as may be specified in such corporation's articles of incorporation as they may be amended from time to time. !uch plan shall be: -a. /dopted by a )ote of a ma4ority of the directors0 -b. /ppro)ed by the )ote of the holders of at least a ma4ority of the outstandin* shares at a special meetin* of shareholders called for that purpose, or by the written consent of such shareholders0 -c. !ubmitted to the &ommissioner and appro)ed by him in writin*0 -d. /ppro)ed by a ma4ority )ote of all the policyholders of the class or classes for whose benefit the stoc# is to be ac,uired )otin* at an election by the policyholders called for that purpose, sub4ect to the pro)isions of !ection 271. "he terms policyholder or policyholders as used in this chapter shall be deemed to mean the person or persons insured under an indi)idual policy of life insurance, or of health and accident insurance, or of any combination of life, health and accident insurance. "hey shall also include the person or persons to whom any annuity or pure endowment is presently or prospecti)ely payable by the terms of an indi)idual annuity or pure endowment contract, e+cept where the policy or contract declares some other person to be the owner or holder thereof, in which case such other person shall be deemed policyholder. %n any case where a policy or contract names two or more persons as 4oint insured, payees, owners or holders thereof, the persons so named shall be deemed collecti)ely to be one -1. policyholder for the purpose of this chapter. %n any case where a policy or contract shall ha)e been assi*ned by assi*nment absolute on its face to an assi*nee other than the insurer, and such assi*nment shall ha)e been filed at the principal office of the insurer at least thirty -1;. days prior to the date of any election or meetin* referred to in this chapter, then such assi*nee shall be deemed at such election or meetin* to be the policyholder. >or the purpose of this chapter the terms policyholder and policyholders include the employer to whom, or a president, secretary or other e+ecuti)e officer of any corporation or association to which a master *roup policy has been issued, but e+clude the holders of certificates or policies issued under or in connection with a master *roup policy. @eneficiaries under unmatured contracts shall not as such be deemed to be policyholders0 and -e. >iled with the &ommissioner after ha)in* been appro)ed as pro)ided in this section.

!ection 27;. "he &ommissioner shall e+amine the plan submitted to him under the pro)isions of subpara*raph -c. of !ection 26:. Fe shall not appro)e such plan unless in his opinion the ri*hts and interests of the insurer, its policyholders and shareholders are protected nor unless he is satisfied that the plan will be fair and e,uitable in its operation. !ection 271. "he election prescribed by subpara*raph -d. of !ection 26: shall be called by the board of directors or the president, and e)ery policyholder of the class or classes for whose benefit the stoc# is to be ac,uired, whose insurance shall ha)e been in force for at least one -1. year prior to such election shall ha)e one )ote, re*ardless of the number of policies or amount of insurance he holds, and re*ardless of whether such policies are policies of life insurance or policies of health and accident insurance or annuity contracts. Notice of such election shall be *i)en to policyholders entitled to )ote by mail from the principal office of such insurer at least thirty -1;. days prior to the date set for such election, in a sealed en)elope, posta*e prepaid, addressed to each such policyholder at his last #nown address. ?otin* shall be by one of the followin* methods: -a. /t a meetin* of such policyholders, held pursuant to such notice, by ballot in person or by pro+y. -b. %f not by the method described in the precedin* subpara*raph, then by mail pursuant to a procedure and on forms to be prescribed by such plan. !uch election shall be conducted under the direction and super)ision of three -1. impartial and disinterested inspectors appointed by the insurer and appro)ed by the &ommissioner. %n case any person appointed as inspector fails to appear at such meetin* or fails or refuses to act at such election, the )acancy, if occurrin* in ad)ance of the con)enin* of the meetin* or in ad)ance of the openin* of the mail )ote, may be filled in the manner prescribed for the appointment of inspectors and, if occurrin* at the meetin* or durin* the can)ass of the mail )ote, may be filled by the person actin* as chairman of said meetin* or desi*nated for that purpose in such plan. "he decision, act or certificate of a ma4ority of the inspectors shall be effecti)e in all respects as the decision, act or certificate of all. "he inspectors of election shall determine the number of policyholders, the )otin* power of each, the policyholders represented at the meetin* or )otin* by mail, the e+istence of a ,uorum and the authenticity, )alidity and effect of pro+ies. "hey shall recei)e )otes, hear and determine all challen*es and ,uestions in any way arisin* in connection with the ri*ht to )ote, count and tabulate all )otes, determine the result, and do such other acts as are proper to conduct the )ote with fairness to all policyholders. "he inspectors of election shall, before commencin* performance of their duties, subscribe to and file with the insurer and with the &ommissioner an oath that they, and each of them, will perform their duties impartially, in *ood faith, to the best of their ability and as e+peditiously as is practicable. <n the re,uest of the insurer, the &ommissioner, a policyholder or his pro+y, the inspectors shall ma#e a report in writin* of any challen*e or ,uestion or matter determined by them and e+ecute a certificate of any fact found by them. "hey shall also certify the result of such )ote to the insurer and to the &ommissioner. /ny report or certificate made by them shall be pri!a facie e)idence of facts stated therein. /ll necessary e+penses incurred in connection with such election shall be paid by the insurer. >or the purpose of this section, a ,uorum shall consist of fi)e percent -5C. of the policyholders of such insurer entitled to )ote at such election.

!ection 272. %n carryin* out any such plan, the insurer may ac,uire any shares of its own stoc# by *ift, be,uest or purchase. /ny shares so ac,uired shall, unless as a result of such ac,uisition all of the shares of the insurer shall ha)e been ac,uired, be ac,uired in trust for the policyholders of the class or classes for whose benefit the plan pro)ides that the stoc# of the insurer shall be ac,uired as hereinafter pro)ided. !uch shares shall be assi*ned and transferred on the boo#s of such insurer and appro)ed by the &ommissioner. !uch trustees shall hold such stoc# in trust until all of the outstandin* shares of capital stoc# of such insurer ha)e been ac,uired, but for not lon*er than thirty -1;. years with such e+tensions of not more than fi)e -5. years each as may be *ranted by the &ommissioner. !uch e+tensions may be *ranted by the &ommissioner if the plan so pro)ides and if in his opinion the plan of ac,uisition of all of such stoc# can be completed within a reasonable period. !uch trustees shall )ote such stoc# at all corporate meetin*s at which stoc#holders ha)e the ri*ht to )ote. (hen all the outstandin* shares of capital stoc# of such insurer ha)e been ac,uired, all said shares shall be cancelled, the certificate of amendment of the insurer's articles of incorporation *i)in* effect thereto shall be filed in accordance with the pro)isions of the &orporation &ode, and the insurer shall become a nonstoc# corporation for the profit of its members and such trust shall thereupon terminate. "hereafter such corporation shall be conducted for the mutual benefit, ratably, of its policyholders of the class or classes for whose benefit the stoc# was ac,uired and shall ha)e power to issue non= assessable policies on a reser)e basis sub4ect to all pro)isions of law applicable to incorporated life insurers issuin* non=assessable policies on a reser)e basis. Policies so issued may be upon the basis of full or partial participation therein as a*reed between the insurer and the insured. 9pon the termination of any such )otin* trust, either in accordance with its terms or as hereinabo)e pro)ided, such plan of mutuali2ation shall terminate, unless theretofore completed. 9pon such termination, unless the plan of mutuali2ation pro)ides for the disposition of the shares ac,uired by the insurer under such plan or for the disposition of the proceeds thereof, the shares held by such trustees shall be disposed of in accordance with an order of the court of competent 4urisdiction in the 4udicial district in which is located the principal office of such insurer, made upon a )erified petition of the &ommissioner. !ection 271. /ny such plan of mutuali2ation may pro)ide for the creation of a )otin* trust under a trust a*reement for the holdin* and )otin* by three -1. or more trustees of any portion or all of the shares of the insurer not re,uired upon the adoption of such plan. "he )otin* trustees shall be named in accordance with such plan or, if no pro)ision is made therein for the namin* of such trustees, then by the insurer. "he )otin* trust a*reement and )otin* trustees shall be sub4ect to the appro)al of the &ommissioner. /ny or all of the trustees under such )otin* trust a*reement may be the same person or persons as any or all of the trustees referred to in !ection 272. !uch )otin* trust a*reement shall pro)ide that in the e)ent of ac,uisition by the insurer of any of the shares of stoc# held thereunder in accordance with the pro)isions of the plan, such shares so ac,uired to*ether with the )otin* ri*hts thereof shall be transferred by the trustees named under the pro)isions of this section to the trustees named under the pro)isions of !ection 272. /ny )otin* trust a*reement created pursuant to the pro)isions of this section may be made irre)ocable for not lon*er than thirty -1;. years and thereafter until the termination of the trust pro)ided for in !ection 272. "he trust created pursuant to the pro)isions of this section shall terminate in any e)ent upon termination of the trust pro)ided for in !ection 272. 9pon the termination of the trust created pursuant to the pro)isions of this section, any shares held in such trust shall re)ert to the persons entitled thereto by law.

!ection 273. 6)ery payment for the ac,uisition of any shares of the capital stoc# of such insurer, the purchase price of which is not fi+ed by such plan, shall be sub4ect to the prior appro)al of the &ommissioner. Neither such plan, nor any such payment, may be appro)ed by the &ommissioner unless he finds that the ri*hts and interests of the insurer, its policyholders, and shareholders are protected. !ection 275. "he trustees referred to in !ection 272 shall file with such insurer and with the &ommissioner a )erified acceptance of their appointments and )erified declarations that they will faithfully dischar*e their duties as such trustees. /ll di)idends and other sums recei)ed by said trustees on the shares held by them, after payin* the necessary e+penses of e+ecutin* their trust, shall be immediately repaid to such insurer for the benefit of all who are, or may become, policyholders of such insurance of the class or classes for whose benefit the stoc# of such insurer was ac,uired and entitled to participate in the profits thereof and shall be added to and become part of the assets of such insurer. !ection 276. %f, at any time within the period pro)ided in the plan for the ac,uisition of the outstandin* shares of stoc# of the insurer, ninety percent -:;C. thereof has already been ac,uired and transferred to the trustees under the plan, the insurer by a )ote of a ma4ority of the directors may determine to ma#e an offer, with the permission of the &ommissioner and sub4ect to such re,uirement as he may specify, to ac,uire by purchase all of the shares not theretofore ac,uired under the plan, at a specified price which the insurer considers to be their fair )alue as of the date of ma#in* such offer. %f the offer to ac,uire is permitted by the &ommissioner, the insurer shall ma#e a written offer by re*istered mail to each shareholder whose shares ha)e not theretofore been ac,uired under the plan or otherwise, offerin* to ac,uire all his shares at such price if accepted in writin* within thirty -1;. days after the mailin* of such offer. /ny shareholder acceptin* such offer within the time therefor shall, within si+ty -6;. days after his acceptance, transfer to the insurer the certificates representin* such shares and, upon doin* so, shall be paid by the insurer the amount of such offer for his shares. /ny share so ac,uired shall be assi*ned and transferred to the trustees under the plan and held by them as shares ac,uired pursuant to the plan. 6ach shareholder who does not accept such offer to ac,uire his shares within the time stated in such offer for acceptance thereof shall within fifteen -15. days after the e+piration of such offer apply to the !ecretary of >inance for a determination of the fair )alue of his shares as of the date of ma#in* such offer. "he !ecretary of >inance may himself, after due notice and hearin*, determine upon the e)idence recei)ed the fair )alue of the shares as of the date of ma#in* such offer, or appoint three -1. impartial and disinterested persons to appraise the fair )alue of such shares with such direction as he shall deem proper and necessary to e+pedite the proceedin*s. 9pon completion of the appraisal proceedin*s, the appraisers shall file with the !ecretary of >inance their report in writin* statin* the fair )alue of such shares as of the date of the ma#in* of such offer and settin* forth their findin*s in support of such statement. "he appraisers shall furnish each party to the proceedin*s a copy of their appraisal report, and within ten -1;. days after receipt thereof, any such party may si*nify his ob4ection, if any, to the report or mo)e for the appro)al thereof. 9pon the e+piration of the period of ten -1;. days referred to abo)e, the report shall be set for hearin*, after which the !ecretary of >inance shall issue an order adoptin*, modifyin* or re4ectin* the report, in whole or in part, or he may

recei)e further e)idence or may recommit it with instructions. (hene)er the !ecretary of >inance shall determine in any manner, as aforesaid, the fair )alue of such shares, he may also determine the terms of payment thereof by the insurer. "he e+penses incidental to the proceedin*s includin* char*es of the appraisers, if any, shall be paid e,ually by the insurer and the shareholder. "he findin*s of the !ecretary of >inance on all ,uestions of fact raised at the hearin* of the application for determination of the fair )alue of such shares shall be conclusi)e upon all parties to the proceedin*s. "he order of the !ecretary of >inance determinin* the fair )alue of the shares and the terms of payment thereof shall ha)e the force and effect of a 4ud*ment which shall be appealable on any ,uestion of law. !uch order shall become final and e+ecutory fifteen -15. days after receipt thereof by the parties to the proceedin*s. 9pon any such order becomin* final and from which no appeal is pendin*, or when the time to appeal therefrom has e+pired, each shareholder party to the proceedin*s shall transfer his shares to the insurer and surrender to the said insurer the certificates representin* such shares and the insurer shall ma#e payment therefor as pro)ided in such order. /ny shares so ac,uired by the insurer shall be assi*ned and transferred to the trustees and held by them as shares ac,uired pursuant to the plan. /ny shareholder who does not apply to the !ecretary of >inance in the manner and within the time hereinbefore prescribed shall be deemed to ha)e accepted the offer referred to abo)e, effecti)e, howe)er, upon the e+piration of the time hereinabo)e prescribed for ma#in* such application, and such shareholder's time for acceptin* such offer shall, for that purpose only, be deemed to ha)e been e+tended accordin*ly. /ny offer to ac,uire shares made pursuant to this section shall, e+cept as otherwise pro)ided herein, be irre)ocable until all proceedin*s upon such offer ha)e been completed or all shares ha)e otherwise been earlier ac,uired by the insurer. /ny shareholder who has e+pressly or impliedly accepted the plan or the offer to ac,uire his shares not theretofore ac,uired under the plan, and any shareholder who has re4ected such plan or such offer and has applied, as aforesaid, to the !ecretary of >inance for a determination of the fair )alue of his shares subse,uent to which an a*reement has been reached or a final order issued fi+in* such fair )alue but who fails to surrender his certificates for cancellation upon payment of the amount to which he is entitled, may be compelled to do so by an order of the !ecretary of >inance for that purpose and such order may pro)ide that upon failure of such shareholder to surrender such certificates for cancellation, such order shall stand in lieu of such surrender and cancellation. !ection 277. !uch insurer, after mutuali2ation, shall be a continuation of the ori*inal insurer, and such mutuali2ation shall not affect such insurer's certificate of authority nor e+istin* suits, ri*hts or contracts e+cept as pro)ided in said plan for the ac,uisition of the outstandin* shares of the capital stoc# of such insurer, appro)ed as pro)ided in this chapter. !uch insurer, after mutuali2ation, shall e+ercise all the ri*hts and powers and shall perform all the duties conferred or imposed by law upon insurers writin* the classes of insurance written by it, and to protect ri*hts and contracts e+istin* prior to mutuali2ation, sub4ect to the effect of said plan. "he board of directors of such insurer, prior to mutuali2ation, may adopt amendments to its bylaws to ta#e effect upon mutuali2ation.

!ection 278. -a. /n annual meetin* of members shall be held at ten o'cloc# in the mornin* of the fourth "uesday of March of each year at the principal office of the insurer, unless a different time or place is pro)ided in the bylaws. -b. !pecial meetin*s of the members, for any purpose or purposes whatsoe)er, may be called at any time by the president, or by the board of directors, or by one or more members holdin* not less than one=fifth -1B5. of the )otin* power of such insurer, or by such other officers or persons as the bylaws authori2e. -c. Notice of all meetin*s of members whether annual or special shall be *i)en in writin* to the members entitled to )ote by the secretary, or an assistant secretary, or other person char*ed with that duty, or if there be no such officer, or in case of his ne*lect or refusal, by any director or member. /t the option of the insurer such notice may be imprinted on premium notices or receipts or on both. / notice may be *i)en by such insurer to any member either personally, or by mail, or other means of written communication, char*es prepaid, addressed to such member at his address appearin* on the boo#s of the insurer, or *i)en by him to the insurer for the purpose of notice. %f a member *i)es no address, notice shall be deemed to ha)e been *i)en him if sent by mail or other means of written communication addressed to the place where the principal office of the insurer is situated, or if published at least once in some newspaper of *eneral circulation in the place in which said office is located. Notice of any meetin* of members shall be sent to each member entitled thereto not less than se)en -7. days before such meetin*, unless the bylaws pro)ide otherwise. Notice of any meetin* of members shall specify the place, the day and the hour of the meetin* and the *eneral nature of the business to be transacted. Notice of an annual meetin* to be held at the time and place specified in subpara*raph -a. of this section shall be sufficiently *i)en if published at least once in each of four -3. successi)e wee#s in a newspaper of *eneral circulation in the place in which the principal office of such insurer is located, and if so published no other notice of such meetin* shall be re,uired. -d. "he presence in person or by pro+y of fi)e percent -5C. of the members entitled to )ote at any meetin* shall constitute a ,uorum for the transaction of business, includin* the amendment of the articles of incorporation andBor the bylaws unless otherwise pro)ided by the bylaws. -e. 6ach such member shall ha)e one -1. )ote at any meetin* of members re*ardless of the number of policies or the amount of insurance that such member holds and re*ardless of whether such policies are policies of life insurance, or of health and accident insurance, or both. /ny member entitled to )ote shall ha)e the ri*ht to do so either in person or by an a*ent or a*ents authori2ed by a written pro+y e+ecuted by such person or his duly authori2ed a*ent and filed with the secretary of such insurer. -f. "he directors of the insurer in office at the time the insurer is mutuali2ed as pro)ided in this chapter shall continue in office until the first annual meetin* of members. /t the first annual meetin*

of members and at each annual meetin* thereafter, directors shall be elected by the members for the term or terms authori2ed by this chapter. -*. "he articles of incorporation or the bylaws may pro)ide that the directors may be di)ided into two -2. or more classes whose terms of office shall e+pire at different times, but no terms shall continue lon*er than si+ -6. years. %n the absence of such pro)isions, each director, e+cept members of the board of directors at the time the insurer is mutuali2ed, shall be elected for a term of one -1. year. /ll directors shall hold office for a term for which they are elected and until their successors are elected and ,ualified. / director may, but need not be a member or policyholder of the insurer of which he is actin* as director. ?acancies in the board of directors may be filled by a ma4ority of the remainin* directors, thou*h less than a ,uorum, and each director so elected shall hold office until the ne+t annual meetin*. -h. /ll insurers mutuali2ed under the pro)isions of this chapter shall be sub4ect to all other applicable pro)isions of this &ode. "he pro)isions of the &orporation &ode shall apply in a suppletory manner. !ection 27:. "he pro)isions of &ommonwealth /ct No. 81, otherwise #nown as the !ecurities /ct, as amended, shall not apply to any of the followin*: -a. !hares of the capital stoc# of such insurer ac,uired as pro)ided in !ection 272 and assi*ned and transferred to the trustees as is pro)ided in said section, and the assi*nment and transfer of said shares as so pro)ided0 -b. /ny certificate or other instrument issued to a policyholder of such mutuali2ed insurer conferrin* or e)idencin* membership in such mutuali2ed insurer or conferrin* or e)idencin* such member's ri*ht to participate in the profits or share in the assets of such mutuali2ed insurer by )irtue of his membership therein, and the issuance of such certificate or other instrument0 -c. "he plan for the ac,uisition of the outstandin* shares of the capital stoc# of such insurer authori2ed by the pro)isions of this chapter, the submission of said plan to the &ommissioner and to the policyholders of such insurer as pro)ided in this chapter, and the appro)al and carryin* out of said plan or any part thereof in accordance with the pro)isions of this chapter. !ection 28;. / domestic mutual life insurance company doin* business in the Philippines may con)ert itself into an incorporated stoc# life insurance company by demutuali2ation. "o that end, it may pro)ide and carry out a plan for the con)ersion by complyin* with the re,uirements of this title. "he con)ersion of a domestic mutual life insurance company to an incorporated stoc# life insurance company shall be carried out pursuant to a con)ersion plan duly appro)ed by the &ommissioner. "he &ommissioner shall promul*ate such rules and re*ulations as he or she may deem necessary to carry out the pro)isions of this title, after due consultation with representati)es of the insurance industry.

/ll con)erted insurers under the pro)isions of this title shall be sub4ect to all other applicable pro)isions of this &ode. "he pro)isions of the &orporation &ode shall apply in a suppletory manner. ,TITLE !. ,*ITH%RA*AL OF FOREIGN INSURANCE CO(PANIES !ection 281. / forei*n insurance company doin* business in the Philippines, upon payment of the fee hereinafter prescribed and surrender to the &ommissioner of its certificate of authority, may apply to withdraw from the Philippines. !uch application shall be duly e+ecuted in writin*, accompanied by e)idence of due authority for such e+ecution, properly ac#nowled*ed. !ection 282. "he &ommissioner shall publish the application for withdrawal once a wee# for three -1. consecuti)e wee#s in a newspaper of *eneral circulation in the Philippines. "he e+penses of such publication shall be paid by the insurance company filin* such application. !ection 281. 6)ery forei*n insurance company desirin* to withdraw from the Philippines shall, prior to such withdrawal, dischar*e its liabilities to policyholders and creditors in this country. %n case of its policies insurin* residents of the Philippines, it shall cause the primary liabilities under such policies to be reinsured and assumed by another insurance company authori2ed to transact business in the Philippines. %n the case of such policies as are sub4ect to cancellation by the withdrawin* company, it may cancel such policies pursuant to the terms thereof in lieu of such reinsurance and assumption of liabilities. !ection 283. "he &ommissioner shall cause an e+amination of the boo#s and records of the withdrawin* company, and if, upon such e+amination, the &ommissioner finds that the insurer has no outstandin* liabilities to policyholders and creditors in the Philippines, and no policies uncancelled0 or its primary liabilities ha)e been reinsured or assumed by another insurance company authori2ed to transact business in the Philippines, as re,uired in the precedin* section, it shall cancel the withdrawin* company's certificate of authority, if une+pired, and shall permit the insurer to withdraw. "he cost and e+penses of all such e+amination shall be paid as prescribed in !ection 33;. !ection 285. 9pon the failure of such withdrawin* insurance company or its a*ents in the Philippines to pay the e+penses of such publication within thirty -1;. days after the presentation of the bill therefor, the &ommissioner shall collect such fee from the deposit furnished in accordance with the pro)isions of !ection 1:7. !ection 286. / forei*n life insurance company that withdraws from the Philippines shall be considered a ser)icin* insurance company if its business transactions are confined to acceptin* periodic premium payments from, or *rantin* policy loans and payin* cash surrender )alues of outstandin* policies to, or re)i)in* lapsed policies of, Philippine policyholders, and such other related ser)ices. !ection 287. No company shall act as a ser)icin* insurance company until after it shall ha)e obtained a special certificate of authority to act as such from the &ommissioner upon application therefor and payment by the company of the fees hereinafter prescribed. !uch certificate shall e+pire

on the last day of December of the third year and shall be renewed, while the company continues to ser)ice its policyholders, and to comply with all the applicable pro)isions of law and re*ulations. ,TITLE !0 ,PROFESSIONAL REINSURERS !ection 288. 6+cept as otherwise pro)ided in this &ode, no partnership, association or corporation shall transact any business in the Philippines as a professional reinsurer until it shall ha)e obtained a certificate of authority for that purpose from the &ommissioner upon application therefor and payment by such entity of the fees hereinafter prescribed. /s used in this &ode, the term $professional reinsurer' shall mean any entity that transacts solely and e+clusi)ely reinsurance business in the Philippines. "he &ommissioner may refuse to issue a certificate of authority to any such entity when such refusal will best promote public interest. No such certificate of authority shall be *ranted to any such entity unless and until the &ommissioner is satisfied by such e+amination and such e)idence as may be re,uired that such entity is ,ualified by the laws of the Philippines to transact business therein as a professional reinsurer. @efore issuin* such certificate of authority, the &ommissioner must be satisfied that the name of the applicant is not that of any other #nown company transactin* insurance or reinsurance business in the Philippines, or a name so similar as to be calculated to mislead the public. !uch certificate of authority shall e+pire on the last day of December the third year followin* its issuance unless it is renewed. 6)ery such partnership, association, or corporation recei)in* such certificate of authority shall be sub4ect to the pro)isions of this &ode and other related laws, and to the 4urisdiction and super)ision of the &ommissioner. !ection 28:. /ny partnership, association, or corporation authori2ed to transact solely reinsurance business must ha)e a capitali2ation of at least "hree billion pesos -P1,;;;,;;;,;;;.;;. paid in cash of which at least fifty percent -5;C. is paid=up and the remainin* portion thereof is contributed surplus, which in no case shall be less than >our hundred million pesos -P3;;,;;;,;;;.;;. or such capitali2ation as may be determined by the !ecretary of >inance, upon the recommendation of the &ommissioner: Provided, "hat twenty=fi)e percent -25C. of the paid=up capital must be in)ested in securities satisfactory to the &ommissioner consistin* of bonds or other instruments of debt of the Go)ernment of the Philippines or its political subdi)isions or instrumentalities, or of *o)ernment= owned or =controlled corporations and entities, includin* the @an*#o !entral n* Pilipinas, and deposited with the &ommissioner, and the remainin* se)enty=fi)e percent -75C. in such other securities as may be allowed and permitted by the &ommissioner, which securities shall at all times be maintained free from any lien or encumbrance: Provided, further, "hat the aforesaid capital re,uirement is without pre4udice to other re,uirements to be imposed under any ris#=based capital method that may be adopted by the &ommissioner: Provided, finally, "hat the pro)isions of this chapter applicable to insurance companies shall as far as practicable be li#ewise applicable to professional reinsurers.

,TITLE )" ,HOL%ING CO(PANIES !ection 2:;. /s used in this title, the followin* terms shall ha)e the respecti)e meanin*s hereinafter set forth unless the conte+t shall otherwise re,uire: -a. Person means an indi)idual, partnership, firm, association, corporation, trust, any similar entity or any combination of the fore*oin* actin* in concert. -b. ontrol, includin* the terms controlling, controlled by and under co!!on control with, means the possession directly or indirectly of the power to direct or cause the direction of the mana*ement and policies of a person, whether throu*h the ownership of )otin* securities by a contract other than a commercial contract for *oods or non=mana*ement ser)ices or otherwise. !ub4ect to !ection 2:2, control shall be presumed to e+ist if any person directly or indirectly owns, controls or holds with the power to )ote forty percent -3;C. or more of the )otin* securities of any other person: Provided, "hat no person shall be deemed to control another person solely by reason of his bein* an officer or director of such other person. -c. Holding co!pany means any person who directly or indirectly controls any authori2ed insurer. -d. ontrolled insurer means an authori2ed insurer controlled directly or indirectly by a holdin* company. -e. ontrolled person means any person, other than a controlled insurer, who is controlled directly or indirectly by a holdin* company. -f. Holding co!pany syste! means a holdin* company to*ether with its controlled insurers and controlled persons. !ection 2:1. Notwithstandin* para*raph -b. of !ection 2:;, the &ommissioner may determine after notice and opportunity to be heard, that a person e+ercises directly or indirectly either alone or pursuant to an a*reement with one or more other persons such a controllin* influence o)er the mana*ement or policies of an authori2ed insurer as to ma#e it necessary or appropriate in the public interest or for the protection of policyholders or stoc#holders of the insurer that the person be deemed to control the insurer. !ection 2:2. "he &ommissioner may determine upon application that any person, either alone or pursuant to a*reement with one or more other persons, does not or will not upon the ta#in* of some proposed action control another person. "he filin* of an application hereunder in *ood faith by any person shall relie)e the applicant from any obli*ation or liability imposed by this title with respect to the sub4ect of the application, e+cept as contained in !ection 1;2, until the &ommissioner has acted upon the application. (ithin thirty -1;. days or such further period as he may prescribe, the &ommissioner may prospecti)ely re)o#e or modify his determination, after notice and opportunity to be heard, whene)er in his 4ud*ment, re)ocation or modification is consistent with this title.

!ection 2:1. Notwithstandin* any other pro)isions of this title, the followin* shall not be deemed holdin* companies: -a. /uthori2ed insurers or reinsurers or their subsidiaries0 and -b. "he Go)ernment of the Philippines, or any political subdi)ision, a*ency or instrumentality thereof, or any corporation which is wholly owned directly or indirectly by one or more of the fore*oin*. "he &ommissioner may conditionally or unconditionally e+empt any specified person or class of persons from any of the obli*ations or liabilities imposed under this title, if and to the e+tent he finds the e+emption necessary or appropriate in the public interest or not ad)erse to the interests of policyholders or stoc#holders and consistent with the purposes of this title. !ection 2:3. -a. 6)ery person who on the date this &ode ta#es effect is a controlled insurer and e)ery person who thereafter becomes a controlled insurer, shall, within si+ty -6;. days thereafter, or within thirty -1;. days after becomin* a controlled insurer, whiche)er is later, re*ister with the &ommissioner. !uch re*istration shall be amended within thirty -1;. days followin* any chan*e in the identity of its holdin* company. "he &ommissioner may *rant one or more reasonable e+tensions of the time to re*ister. -b. 6)ery re*istrant shall furnish the &ommissioner with the followin* information concernin* its holdin* company: -1. / copy of its charter or articles of incorporation and its bylaws0 -2. "he identities of its principal shareholders, officers, directors and controlled persons0 and -1. %nformation as to its capital structure and financial condition, and a description of its principal business acti)ities. !ection 2:5. 6)ery controlled insurer shall file with the &ommissioner such reports or material as he may direct for the purpose of disclosin* information concernin* the operations of persons within the holdin* company system which may materially affect the operations, mana*ement or financial condition of the insurer. !ection 2:6. 6)ery holdin* company and e)ery controlled person within a holdin* company system shall be sub4ect to e+amination by order of the &ommissioner if he has cause to belie)e that the operations of such persons may materially affect the operations, mana*ement or financial condition of any controlled insurer with the system and that he is unable to obtain rele)ant information from such controlled insurer. "he *rounds relied upon by the &ommissioner for such e+amination shall be stated in his order, which order shall be sub4ect to 4udicial re)iew only at the instance of the person sou*ht to be e+amined. !uch e+amination shall be confined to matters specified in the order. "he cost of such e+amination shall be assessed a*ainst the person e+amined and no portion thereof shall thereafter be reimbursed to it directly or indirectly by the controlled insurer.

!ection 2:7. "he &ommissioner shall #eep the contents of each report made pursuant to this title and any information obtained by him in connection therewith confidential and shall not ma#e the same public without the prior written consent of the controlled insurer to which it pertains unless the &ommissioner after notice and an opportunity to be heard shall determine that the interests of policyholders, stoc#holders or the public will be ser)ed by the publication thereof. %n any action or proceedin* by the &ommissioner a*ainst the person e+amined or any other person within the same holdin* company system a report of such e+amination published by him shall be admissible as e)idence of the facts stated therein. !ection 2:8. "ransactions within a holdin* company system to which a controlled insurer is a party shall be sub4ect to the followin*: -a. "he terms shall be fair and e,uitable0 -b. &har*es or fees for ser)ices performed shall be reasonable0 -c. 6+penses incurred and payments recei)ed shall be allocated to the insurer on an e,uitable basis in conformity with customary insurance accountin* practices consistently applied. "he boo#s, accounts and records of each party to all such transactions shall be maintained as to clearly and accurately disclose the nature and details of the transactions includin* such accountin* information as is necessary to support the reasonableness of the char*es or fees to the respecti)e parties. !ection 2::. "he prior written appro)al of the &ommissioner shall be re,uired for the followin* transactions between a controlled insurer and any person in its holdin* company system: sales, purchases, e+chan*es, loans or e+tensions of credit, or in)estments, in)ol)in* fi)e percent -5C. or more of the insurer's admitted assets as of the thirty=first day of December ne+t precedin*. !ection 1;;. "he followin* transactions between a controlled insurer and any person in its holdin* company system may not be entered into unless the insurer has notified the &ommissioner in writin* of its intention to enter into any such transaction at least thirty -1;. days prior thereto, or such shorter period as he may permit, and he has not disappro)ed it within such period: -a. !ales, purchases, e+chan*es, loans or e+tensions of credit, or in)estments, in)ol)in* more than one=half of one percent -JC. but less than fi)e percent -5C. of the insurer's admitted assets as of the thirty=first day of December ne+t precedin*0 -b. Reinsurance treaties or a*reements0 -c. Renderin* of ser)ices on a re*ular or systematic basis0 or -d. /ny material transaction, specified by re*ulation, which the &ommissioner determines may ad)ersely affect the interest of the insurer's policyholders or stoc#holders or of the public.

Nothin* herein contained shall be deemed to authori2e or permit any transaction which, in the case of a non=controlled insurer, would be otherwise contrary to law. !ection 1;1. "he &ommissioner, in re)iewin* transactions pursuant to !ections 2:: and 1;;, shall consider whether the transactions comply with the standard set forth in !ection 2:8 and whether they may ad)ersely affect the interests of policyholders. "his section shall not apply to transactions sub4ect to other sections of this &ode which impose notice or appro)al re,uirements *reater than those prescribed by this title. !ection 1;2. -a. No person, other than an authori2ed insurer, shall ac,uire control of any domestic insurer, whether by purchase of its securities or otherwise, e+cept: -1. /fter twenty -2;. days written notice to its insurer or such shorter period as the &ommissioner may permit, of its intention to ac,uire control0 and -2. (ith the prior written appro)al of the &ommissioner. -b. "he &ommissioner shall disappro)e the ac,uisition of control of a domestic insurer if he determines, after notice and an opportunity to be heard, that such action is reasonably necessary to protect the interest of the people of this country. "he followin* shall be the only factors to be considered by him in reachin* the fore*oin* determination: -1. "he financial condition of the ac,uirin* person and the insurer0 -2. "he trustworthiness of the ac,uirin* person or any of its officers or directors0 -1. / plan for the proper and effecti)e conduct of the insurer's operations0 -3. "he source of the funds or assets for the ac,uisition0 -5. "he fairness of any e+chan*e of stoc#, assets, cash or other consideration for the stoc# or assets to be recei)ed0 -6. (hether the effect of the ac,uisition may be substantially to lessen competition in any line of commerce in insurance or to tend to create a monopoly therein0 and -7. (hether the ac,uisition is li#ely to be ha2ardous or pre4udicial to the insurer's policyholders or stoc#holders. -c. "he followin* conditions affectin* any controlled insurer, re*ardless of when such control has been ac,uired, are )iolations of this title: -1. "he controllin* person or any of its officers or directors ha)e demonstrated untrustworthiness0 and -2. "he effect of retention of control may be substantially to lessen competition in any line of commerce in insurance in this country or to tend to create a monopoly therein. %f, after notice

and an opportunity to be heard, the &ommissioner determines that any of the fore*oin* )iolations e+ists, he shall reduce his findin*s to writin* and shall issue an order based thereon and cause the same to be ser)ed upon the insurer and upon all persons affected thereby directin* any person found to be in )iolation thereof to ta#e appropriate action to cure such )iolation. 9pon the failure of any such person to comply with such order, !ection 1;6 shall become applicable. -d. "he &ommissioner may re,uire the submission of such information as he deems necessary to determine whether any ac,uisition or retention of control complies with this title and may re,uire, as a condition of appro)al of such ac,uisition or retention of control, that all or any portion of such information be disclosed to the insurer's stoc#holders. -e. 9nless sub4ect to re*istration under !ection 2:3 or unless ac,uisition of its control is sub4ect to para*raphs -a. and -b. hereof, e)ery authori2ed insurer shall notify the &ommissioner in writin* of the identity of any person whom the insurer then #nows or has reason to belie)e controls or has ta#en any action, other than preliminary ne*otiations or discussion, to ac,uire control of the insurer. !ection 1;1. -a. Notwithstandin* the control of an authori2ed insurer by any person, the officers and directors of the insurer shall not thereby be relie)ed of any obli*ation or liability to which they would otherwise be sub4ect by law, and the insurer shall be mana*ed so as to assure its separate operatin* identity consistent with this title. -b. Nothin* herein shall preclude an authori2ed insurer from ha)in* or sharin* a common mana*ement or cooperati)e or 4oint use of personnel, property or ser)ices with one or more other persons under arran*ements meetin* the standards of !ection 2:8. !ection 1;3. "o the e+tent that any information or material is set forth in forms or other matter on file with any *o)ernment a*ency or in a re*istration form filed with the &ommissioner by another person within the same holdin* company system, the controlled insurer may comply with the re*istration or reportin* re,uirements of this title by referrin* in its re*istration form or report to such other filed matter and attachin* a copy thereof certified by the insurer as a true and complete copy, to such re*istration form or report or, if such other filed matter is on file with the &ommissioner, incorporatin* such matter by reference. !ection 1;5. No holdin* company or controlled person shall directly or indirectly or throu*h another person do or cause to be done for or in behalf of the controlled insurer any act intended to affect the insurance operations of the insurer which, if done by the insurer, would )iolate any pro)ision of this &ode. !ection 1;6. %n addition to any other penalty pro)ided by law, the &ommissioner may, upon the willful failure of any person within a holdin* company system to comply with this title or any re*ulation or order promul*ated hereunder: -a. Proceed under "itle 13 or "itle 15, &hapter %%% of this &ode with respect to insurer within the holdin* company system0 or

-b. Re)o#e or refuse to renew the authority to do business in this country of an insurer within the holdin* company system or refuse to issue such authority to any other insurer in the system0 or -c. Direct that, in addition to any other penalty pro)ided by law, such person forfeit to the people of this country a sum not less than >i)e thousand pesos -P5,;;;.;;. for a first )iolation and "wenty=fi)e thousand pesos -P25,;;;.;;. for any subse,uent )iolation. /n additional sum not less than "wenty=fi)e thousand pesos -P25,;;;.;;. shall be imposed for each month durin* which any such )iolation shall continue. ,CHAPTER I2 ,SALES AGENCIES AN% TECHNICAL SER2ICES ,TITLE ! ,INSURANCE AGENTS AN% INSURANCE BRO+ERS !ection 1;7. No insurance company doin* business in the Philippines, nor any a*ent thereof, shall pay any commission or other compensation to any person for ser)ices in obtainin* insurance, unless such person shall ha)e first procured from the &ommissioner a license to act as an insurance a*ent of such company or as an insurance bro#er as hereinafter pro)ided. No person shall act as an insurance a*ent or as an insurance bro#er in the solicitation or procurement of applications for insurance, or recei)e for ser)ices in obtainin* insurance, any commission or other compensation from any insurance company doin* business in the Philippines, or any a*ent thereof, without first procurin* a license so to act from the &ommissioner, which must be renewed e)ery three -1. years thereafter. !uch license shall be issued by the &ommissioner only upon the written application of the person desirin* it, such application if for a license to act as insurance a*ent, bein* appro)ed or endorsed by the company such person desires to represent, and shall be upon a form prescribed by the &ommissioner *i)in* such information as he may re,uire, and upon payment of the correspondin* fee hereinafter prescribed. "he &ommissioner shall satisfy himself as to the competence and trustworthiness of the applicant and shall ha)e the ri*ht to refuse to issue or renew and to suspend or re)o#e any such license in his discretion. "he license shall e+pire after the thirty=first day of December of the third year followin* the date of issuance unless it is renewed. Dicenses may be renewed in the case of the company represented by such a*ents, and in the case of insurance bro#ers, upon the application of the said bro#ers, themsel)es. !ection 1;8. "he pro)isions of !ections 1;7 and 1;: shall apply to an employee who shall be en*a*ed to sell insurance products by an insurance company. !ection 1;:. /ny person who for compensation solicits or obtains insurance on behalf of any insurance company or transmits for a person other than himself an application for a policy or contract of insurance to or from such company or offers or assumes to act in the ne*otiatin* of such insurance shall be an insurance a*ent within the intent of this section and shall thereby become liable to all the duties, re,uirements, liabilities and penalties to which an insurance a*ent is sub4ect.

/n insurance a*ent is an independent contractor and not an employee of the company represented. $%nsurance a*ent' includes an a*ency leader, a*ency mana*er, or their e,ui)alent. !ince the insurance industry is imbued with public interest, the insurance companies upon appro)al of the &ommissioner may e+ercise wide latitude in super)isin* the acti)ities of their insurance a*ents to ensure the protection of the insurin* public. !ection 11;. /ny person who for any compensation, commission or other thin* of )alue acts or aids in any manner in solicitin*, ne*otiatin* or procurin* the ma#in* of any insurance contract or in placin* ris# or ta#in* out insurance, on behalf of an insured other than himself, shall be an insurance bro#er within the intent of this &ode, and shall thereby become liable to all the duties, re,uirements, liabilities and penalties to which an insurance bro#er is sub4ect. !ection 111. 6)ery applicant for an insurance bro#er's license shall file with the application and shall thereafter maintain in force while so licensed, a bond in fa)or of the people of the Republic of the Philippines e+ecuted by a company authori2ed to become surety upon official reco*ni2ances, stipulations, bonds and underta#in*s. "he bond shall be in such amount as may be fi+ed by the &ommissioner, but in no case less than >i)e hundred thousand pesos -P5;;,;;;.;;., and shall be conditioned upon full accountin* and due payment to the person entitled thereto of funds comin* into the bro#er's possession throu*h insurance transactions under license. "he bond shall remain in force until released by the &ommissioner, or until cancelled by the surety. (ithout pre4udice to any liability pre)iously incurred thereunder, the surety may cancel the bond on thirty -1;. days ad)ance written notice to both the bro#er and the &ommissioner. 9pon appro)al of the application, the applicant must also file two -2. errors and omissions -professional liability or professional indemnity. policies issued separately by two -2. insurance companies authori2ed to do business in the Philippines, satisfactory to the &ommissioner to indemnify the applicant a*ainst any claim or claims for breach of duty as insurance bro#er which may be made a*ainst him by reason of any ne*li*ent act, error or omission, whene)er or where)er committed or alle*ed to ha)e been committed, on the part of the applicant or any person who has been, is now, or may hereafter durin* the subsistence of the policies be employed by the said applicant in his capacity as insurance bro#er: Provided, "hat the filin* of any claim or claims under one of such policies shall preclude the filin* of the said claim or claims under the other policy. "he said policies shall be in such amounts as may be prescribed by the &ommissioner, dependin* upon the si2e or amount of the bro#in* business of the applicant, but in no case shall the amount of each of such policies be less than >i)e hundred thousand pesos -P5;;,;;;.;;.. !ection 112. "he &ommissioner shall, in order to determine the competence of e)ery applicant to ha)e the #ind of license applied for, re,uire such applicant to submit to a written e+amination and to pass the same to the satisfaction of the &ommissioner. "he &ommissioner may dele*ate or authori2e the administration of the e+amination to an independent or*ani2ation, sub4ect to such conditions that the &ommissioner may pro)ide. !ection 111. /n applicant for the written e+amination mentioned in the precedin* section must be of *ood moral character and must not ha)e been con)icted of any crime in)ol)in* moral turpitude. Fe must satisfactorily show to the &ommissioner that he has been trained in the #ind of insurance

contemplated in the license applied for. !uch e+amination may be wai)ed if it is shown to the satisfaction of the &ommissioner that the applicant has under*one e+tensi)e education andBor trainin* in insurance. !ection 113. /n application for the issuance or renewal of a license to act as an insurance a*ent or insurance bro#er may be refused, or such license, if already issued or renewed, shall be suspended or re)o#ed if the &ommissioner finds that the applicant for, or holder of, such license: -a. Fas willfully )iolated any pro)ision of this &ode0 or -b. Fas intentionally made a material misstatement in the application to ,ualify for such license0 or -c. Fas obtained or attempted to obtain a license by fraud or misrepresentation0 or -d. Fas been *uilty of fraudulent or dishonest practices0 or -e. Fas misappropriated or con)erted to his own use or ille*ally withheld moneys re,uired to be held in a fiduciary capacity0 or -f. Fas not demonstrated trustworthiness and competence to transact business as an insurance a*ent or insurance bro#er in such manner as to safe*uard the public0 or -*. Fas materially misrepresented the terms and conditions of policies or contracts of insurance which he see#s to sell or has sold0 or -h. Fas failed to pass the written e+amination prescribed, if not otherwise e+empt from ta#in* the same. %n addition to the fore*oin* causes, no license to act as insurance a*ent or insurance bro#er shall be renewed if the holder thereof has not been acti)ely en*a*ed as such a*ent or bro#er in accordance with such rules as the &ommissioner may prescribe. !ection 115. "he premium, or any portion thereof, which an insurance a*ent or insurance bro#er collects from an insured and which is to be paid to an insurance company because of the assumption of liability throu*h the issuance of policies or contracts of insurance, shall be held by the a*ent or bro#er in a fiduciary capacity and shall not be misappropriated or con)erted to his own use or ille*ally withheld by the a*ent or bro#er. /ny insurance company which deli)ers to an insurance a*ent or insurance bro#er a policy or contract of insurance shall be deemed to ha)e authori2ed such a*ent or bro#er to recei)e on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or deli)ery or which becomes due thereon. %n order to ensure faithful performance by the insurance a*ent or insurance bro#er of these fiduciary responsibilities, the %nsurance &ommissioner shall prescribe the minimum terms and conditions on

such matters in the standard a*ency or bro#ers a*reement between the a*ents andBor the bro#er with the insurance companies. !ection 116. /ny pro)ision of e+istin* laws to the contrary notwithstandin*, no person shall, within the Philippines, sell or offer for sale a )ariable contract or do or perform any act or thin* in the sale, ne*otiation, ma#in* or consummatin* of any )ariable contract other than for himself unless such person shall ha)e a )alid and current license from the &ommissioner authori2in* such person to act as a )ariable contract a*ent. No such license shall be issued unless and until the &ommissioner is satisfied, after e+amination that such person is by trainin*, #nowled*e, ability and character ,ualified to act as such a*ent. /ny such license may be withdrawn and cancelled by the &ommissioner after notice and hearin*, if he shall find that the holder thereof does not then ha)e the ,ualifications re,uired for the issuance of such license. !ection 117. %t shall be unlawful for any person, company or corporation in the Philippines to act as *eneral a*ent of any insurance company unless he is empowered by a written power of attorney duly e+ecuted by such insurance company, and re*istered with the &ommissioner to recei)e notices, summons and le*al processes for and in behalf of the insurance company concerned in connection with actions or other le*al proceedin*s a*ainst said insurance company. %t shall be the duty of said *eneral a*ent to notify the &ommissioner of his post office address in the Philippines, or any chan*e thereof. Notices, summons, or processes of any #ind sent by re*istered mail to the last re*istered address of such *eneral a*ent of the company concerned or to the &ommissioner shall be sufficient ser)ice and deemed as if ser)ed on the insurance company itself. !ection 118. 6+cept as otherwise pro)ided by law or treaty, it shall be unlawful for any person, partnership, association or corporation in the Philippines, for himself or itself, or for some other person, partnership, association or corporation, either to procure, recei)e or forward applications of insurance in, or to issue or to deli)er or accept policies or contracts of insurance of or for, any insurance company or companies not authori2ed to transact business in the Philippines, co)erin* ris#s, life or non=life, situated in the Philippines0 and any such person, partnership, association or corporation )iolatin* the pro)isions of this section shall be deemed *uilty of a penal offense, and upon con)iction thereof, shall for each such offense be punished by a fine of "wo hundred fifty thousand pesos -P25;,;;;.;;., or imprisonment of si+ -6. months, or both, at the discretion of the court: Provided, "hat the pro)isions of this section shall not apply to reinsurance. ,TITLE ) ,REINSURANCE BRO+ERS !ection 11:. 6+cept as pro)ided in the ne+t succeedin* title, no person shall act as reinsurance bro#er in the Philippines unless he is authori2ed as such by the &ommissioner. / reinsurance bro#er is one who, for compensation, not bein* a duly authori2ed a*ent, employee or officer of an insurer in which any reinsurance is effected, acts or aids in any manner in ne*otiatin* contracts of reinsurance, or placin* ris#s of effectin* reinsurance, for any insurance company authori2ed to do business in the Philippines.

!ection 12;. 9pon application and payment of the correspondin* fee hereinafter prescribed, and the filin* of two -2. errors and omissions -professional liability or professional indemnity. policies hereinafter described, a person may, if found ,ualified, be issued a license to act as reinsurance bro#er by the &ommissioner. No such license shall be )alid after December 11 of the third year followin* its issuance unless it is renewed. "he errors and omissions -professional liability or professional indemnity. policies mentioned abo)e shall indemnify the applicant a*ainst any claim or claims for breach of duty as reinsurance bro#er which may be made a*ainst him by reason of any ne*li*ent act, error or omission, whene)er or where)er committed or alle*ed to ha)e been committed, on the part of the applicant or any person who has been, is now, or may hereafter durin* the subsistence of the policies be employed by the said applicant in his capacity as reinsurance bro#er: Provided, "hat the filin* of any claim or claims under one of such policies shall preclude the filin* of the said claim or claims under the other policy. "he said policies shall be issued separately by two -2. insurance companies authori2ed to do business in the Philippines and shall be in such amounts as may be prescribed by the %nsurance &ommissioner, dependin* upon the si2e or amount of the bro#in* business of the applicant, but in no case shall the amount of each of such policies be less than >i)e hundred thousand pesos -P5;;,;;;.;;.. !ection 121. "he &ommissioner may recall, suspend or re)o#e the license *ranted to a reinsurance bro#er for )iolation of any e+istin* law, rule and re*ulation, or any pro)ision of this &ode after due notice and hearin*. ,TITLE 3 ,RESI%ENT AGENTS !ection 122. No person shall act as resident a*ent, as hereinafter defined, unless he is re*istered as such with the &ommissioner. !ection 121. "he term resident agent, as used in this title, is one duly appointed by a forei*n insurer or bro#er not authori2ed to do business in the Philippines to recei)e in its behalf notices, summons and le*al processes in connection with actions or other le*al proceedin*s a*ainst such forei*n insurer or bro#er. !ection 123. "he application for a certificate of re*istration as resident a*ent filed with the &ommissioner must be accompanied with a copy of the power of attorney, duly notari2ed and authenticated by the Philippine &onsul in the place where such forei*n insurer or bro#er is domiciled, empowerin* the applicant to act as resident a*ent and to recei)e notices, summons and le*al processes for and in behalf of such forei*n insurer or bro#er in connection with any action or le*al proceedin* a*ainst such forei*n insurer or bro#er. !ection 125. %t shall be the duty of such resident a*ent to notify immediately the &ommissioner of any chan*e of his office address. !ection 126. / certificate of re*istration issued to a resident a*ent shall e+pire on the thirty=first day of December of the third year followin* its issuance unless it is renewed.

"he &ommissioner may, after due notice and hearin*, recall or cancel the certificate of re*istration issued to a resident a*ent for )iolation of any e+istin* law, rule or re*ulation, or any pro)ision of this &ode. ,TITLE ,NON4LIFE CO(PAN& UN%ER*RITER !ection 127. No person shall act, and no company shall employ any person, as non=life company underwriter, whose duty and responsibility it shall be to select, e)aluate and accept ris#s for, and to determine the terms and conditions, includin* those pertainin* to amounts of retentions, under which such ris#s are to be accepted by the company, unless such underwriter is re*istered as such with the &ommissioner. !ection 128. 6)ery non=life insurance company doin* business in the Philippines must maintain at all times a re*ister of ris#s accepted and a claims re*ister for each line of ris#s en*a*ed in by such non= life insurance company with such entries therein as are now or as may hereafter be re,uired by the &ommissioner, and it shall be the responsibility of the underwriter on the particular line of ris# in)ol)ed to see to it that the said re*isters are well maintained and #ept, and that all entries therein are properly and correctly recorded. !uch re*isters shall be open to inspection and e+amination of duly authori2ed representati)es of the &ommissioner at all times durin* business hours. !ection 12:. No person shall be re*istered with the &ommissioner, unless such person shall be at least twenty=one -21. years of a*e on the date of such re*istration0 a resident of the Philippines0 of *ood moral character and with no con)iction of any crime in)ol)in* moral turpitude0 has had at the time such re*istration is made at least two -2. years of underwritin* wor# in the particular line of ris# in)ol)ed0 and has passed such ,ualifyin* written e+amination that the &ommissioner shall conduct at such time and in such place as he may decide to hold for applicants desirin* to act as underwriters. !uch e+amination shall not be re,uired of any person who has ser)ed as non=life company underwriter for a period of at least fi)e -5. years, if the &ommissioner is satisfied of the applicant's competence as shown by the results of his underwritin* wor# in the non=life insurance company or companies that employed him in that capacity. "he minimum underwritin* e+perience herein re,uired may be reduced or wai)ed if it is shown to the satisfaction of the &ommissioner that the non=life company underwriter has under*one e+tensi)e education andBor trainin* in insurance. !ection 11;. /ny applicant who misrepresents or omits any material fact in his application for re*istration as a non=life company underwriter, or commits any dishonest act in ta#in* or in connection with the ,ualifyin* written e+amination for underwriters, shall be barred from bein* re*istered as such non=life company underwriter and, if already re*istered, his re*istration shall be cancelled and the certificate of re*istration issued in his fa)or shall be recalled immediately by the &ommissioner. %n the e)ent that the certificate of authority of a non=life insurance company to transact business is suspended or re)o#ed due to business failure arisin* lar*ely from the imprudent and in4udicious acceptance of ris#s by the underwriter concerned, the re*istration of such underwriter shall li#ewise

be cancelled and his certificate of re*istration shall be recalled by the &ommissioner, and no similar certificate shall thereafter be issued in his fa)or. !ection 111. No certificate of re*istration issued to an underwriter shall be )alid after December 11 of the third year followin* its issuance unless it is renewed. "he &ommissioner may, after due notice and hearin*, also suspend or cancel such certificate for )iolation of e+istin* laws, rules and re*ulations or of any pro)isions of this &ode. ,TITLE / ,A%7USTERS !ection 112. No person, partnership, association, or corporation shall act as an ad4uster, as hereinafter defined, unless authori2ed so to act by )irtue of a license issued or renewed by the &ommissioner pursuant to the pro)isions of this &ode: Provided, "hat in the case of a natural person, he must be a >ilipino citi2en and in the case of a partnership, association or corporation, at least si+ty percent -6;C. of its capital must be owned by citi2ens of the Philippines. !ection 111. /n ad4uster may be an independent ad4uster or a public ad4uster. "he term independent ad*uster means any person, partnership, association or corporation which, for money, commission or any other thin* of )alue, acts for or on behalf of an insurer in the ad4ustin* of claims arisin* under insurance contracts or policies issued by such insurer. "he term public ad*uster means any person, partnership, association or corporation which, for money, commission or any other thin* of )alue, acts on behalf of an insured in ne*otiatin* for, or effectin*, the settlement of a claim or claims of the said insured arisin* under insurance contracts or policies, or which ad)ertises for or solicits employment as an ad4uster of such claims. !ection 113. >or e)ery line of insurance claim ad4ustment, ad4usters shall be licensed either as independent ad4usters or as public ad4usters. No ad4uster shall act on behalf of an insurer unless said ad4uster is licensed as an independent ad4uster0 and no ad4uster shall act on behalf of an insured unless said ad4uster is licensed as a public ad4uster: Provided, however, "hat when a firm or person has been licensed as a public ad4uster, he shall not be *ranted another license as independent ad4uster and vice versa. No license, howe)er, shall be re,uired of any company ad4uster who is a salaried employee of an insurance company for the ad4ustment of claims filed under policies issued by such insurance company. !ection 115. !uch license or any renewal thereof may be issued by the &ommissioner upon written application filed by the person interested on the form or forms prescribed by the &ommissioner, which shall contain such information as he may re,uire, and upon payment of the correspondin* fee hereinafter prescribed.

!ection 116. "he &ommissioner shall conduct, at such times, and in such places as he may decide to hold, written e+aminations to determine the competence and ability of applicants desirin* to act as ad4uster of insurance claims. !ection 117. No ad4uster's license issued hereunder shall be )alid after December 11 of the third year followin* the issuance of such license unless it is renewed. !ection 118. Nothin* contained in this title shall apply to any duly licensed attorney=at=law who acts or aids in ad4ustin* insurance claims as an incident to the practice of his profession and who does not ad)ertise himself as an ad4uster. !ection 11:. "he &ommissioner may suspend or re)o#e any ad4uster's license if, after *i)in* notice and hearin* to the ad4uster concerned, the &ommissioner finds that the said ad4uster: -a. Fas )iolated any pro)ision of this &ode and of the circulars, rulin*s and instructions of the &ommissioner or has )iolated any law in the course of his dealin*s as an ad4uster0 or -b. Fas made a material misstatement in the application for such license0 or -c. Fas been *uilty of fraudulent or dishonest practices0 or -d. Fas demonstrated his incompetence or untrustworthiness to act as ad4uster0 or -e. Fas made patently un4ust )aluation of loss0 or -f. Fas failed to ma#e a report of the ad4ustment he proposed within si+ty -6;. days from the date of the filin* of the claim by the insured with the insurer, unless pre)ented so to do by reasons beyond his control0 or -*. Fas refused to allow an e+amination into his affairs or method of doin* business as hereinafter pro)ided. !ection 13;. 6)ery ad4uster shall submit to the &ommissioner a ,uarterly report of all losses which are the sub4ect of ad4ustment effected by him durin* each month in the form prescribed by the &ommissioner. "he report shall be filed within one -1. month after the end of each ,uarter. !ection 131. 6)ery ad4uster shall #eep his or its boo#s, records, reports, accounts, and )ouchers in such manner that the &ommissioner or his duly authori2ed representati)es may readily )erify the ,uarterly reports of the said ad4uster and ascertain whether the said ad4uster has complied with the pro)isions of law or re*ulations obli*atory upon him or whether the method of doin* business of the said ad4uster has been fair, 4ust and honest. !ection 132. "he &ommissioner shall, at least once a year and whene)er he considers the public interest so demands, cause an e+amination to be made into the affairs and method of doin* business of e)ery ad4uster.

!ection 131. /ny )iolation of any pro)ision of this title shall be punished by a fine of not less than "en thousand pesos -P1;,;;;.;;., or by imprisonment at the discretion of the court: Provided, "hat, in case of a partnership, association or corporation, the said penalty shall be imposed upon the partner, president, mana*er, mana*in* director, director or person in char*e of its business or responsible for the )iolation. ,TITLE # ,ACTUARIES !ection 133. No life insurance company shall be licensed to do business in the Philippines nor shall any life insurance company doin* business in the Philippines be allowed to continue doin* such business unless they shall en*a*e the ser)ices of an actuary duly accredited with the &ommissioner who shall, durin* his tenure of office, be directly responsible for the direction and super)ision of all actuarial wor# connected with or that may be in)ol)ed in the business of the insurance company. "he &ommissioner may also re,uire non=life insurance companies to en*a*e the ser)ices of an accredited actuary, in accordance with the rules and re*ulations that the &ommissioner will formulate. !ection 135. /ny person may be officially accredited by the &ommissioner to act as an actuary in any life insurance company or in any mutual benefit association authori2ed to do business in the Philippines upon application therefor and the payment of the correspondin* fee hereinafter prescribed: Provided, "hat: -a. Fe is a fellow of *ood standin* of the /ctuarial !ociety of the Philippines at the time of his appointment and remains in such *ood standin* durin* the tenure of his en*a*ement0 or -b. %n the case of one who is not a fellow of the /ctuarial !ociety of the Philippines, he meets all the re,uirements of the said !ociety for accreditation as a fellow of the !ociety, and has been *i)en permission by the pertinent *o)ernment authorities in the Philippines to render ser)ices in the Philippines, in the e)ent that he is not a citi2en of the Philippines. "he re*istration of the actuary shall be suspended or re)o#ed by the &ommissioner on the followin* *rounds: -1. >ailure to ade,uately perform re,uired functions and duties under this &ode0 -2. >ailure to disclose conflict of interest0 -1. >ailure to comply with the &ode of &onduct of the /ctuarial !ociety of the Philippines0 or -3. !uch other *rounds that may be determined by the &ommissioner. No actuary en*a*ed by a life insurance company shall be at the same time a stoc#holder or a director of the board, chief e+ecuti)e officer or chief financial officer of the company or hold any position that the &ommissioner may determine to ha)e an inherent conflict of interest to the position of an actuary.

No certificate of re*istration issued under this title shall be )alid after December 11 of the third year followin* its issuance unless it is renewed. !ection 136. "he followin* documents, which are from time to time submitted to the &ommissioner by a life insurance company authori2ed to do business in the Philippines, shall be duly certified by an accredited actuary employed by such company: -a. Policy reser)es, claims or loss reser)es and net due and deferred premiums. -b. !tatements of bases and net premiums, loadin* for *ross premiums, and on non=forfeiture )alues and reser)es, when applyin* for appro)al of *ross premiums, reser)es and non= forfeiture )alues. -c. Policies of insurance under any plan submitted to the &ommissioner as re,uired by law. -d. /nnual statements and )aluation reports submitted to the &ommissioner as re,uired by law. -e. >inancial pro4ection showin* the probable income and out*o and reser)e re,uirements, enumeratin* the actuarial assumptions and bases of pro4ections. -f. ?aluation of annuity funds or retirement plans. "he &ommissioner may also re,uire non=life insurance companies to submit, from time to time, similar documents which shall be duly certified by an accredited actuary employed by such company. /ny life insurance company authori2ed to do business in the Philippines may employ any person who is not officially accredited under either of the ,ualifications for any #ind of actuarial wor#: Provided, "hat he shall not, at any time, ha)e the authority to certify to the correctness of the fore*oin* documents. !ection 137. No accredited actuary shall ser)e more than one client or employer at the same time. Fowe)er, one already in the employ of an insurance company may be allowed by the &ommissioner to ser)e a mutual benefit association or any other insurance company, pro)ided the followin* conditions are first complied with: -a. "hat the re,uest to en*a*e his ser)ices by the other employer is in writin*0 -b. "hat his present employer ac,uiesced to it in writin*0 and -c. "hat he furnishes the &ommissioner with copies of said re,uest and ac,uiescence. No e+ternal auditor shall be en*a*ed by super)ised persons or entities unless it has been issued an accreditation certificate by the &ommissioner. "he accreditation certificate shall be )alid until December 11 of the third year from issuance unless it is re)o#ed or suspended. "he &ommissioner shall issue rules and re*ulations to *o)ern the accreditation of the e+ternal auditor and the re)ocation or suspension of the accreditation.

,TITLE $ ,RATING ORGANI5ATION AN% RATE (A+ING !ection 138. 6)ery or*ani2ation which now e+ists or which may hereafter be formed for the purpose of ma#in* rates to be used by more than one insurance company authori2ed to do business in the Philippines shall be #nown as a ratin* or*ani2ation. "he term rate as used in this title shall *enerally mean the ratio of the premium to the amount insured and shall include, as the conte+t may re,uire, either the consideration to be paid or char*ed for insurance contracts, includin* surety bonds, or the elements and factors formin* the basis for the determination or application of the same, or both. !ection 13:. 6)ery ratin* or*ani2ation which now e+ists or which may hereafter be formed shall be sub4ect to the pro)isions of this title. !ection 15;. No ratin* or*ani2ation hereafter formed shall commence rate=ma#in* operations until it shall ha)e obtained a license from the &ommissioner. @efore obtainin* such license, such ratin* or*ani2ation shall file with the &ommissioner a notice of its intention to commence rate=ma#in* operations, a copy of its constitution, articles of a*reement or association, or of incorporation, and its bylaws, a list of insurance companies that ha)e a*reed to become members or subscribers, and such other information concernin* such ratin* or*ani2ation and its operations as may be re,uired by the &ommissioner. %f the &ommissioner finds that the or*ani2ation has complied with the pro)isions of law and that it has a sufficient number of members or subscribers and is otherwise ,ualified to function as a ratin* or*ani2ation, the &ommissioner may issue a license to such ratin* or*ani2ation authori2in* it to ma#e rates for the #inds of insurance or subdi)isions thereof as may be specified in such license. No license issued to a ratin* or*ani2ation shall be )alid after December 11 of the third year followin* its issuance unless it is renewed. No ratin* or*ani2ation which now e+ists and is not licensed pursuant to this section shall continue rate=ma#in* operations until it shall ha)e obtained from the &ommissioner a license which he may issue if satisfied that such or*ani2ation is complyin* with the pro)isions of this title. 6)ery ratin* or*ani2ation shall notify the &ommissioner promptly of e)ery chan*e in: -a. %ts constitution, its articles of a*reement or association or its certificate of incorporation, and its bylaws, rules and re*ulations *o)ernin* the conduct of its business0 and -b. %ts list of members and subscribers. / !e!ber means an insurer who participates in or is entitled to participate in the mana*ement of a ratin* or*ani2ation. / subscriber means an insurer which is furnished at its re,uest with rates and ratin* manuals by a ratin* or*ani2ation of which it is not a member. !ection 151. 6ach ratin* or*ani2ation shall furnish its ratin* ser)ice without discrimination to all of its members and subscribers, and shall, sub4ect to reasonable rules and re*ulations, permit any insurance company doin* business in the Philippines, not admitted to membership, to become a subscriber to its ratin* ser)ices for any #ind of insurance or subdi)isions thereof. Notice of proposed chan*es in such rules and re*ulations shall be *i)en to subscribers. "he reasonableness of any rule

or re*ulation in its application to subscribers, or the refusal of any ratin* or*ani2ation to admit an insurance company as a subscriber, shall, at the re,uest of any subscriber or any such insurance company, be re)iewed by the &ommissioner at a hearin* held upon at least ten -1;. days' written notice to such ratin* or*ani2ation and to such subscriber or insurance company. "he &ommissioner may, after such hearin*, issue an appropriate order. !ection 152. No ratin* or*ani2ation or any other association shall refuse to do business with, or prohibit or pre)ent the payment of commissions to, any person licensed as an insurance bro#er pursuant to the pro)isions of "itle 1 of this chapter. !ection 151. Ratin* or*ani2ations shall be sub4ect to e+amination by the &ommissioner, as often as he may deem such e+amination e+pedient, pursuant to the pro)isions of this &ode applicable to the e+amination of insurance companies. Fe shall cause such an e+amination of each ratin* or*ani2ation to be made at least once in e)ery fi)e -5. years. !ection 153. "he &ommissioner may suspend or re)o#e the license of any ratin* or*ani2ation which fails to comply with his order within the time limited by such order, or any e+tension thereof which he may *rant. "he &ommissioner may determine when a suspension of license shall become effecti)e and it shall remain in effect for the period fi+ed by him, unless he modifies or rescinds such suspension. !ection 155. /ny ratin* or*ani2ation may subscribe for or purchase actuarial, technical or other ser)ices, and such ser)ices shall be a)ailable to all members and subscribers without discrimination. !ection 156. /ny ratin* or*ani2ation may pro)ide for the e+amination of policies, daily reports, binders, renewal certificates, endorsements or other instruments of insurance, or the cancellation thereof, and may ma#e reasonable rules *o)ernin* their submission. !uch rules shall contain a pro)ision that in the e)ent an insurance company does not within si+ty -6;. days furnish satisfactory e)idence to the ratin* or*ani2ation of the correction of any error or omission pre)iously called to its attention by the ratin* or*ani2ation, it shall be the duty of the ratin* or*ani2ation to notify the &ommissioner thereof. /ll information so submitted for e+amination shall be confidential. !ection 157. &ooperation amon* ratin* or*ani2ations or amon* ratin* or*ani2ations and insurers in rate ma#in* or in other matters within the scope of this title is hereby authori2ed, pro)ided the filin*s resultin* from such cooperation are sub4ect to all pro)isions of this title which are applicable to filin*s *enerally. "he &ommissioner may re)iew such cooperati)e acti)ities and practices and if he finds that any such acti)ity or practice is unfair or unreasonable or otherwise inconsistent with the pro)isions of this title, he may issue a written order specifyin* in what respects such acti)ity or practice is unfair or unreasonable or otherwise inconsistent with the pro)isions of this title, and re,uirin* the discontinuance of such acti)ity or practice. !ection 158. 6)ery ratin* or*ani2ation and e)ery insurance company which ma#es and files its own rates, shall ma#e rates for all ris#s rated by such or*ani2ation or insurance company in accordance with the followin* pro)isions:

-a. @asic classification, manual, minimum, class, or schedule rates or ratin* plans, shall be made and adopted for all such ris#s. /ny departure from such rates shall be in accordance with schedules, ratin* plans and rules filed with the &ommissioner0 -b. Rates shall be reasonable and ade,uate for the class of ris#s to which they apply0 -c. No rate shall discriminate unfairly between ris#s in)ol)in* essentially the same ha2ards and e+pense elements or between ris#s in the application of li#e char*es and credits0 -d. &onsideration shall be *i)en to the past and prospecti)e loss e+perience, includin* the confla*ration and catastrophe ha2ards, if any, to all factors reasonably attributable to the class of ris#s, to a reasonable profit, to commissions paid durin* the most recent annual period and to past and prospecti)e other e+penses. %n case of fire insurance rates, consideration shall be *i)en to the e+perience of the fire insurance business durin* a period of not less than fi)e -5. years ne+t precedin* the year in which the re)iew is made0 -e. Ris# may be *rouped by classifications for the establishment of rates and minimum premiums. &lassification rates may be modified to produce rates for indi)idual ris#s in accordance with ratin* plans which establish standards for measurin* )ariations in ha2ards or e+pense pro)isions, or both. !uch standards may measure any difference amon* ris#s that can be demonstrated to ha)e a probable effect upon losses or e+penses. !ection 15:. No ratin* or*ani2ation and no insurance company which ma#es and files its own rates shall ma#e or promul*ate any rate or schedule of rates which is to be applied to any fire ris# on the condition that the whole amount of insurance on any ris# or any specified part thereof shall be placed with the members of or subscribers to such ratin* or*ani2ation or with such insurer. !ection 16;. 6)ery insurance company doin* business in the Philippines shall annually file with the ratin* or*ani2ation of which it is a member or subscriber, or with such other a*ency as the &ommissioner may desi*nate, a statistical report showin* a classification schedule of its premiums and losses on all #inds or types of insurance business to which !ection 158 is applicable, and such other information as the &ommissioner may deem necessary or e+pedient for the administration of the pro)isions of this title. !ection 161. 6)ery non=life ratin* or*ani2ation and e)ery non=life insurance company doin* business in the Philippines shall file with the &ommissioner, e+cept as to ris#s which by *eneral custom of the business are not written accordin* to manual rates or ratin* plans, e)ery rate manual, schedule of rates, classification of ris#s, ratin* plan, and e)ery other ratin* rule and e)ery modification of any of the fore*oin* which it proposes to use. /n insurance company may satisfy its obli*ation to ma#e such filin*s for any #ind or type of insurance by becomin* a member of or subscriber to a ratin* or*ani2ation which ma#es such filin*s for such #ind or type of insurance, and by authori2in* the &ommissioner to accept such filin*s of the ratin* or*ani2ation on behalf of such insurance company. !ection 162. 6)ery manual or schedule of rates and e)ery ratin* plan filed as pro)ided in the precedin* section shall state or clearly indicate the character and e+tent of the co)era*e to which any such rate or any modification thereof will be applied.

!ection 161. "he &ommissioner shall re)iew filin*s as soon as reasonably possible after they ha)e been made in order to determine whether they meet the re,uirements of this title. (hen a filin* is not accompanied by the information upon which the insurance company supports such filin*, and the &ommissioner does not ha)e sufficient information to determine whether such filin* meets the re,uirements of this title, he shall re,uire such insurance company to furnish the information upon which it supports such filin*. "he information furnished in support of a filin* may include: -a. "he e+perience or 4ud*ment of the insurance company or ratin* or*ani2ation ma#in* the filin*0 -b. %ts interpretation of any statistical data it relies upon0 -c. "he e+perience of other insurance companies or ratin* or*ani2ation0 or -d. /ny other rele)ant factors. !ection 163. %f the &ommissioner finds that any rate filin*s theretofore filed with him do not comply with the pro)isions of this title or that they pro)ide rates or rules which are inade,uate, e+cessi)e, unfairly discriminatory or otherwise unreasonable, he may order the same withdrawn and at the e+piration of si+ty -6;. days thereafter the same shall be deemed no lon*er on file. @efore ma#in* any such findin* and order, the &ommissioner shall *i)e notice, not less than ten -1;. days in ad)ance, and a hearin*, to the ratin* or*ani2ation, or to the insurer, which filed the same. !uch order shall not affect any contract or policy made or issued prior to the e+piration of such si+ty -6;.=day period. !ection 165. No member or subscriber of a ratin* or*ani2ation, and no insurance company doin* business in the Philippines, or a*ent, employee or other representati)e of such company, and no insurance bro#er shall char*e or demand a rate or recei)e a premium which de)iates from the rates, ratin* plans, classifications, schedules, rules and standards, made and last filed by a ratin* or*ani2ation or by or on behalf of the insurance company, or shall issue or ma#e any policy or contract in)ol)in* a )iolation of such rate filin*s. !ection 166. Notwithstandin* any other pro)isions of this title, upon the written application of the insurer, statin* his reasons therefor, filed with and appro)ed by the &ommissioner, a rate in e+cess of that pro)ided by a filin* otherwise applicable may be used on any specific ris#. !ection 167. (hene)er the &ommissioner shall determine, after notice and a hearin*, that the rates char*ed or filed on any class of ris#s are e+cessi)e, discriminatory, inade,uate or unreasonable, he shall order that such rates be appropriately ad4usted. >or the purpose of applyin* the pro)isions of this section, the &ommissioner may from time to time appro)e reasonable classifications of ris#s for any or all such classes, ha)in* due re*ard to the past and prospecti)e loss e+perience, includin* confla*ration or catastrophe ha2ards, if any, to all other rele)ant factors and to a reasonable profit. !ection 168. Nothin* contained in this title shall be construed as re,uirin* any insurer to become a member of or subscriber to any ratin* or*ani2ation.

!ection 16:. /*reements may be made amon* insurance companies with respect to the e,uitable apportionment amon* them of insurance which may be afforded applicants who are in *ood faith entitled to but are unable to procure such insurance throu*h ordinary methods and such insurance companies may a*ree amon* themsel)es on the use of reasonable rates and modifications for such insurance, such a*reements and rate modifications to be sub4ect to the appro)al of the &ommissioner: Provided, however, "hat the pro)isions of this section shall not be deemed to apply to wor#men's compensation insurance. !ection 17;. No insurance company doin* business in the Philippines or any a*ent thereof, no insurance bro#er, and no employee or other representati)e of any such insurance company, a*ent, or bro#er, shall ma#e, procure or ne*otiate any contract of insurance or a*reement as to policy contract, other than is plainly e+pressed in the policy or other written contract issued or to be issued as e)idence thereof, or shall directly or indirectly, by *i)in* or sharin* a commission or in any manner whatsoe)er, pay or allow or offer to pay or allow to the insured or to any employee of such insured, either as an inducement to the ma#in* of such insurance or after such insurance has been effected, any rebate from the premium which is specified in the policy, or any special fa)or or ad)anta*e in the di)idends or other benefits to accrue thereon, or shall *i)e or offer to *i)e any )aluable consideration or inducement of any #ind, directly or indirectly, which is not specified in such policy or contract of insurance0 nor shall any such company, or any a*ent thereof, as to any policy or contract of insurance issued, ma#e any discrimination a*ainst any >ilipino in the sense that he is *i)en less ad)anta*eous rates, di)idends or other policy conditions or pri)ile*es than are accorded to other nationals because of his race. !ection 171. No insurance company doin* business in the Philippines, and no officer, director, or a*ent thereof, and no insurance bro#er or any other person, partnership or corporation shall issue or circulate or cause or permit to be issued or circulated any literature, illustration, circular or statement of any sort misrepresentin* the terms of any policy issued by any insurance company of the benefits or ad)anta*es promised thereby, or any misleadin* estimate of the di)idends or share of surplus to be recei)ed thereon, or shall use any name or title of any policy or class of policies misrepresentin* the true nature thereof0 nor shall any such company or a*ent thereof, or any other person, partnership or corporation ma#e any misleadin* representation or incomplete comparison of policies to any person insured in such company for the purpose of inducin* or tendin* to induce such person to lapse, forfeit, or surrender his said insurance. !ection 172. %f the &ommissioner, after notice and hearin*, finds that any insurance company, ratin* or*ani2ation, a*ent, bro#er or other person has )iolated any of the pro)isions of this title, it shall order the payment of a fine not to e+ceed "wenty=fi)e thousand pesos -P25,;;;.;;. for each such offense, and shall immediately suspend or re)o#e the license issued to such insurance company, ratin* or*ani2ation, a*ent, or bro#er. "he issuance, procurement or ne*otiation of a sin*le policy or contract of insurance shall be deemed a separate offense. ,TITLE . ,PRO2ISION CO((ON TO AGENTS' BRO+ERS AN% A%7USTERS

!ection 171. / license issued to a partnership, association or corporation to act as an insurance a*ent, *eneral a*ent, insurance bro#er, reinsurance bro#er, or ad4uster shall authori2e only the indi)idual named in the license who shall ,ualify therefor as thou*h an indi)idual licensee. "he &ommissioner shall char*e, and the licensee shall pay, a full additional license fee as to each respecti)e indi)idual so named in such license in e+cess of one. Dicenses and certificates of re*istration issued under the pro)isions of this chapter may be renewed by the filin* of notices of intention on forms to be prescribed by the &ommissioner and payment of the fees therefor. !ection 173. "he &ommissioner, in consultation with the duly accredited associations representin* the insurance industry, shall adopt and promul*ate a code of conduct to promote inte*rity, honesty and ethical business practices amon* insurance a*ents, distributors and other intermediaries. ,TITLE 0 ,BANCASSURANCE !ection 175. "he term bancassurance shall mean the presentation and sale to ban# customers by an insurance company of its insurance products within the premises of the head office of such ban# duly licensed by the @an*#o !entral n* Pilipinas or any of its branches under such rules and re*ulations which the &ommissioner and the @an*#o !entral n* Pilipinas may promul*ate. "o en*a*e in bancassurance arran*ement, a ban# is not re,uired to ha)e e,uity ownership of the insurance company. No insurance company shall enter into a bancassurance arran*ement unless it possesses all the re,uirements as may be prescribed by the &ommissioner and the @an*#o !entral n* Pilipinas. No insurance product under this section, whether life or non=life, shall be issued or deli)ered unless in the form pre)iously appro)ed by the &ommissioner. !ection 176. Personnel tas#ed to present and sell insurance products within the ban# premises shall be duly licensed by the &ommissioner and shall be sub4ect to the rules and re*ulations of this /ct. !ection 177. "he &ommissioner and the @an*#o !entral n* Pilipinas shall promul*ate rules and re*ulations to effecti)ely super)ise the business of bancassurance.

,CHAPTER 2 ,SECURIT& FUN% !ection 178. "here is hereby created a fund to be #nown as the !ecurity >und which shall be used in the payment of allowed claims a*ainst an insurance company authori2ed to transact business in the Philippines remainin* unpaid by reason of the insol)ency of such company. "he said >und may also be used to reinsure the policy of the insol)ent insurer in any sol)ent insurer authori2ed to do business in the Philippines as pro)ided in !ection 256. "he >und may li#ewise be used to pay insured claims which otherwise would not be compensable under the pro)isions of the policy. No payment from the !ecurity >und shall, howe)er, be made to any person who owns or controls ten percent -1;C. or

more of the )otin* shares of stoc# of the insol)ent insurer and no payment on any one claim shall e+ceed "wenty thousand pesos -P2;,;;;.;;.. !ection 17:. !uch >und shall consist of all payments made to the >und by insurance companies authori2ed to do business in the Philippines. Payments made by life insurance companies shall be treated separately from those made by non=life insurance companies and the correspondin* fund shall be called Dife /ccount and Non=Dife /ccount, respecti)ely, and shall be held and administered as such by the &ommissioner in accordance with the pro)isions of this title. "he Dife /ccount shall be utili2ed e+clusi)ely for disbursements that refer to life insurance companies, while the Non=Dife /ccount shall be utili2ed e+clusi)ely for disbursements that refer to non=life insurance companies. !ection 18;. /ll insurance companies doin* business in the Philippines shall contribute to the !ecurity >und, Dife or Non=Dife /ccount, as the case may be, the a**re*ate amount of >i)e million pesos -P5,;;;,;;;.;;. for each /ccount. "he contributions of the life insurance companies and of the non=life insurance companies shall be in direct proportion to the ratio between a particular life insurance company or a particular non=life insurance company's net worth and the a**re*ate net worth of all life insurance companies or all non=life insurance companies, as the case may be, as shown in their latest financial statements appro)ed by the &ommissioner. "his proportion applied to the >i)e million pesos -P5,;;;,;;;.;;. shall be the contribution of a particular company to the correspondin* /ccount of the !ecurity >und. "he amount of >i)e million pesos -P5,;;;,;;;.;;. in each /ccount shall be in the form of a re)ol)in* trust fund. "he respecti)e contributions of the companies shall remain as admitted assets in their boo#s and any disbursement therefrom shall be deducted proportionately from the contributions of each company which will be allowed as deductions for income ta+ purposes. /ny earnin*s of the >und shall be turned o)er to the contributin* companies in proportion to their contributions. %n the case of disbursements of funds from the >und as pro)ided in the fore*oin* para*raph, the life and non=life companies, as the case may be, shall replenish the amount disbursed in direct proportion to the indi)idual company's net worth and the a**re*ate net worth of the life or non=life companies, as the case may be. Fowe)er, in no case shall the >und e+ceed the a**re*ate amount of "en million pesos -P1;,;;;,;;;.;;., or >i)e million pesos -P5,;;;,;;;.;;. for each /ccount. !hould the >und, Dife or Non=Dife /ccount, as the case may be, be inade,uate for a disbursement as pro)ided for, then the Dife or Non=Dife companies, as the case may be, shall contribute to the >und their respecti)e shares in the proportion pre)iously mentioned. !ection 181. "he &ommissioner may adopt, amend, and enforce all reasonable rules and re*ulations necessary for the proper administration of the >und and of the /ccounts. %n the e)ent any insurer shall fail to ma#e any payment re,uired by this title, or that any payment made is incorrect, he shall ha)e full authority to e+amine all the boo#s and records of the insurer for the purpose of ascertainin* the facts and shall determine the correct amount to be paid and may proceed in any court of competent 4urisdiction to reco)er for the benefit of the >und or of the /ccount concerned any sum shown to be due upon such e+amination and determination. /ny insurer which fails to ma#e any payment to the >und or to the /ccount concerned when due, shall thereby forfeit to said >und or /ccount concerned a penalty of fi)e percent -5C. of the amount determined to be due as pro)ided by

this title, plus one percent -1C. of such amount for each month of delay or fraction thereof, after the e+piration of the first month of such delay, but the &ommissioner, if satisfied that the delay was e+cusable, may remit all or any part of such penalty. "he &ommissioner, in his discretion, may suspend or re)o#e the certificate of authority to do business in the Philippines of any insurance company which shall fail to comply with this title or to pay any penalty imposed in accordance therewith. !ection 182. "he /ccounts created by this title shall be separate and apart from each other and from any other fund. "he "reasurer of the Philippines shall be the custodian of the Dife /ccount and Non= Dife /ccount of the !ecurity >und0 and all disbursements from any /ccount shall be made by the "reasurer of the Philippines upon )ouchers si*ned by the &ommissioner or his deputy, as hereinafter pro)ided. "he moneys of said /ccount may be in)ested by the &ommissioner only in bonds or other instruments of debt of the Go)ernment of the Philippines or its political subdi)isions or instrumentalities. "he &ommissioner may sell any of the securities in which an /ccount is in)ested, if ad)isable, for its proper administration or in the best interest of such /ccount. !ection 181. Payments from either the Dife %nsurance /ccount or Non=Dife /ccount, as the case may be, shall be made by the "reasurer of the Philippines to the &ommissioner, upon the authority of appropriate certificate filed with him by the &ommissioner actin* in such capacity. !ection 183. "he &ommissioner may, in his discretion, desi*nate or appoint a duly authori2ed representati)e or representati)es to appear and defend before any court or other body or official ha)in* 4urisdiction any or all actions or proceedin*s a*ainst principals or assureds on insurance policies or contracts issued to them where the insurer has become insol)ent or unable to meet its insurance obli*ations. "he &ommissioner shall ha)e, as of the date of insol)ency of such insurer or as of the date of its inability to meet its insurance obli*ations, only the ri*hts which such insurer would ha)e had if it had not become insol)ent or unable to meet its insurance obli*ations. >or the purpose of this title, the &ommissioner shall ha)e power to employ such counsel, cler#s and assistants as he may deem necessary. !ection 185. "he e+pense of administerin* an /ccount shall be paid out of the /ccount concerned. "he &ommissioner shall ser)e as administrator of the >und and of the /ccounts without additional compensation, but may be allowed and paid from the /ccount concerned e+penses incurred in the performance of his duties in connection with said /ccount. "he compensation of those persons employed by the &ommissioner shall be deemed administration e+pense payable from the /ccount concerned. "he &ommissioner shall include in his annual report to the !ecretary of >inance a statement of the e+penses of administration of the >und and of the Dife /ccount and Non=Dife /ccount for the precedin* year. ,CHAPTER 2I ,CO(PULSOR& (OTOR 2EHICLE LIABILIT& INSURANCE !ection 186. >or purposes of this chapter:

-a. Motor +ehicle is any )ehicle as defined in !ection 1, para*raph -a. of Republic /ct No. 3116, otherwise #nown as the $Dand "ransportation and "raffic &ode'. -b. Passenger is any fare payin* person bein* transported and con)eyed in and by a motor )ehicle for transportation of passen*ers for compensation, includin* persons e+pressly authori2ed by law or by the )ehicle's operator or his a*ents to ride without fare. -c. ,hird party is any person other than a passen*er as defined in this section and shall also e+clude a member of the household, or a member of the family within the second de*ree of consan*uinity or affinity, of a motor )ehicle owner or land transportation operator, as li#ewise defined herein, or his employee in respect of death, bodily in4ury, or dama*e to property arisin* out of and in the course of employment. -d. -wner or !otor vehicle owner means the actual le*al owner of a motor )ehicle, in whose name such )ehicle is duly re*istered with the Dand "ransportation <ffice0 -e. .and transportation operator means the owner or owners of motor )ehicles for transportation of passen*ers for compensation, includin* school buses. -f. #nsurance policy or Policy refers to a contract of insurance a*ainst passen*er and third= party liability for death or bodily in4uries and dama*e to property arisin* from motor )ehicle accidents. !ection 187. %t shall be unlawful for any land transportation operator or owner of a motor )ehicle to operate the same in the public hi*hways unless there is in force in relation thereto a policy of insurance or *uaranty in cash or surety bond issued in accordance with the pro)isions of this chapter to indemnify the death, bodily in4ury, andBor dama*e to property of a third=party or passen*er, as the case may be, arisin* from the use thereof. !ection 188. "he &ommissioner shall furnish the Dand "ransportation <ffice with a list of insurance companies authori2ed to issue the policy of insurance or surety bond re,uired by this chapter. !ection 18:. "he Dand "ransportation <ffice shall not allow the re*istration or renewal of re*istration of any motor )ehicle without first re,uirin* from the land transportation operator or motor )ehicle owner concerned the presentation and filin* of a substantiatin* documentation in a form appro)ed by the &ommissioner e)idencin* that the policy of insurance or *uaranty in cash or surety bond re,uired by this chapter is in effect. !ection 1:;. 6)ery land transportation operator and e)ery owner of a motor )ehicle shall, before applyin* for the re*istration or renewal of re*istration of any motor )ehicle, at his option, either secure an insurance policy or surety bond issued by any insurance company authori2ed by the &ommissioner or ma#e a cash deposit in such amount as herein re,uired as limit of liability for purposes specified in !ection 187. -a. %n the case of a land transportation operator, the insurance *uaranty in cash or surety bond shall co)er liability for death or bodily in4uries of third=parties andBor passen*ers arisin*

out of the use of such )ehicle in the amount not less than "wel)e thousand pesos -P12,;;;.;;. per passen*er or third=party and an amount, for each of such cate*ories, in any one accident of not less than that set forth in the followin* scale: -1. Motor )ehicles with an authori2ed capacity of twenty=si+ -26. or more passen*ers: >ifty thousand pesos -P5;,;;;.;;.0 -2. Motor )ehicles with an authori2ed capacity of from twel)e -12. to twenty=fi)e -25. passen*ers: >orty thousand pesos -P3;,;;;.;;.0 -1. Motor )ehicles with an authori2ed capacity of from si+ -6. to ele)en -11. passen*ers: "hirty thousand pesos -P1;,;;;.;;.0 -3. Motor )ehicles with an authori2ed capacity of fi)e -5. or less passen*ers: >i)e thousand pesos -P5,;;;.;;. multiplied by the authori2ed capacity. Provided, however, "hat such cash deposit made to, or surety bond posted with, the &ommissioner shall be resorted to by him in cases of accidents the indemnities for which to third=parties andBor passen*ers are not settled accordin*ly by the land transportation operator and, in that e)ent, the said cash deposit shall be replenished or such surety bond shall be restored within si+ty -6;. days after impairment or e+piry, as the case may be, by such land transportation operator, otherwise, he shall secure the insurance policy re,uired by this chapter. "he aforesaid cash deposit may be in)ested by the &ommissioner in readily mar#etable *o)ernment bonds, andBor securities. -b. %n the case of an owner of a motor )ehicle, the insurance or *uaranty in cash or surety bond shall co)er liability for death or in4ury to third=parties in an amount not less than that set forth in the followin* scale in any one accident: -1. Pri)ate &ars -i. @antam: "wenty thousand pesos -P2;,;;;.;;.0 -ii. Di*ht: "wenty thousand pesos -P2;,;;;.;;.0 and -iii. Fea)y: "hirty thousand pesos -P1;,;;;.;;.. -2. <ther Pri)ate ?ehicles -i. "ricycles, motorcycles and scooters: "wel)e thousand pesos -P12,;;;.;;.0 -ii. ?ehicles with an unladen wei*ht of 2,6;; #ilos or less: "wenty thousand pesos -P2;,;;;.;;.0 -iii. ?ehicles with an unladen wei*ht of between 2,6;1 #ilos and 1,:1; #ilos: "hirty thousand pesos -P1;,;;;.;;.0 and

-i). ?ehicles with an unladen wei*ht o)er 1,:1; #ilos: >ifty thousand pesos -P5;,;;;.;;.. "he &ommissioner may, if warranted, set forth schedule of indemnities for the payment of claims for death or bodily in4uries with the co)era*es set forth herein. !ection 1:1. /ny claim for death or in4ury to any passen*er or third=party pursuant to the pro)isions of this chapter shall be paid without the necessity of pro)in* fault or ne*li*ence of any #ind: Provided, "hat for purposes of this section: -a. "he total indemnity in respect of any person shall not be less than >ifteen thousand pesos -P15,;;;.;;.0 -b. "he followin* proofs of loss, when submitted under oath, shall be sufficient e)idence to substantiate the claim: -1. Police report of accident0 and -2. Death certificate and e)idence sufficient to establish the proper payee0 or -1. Medical report and e)idence of medical or hospital disbursement in respect of which refund is claimed0 -c. &laim may be made a*ainst one motor )ehicle only. %n the case of an occupant of a )ehicle, claim, shall lie a*ainst the insurer of the )ehicle in which the occupant is ridin*, mountin* or dismountin* from. %n any other case, claim shall lie a*ainst the insurer of the directly offendin* )ehicle. %n all cases, the ri*ht of the party payin* the claim to reco)er a*ainst the owner of the )ehicle responsible for the accident shall be maintained. !ection 1:2. No land transportation operator or owner of motor )ehicle shall be unreasonably denied the policy of insurance or surety bond re,uired by this chapter by the insurance companies authori2ed to issue the same, otherwise, the Dand "ransportation <ffice shall re,uire from said land transportation operator or owner of the )ehicle, in lieu of a policy of insurance or surety bond, a certificate that a cash deposit has been made with the &ommissioner in such amount re,uired as limits of indemnity in !ection 1:; to answer for the passen*er andBor third=party liability of such land transportation operator or owner of the )ehicle. No insurance company may issue the policy of insurance or surety bond re,uired under this chapter unless so authori2ed under e+istin* laws. "he authority to en*a*e in the casualty andBor surety lines of business of an insurance company that refuses to issue or renew, without 4ust cause, the insurance policy or surety bond therein re,uired shall be withdrawn immediately. !ection 1:1. No cancellation of the policy shall be )alid unless written notice thereof is *i)en to the land transportation operator or owner of the )ehicle and to the Dand "ransportation <ffice at least

fifteen -15. days prior to the intended effecti)e date thereof. 9pon receipt of such notice, the Dand "ransportation <ffice, unless it recei)es e)idence of a new )alid insurance or *uaranty in cash or surety bond as prescribed in this chapter, or an endorsement of re)i)al of the cancelled one, shall order the immediate confiscation of the plates of the motor )ehicle co)ered by such cancelled policy. "he same may be reissued only upon presentation of a new insurance policy or that a *uaranty in cash or surety bond has been made or posted with the &ommissioner and which meets the re,uirements of this chapter, or an endorsement or re)i)al of the cancelled one. !ection 1:3. %f the cancellation of the policy or surety bond is contemplated by the land transportation operator or owner of the )ehicle, he shall, before the policy or surety bond ceases to be effecti)e, secure a similar policy of insurance or surety bond to replace the policy or surety bond to be cancelled or ma#e a cash deposit in sufficient amount with the &ommissioner, and without any *ap, file the re,uired documentation with the Dand "ransportation <ffice, and notify the insurance company concerned of the cancellation of its policy or surety bond. !ection 1:5. %n case of chan*e of owner ship of a motor )ehicle, or chan*e of the en*ine of an insured )ehicle, there shall be no need of issuin* a new policy until the ne+t date of re*istration or renewal of re*istration of such )ehicle, and: Provided, "hat the insurance company shall a*ree to continue the policy, such chan*e of ownership or such chan*e of the en*ine shall be indicated in a correspondin* endorsement by the insurance company concerned, and a si*ned duplicate of such endorsement shall, within a reasonable time, be filed with the Dand "ransportation <ffice. !ection 1:6. %n the settlement and payment of claims, the indemnity shall not be a)ailed of by any accident )ictim or claimant as an instrument of enrichment by reason of an accident, but as an assistance or restitution insofar as can fairly be ascertained. !ection 1:7. /ny person ha)in* any claim upon the policy issued pursuant to this chapter shall, without any unnecessary delay, present to the insurance company concerned a written notice of claim settin* forth the nature, e+tent and duration of the in4uries sustained as certified by a duly licensed physician. Notice of claim must be filed within si+ -6. months from the date of accident, otherwise, the claim shall be deemed wai)ed. /ction or suit for reco)ery of dama*e due to loss or in4ury must be brou*ht, in proper cases, with the &ommissioner or the courts within one -1. year from denial of the claim, otherwise, the claimant's ri*ht of action shall prescribe. !ection 1:8. "he insurance company concerned shall forthwith ascertain the truth and e+tent of the claim and ma#e payment within fi)e -5. wor#in* days after reachin* an a*reement. %f no a*reement is reached, the insurance company shall pay only the no=fault indemnity pro)ided in !ection 1:1 without pre4udice to the claimant from pursuin* his claim further, in which case, he shall not be re,uired or compelled by the insurance company to e+ecute any ,uit claim or document releasin* it from liability under the policy of insurance or surety bond issued. %n case of any dispute in the enforcement of the pro)isions of any policy issued pursuant to this chapter, the ad4udication of such dispute shall be within the ori*inal and e+clusi)e 4urisdiction of the &ommissioner, sub4ect to the limitations pro)ided in !ection 31:.

!ection 1::. %t shall be unlawful for a land transportation operator or owner of motor )ehicle to re,uire his or its dri)ers or other employees to contribute in the payment of premiums. !ection 3;;. No *o)ernment office or a*ency ha)in* the duty of implementin* the pro)isions of this chapter nor any official or employee thereof shall act as a*ent in procurin* the insurance policy or surety bond pro)ided for herein. "he commission of an a*ent procurin* the said policy or bond shall in no case e+ceed ten percent -1;C. of the amount of the premiums therefor. !ection 3;1. /ny land transportation operator or owner of motor )ehicle or any other person )iolatin* any of the pro)isions of the precedin* sections shall be punished by a fine of not less than >i)e hundred pesos -P5;;.;;. andBor imprisonment for not more than si+ -6. months. "he )iolation of !ection 1:; by a land transportation operator shall be a sufficient cause for the re)ocation of the certificate of public con)enience issued by the Dand "ransportation >ranchisin* and Re*ulatory @oard co)erin* the )ehicle concerned. !ection 3;2. (hene)er any )iolation of the pro)isions of this chapter is committed by a corporation or association, or by a *o)ernment office or entity, the e+ecuti)e officer or officers of said corporation, association or *o)ernment office or entity who shall ha)e #nowin*ly permitted, or failed to pre)ent, said )iolation shall be held liable as principals. ,CHAPTER 2II ,(UTUAL BENEFIT ASSOCIATIONS AN% TRUSTS FOR CHARITABLE USES ,TITLE ! ,(UTUAL BENEFIT ASSOCIATIONS !ection 3;1. /ny society, association or corporation, without capital stoc#, formed or or*ani2ed not for profit but mainly for the purpose of payin* sic# benefits to members, or of furnishin* financial support to members while out of employment, or of payin* to relati)es of deceased members of fi+ed or any sum of money, irrespecti)e of whether such aim or purpose is carried out by means of fi+ed dues or assessments collected re*ularly from the members, or of pro)idin*, by the issuance of certificates of insurance, payment of its members of accident or life insurance benefits out of such fi+ed and re*ular dues or assessments, but in no case shall include any society, association, or corporation with such mutual benefit features and which shall be carried out purely from )oluntary contributions collected not re*ularly andBor no fi+ed amount from whomsoe)er may contribute, shall be #nown as a mutual benefit association within the intent of this &ode. /ny society, association, or corporation principally or*ani2ed as a labor union shall be *o)erned by the Dabor &ode notwithstandin* any mutual benefit feature pro)isions in its charter as incident to its or*ani2ation. %n no case shall a mutual benefit association be or*ani2ed and authori2ed to transact business as a charitable or bene)olent or*ani2ation, and whene)er it has this feature as incident to its e+istence, the correspondin* charter pro)ision shall be re)ised to conform with the pro)ision of this section. Mutual benefit association, already licensed to transact business as such on the date this &ode

becomes effecti)e, ha)in* charitable or bene)olent feature shall abandon such incidental purpose upon effecti)ity of this &ode if they desire to continue operatin* as such mutual benefit associations. !ection 3;3. / mutual benefit association, before it may transact as such, must first secure a license from the &ommissioner. "he application for such license shall be filed with the &ommissioner to*ether with certified true copies of the articles of incorporation or the constitution and bylaws of the association, and all amendments thereto, and such other documents or testimonies as the &ommissioner may re,uire. No license shall be *ranted to a mutual benefit association until the &ommissioner shall ha)e been satisfied by such e+amination as he may ma#e and such e)idence as he may re,uire that the association is ,ualified under e+istin* laws to operate and transact business as such. "he &ommissioner may refuse to issue a license to any mutual benefit association if, in his 4ud*ment, such refusal will best promote the interest of the members of such association and of the people of this country. /ny license issued shall e+pire on the last day of December of the third year followin* its issuance and, upon proper application, may be renewed if the association is continuin* to comply with e+istin* laws, rules and re*ulations, orders, instructions, rulin*s and decisions of the &ommissioner. 6)ery association recei)in* any such license shall be sub4ect to the super)ision of the &ommissioner: Provided, "hat no such license shall be *ranted to any such association if such association has no actuary. !ection 3;5. No mutual benefit association shall be issued a license to operate as such unless it has constituted and established a Guaranty >und by depositin* with the &ommissioner an initial minimum amount of >i)e million pesos -P5,;;;,;;;.;;. in cash, or in *o)ernment securities with a total )alue e,ual to such amount, to answer for any )alid benefit claim of any of its members. /ll moneys recei)ed by the &ommissioner for this purpose must be deposited by him in interest= bearin* deposits with any ban# or ban#s authori2ed to transact business in the Philippines for the account of the particular association constitutin* the Guaranty >und. /ny accrual to such fund, be it interest earned or di)idend additions on moneys or securities so deposited, may, with the prior appro)al of the &ommissioner, be withdrawn by the association if there is no pendin* benefit claim a*ainst it, includin* interest thereon or di)idend additions thereto. "he &ommissioner, prior to or after licensin* a mutual benefit association, may re,uire such association to increase its Guaranty >und from the initial minimum amount re,uired to an amount e,ual to the capital in)estment re,uired of an e+istin* domestic insurance company under !ection 2;: of this &ode. !ection 3;6. 6)ery mutual benefit association licensed to do business as such shall issue membership certificates to its members specifyin* the benefits to which such members are entitled. !uch certificates, to*ether with the articles of incorporation of the association or its constitution and bylaws, and all e+istin* laws as may be pertinent shall constitute the a*reement, as of the date of its issuance, between the association and the member. "he membership certificate shall be in a form pre)iously appro)ed by the &ommissioner.

!ection 3;7. / mutual benefit association may, by reinsurance a*reement, cede in whole or in part any indi)idual ris# or ris#s under certificates of insurance issued by it, only to a life insurance company authori2ed to transact business or to a professional reinsurer authori2ed to accept life ris#s in the Philippines: Provided, "hat a copy of the draft of such reinsurance a*reement shall be submitted to the &ommissioner for his appro)al. "he association may ta#e credit for the reser)es on such ceded ris#s to the e+tent reinsured. !ection 3;8. "he constitution or bylaws of a mutual benefit association must distinctly state the purpose for which dues andBor assessments are made and collected and the portion thereof which may be used for e+penses. Death benefit and other relief funds shall be created and used e+clusi)ely for payin* benefits due the members under their respecti)e membership certificates. / *eneral fund shall li#ewise be created and used for e+penses of administration of the association. / mutual benefit association shall only maintain free and unassi*ned surplus of not more than twenty percent -2;C. of its total liabilities as )erified by the &ommissioner. /ny amount in e+cess shall be returned to the members by way of di)idends, enhancin* the e,uity )alue or pro)idin* benefits in #ind and other rele)ant ser)ices. %n addition, sub4ect to the appro)al of the &ommissioner, a mutual benefit association may allocate a portion for capacity buildin* and research and de)elopment such as de)elopin* new products and ser)ices, up*radin* and impro)in* operatin* systems and e,uipment and continuin* member education. !ection 3;:. 6)ery outstandin* membership certificate must ha)e an e,uity )alue e,ui)alent to at least fifty percent -5;C. of the total contributions collected thereon. "he e,uity )alue only applies to basic life insurance product and e+cludes optional products. !ection 31;. 6)ery mutual benefit association must accumulate and maintain, out of the periodic dues collected from its members, sufficient reser)es for the payment of claims or obli*ations for which it shall hold funds in securities satisfactory to the &ommissioner consistin* of bonds of the Go)ernment of the Philippines, or any of its political subdi)isions and instrumentalities, or in such other *ood securities as may be appro)ed by the &ommissioner. "he reser)e liability shall be established in accordance with actuarial procedures and shall be appro)ed by the &ommissioner. "he articles of incorporation or the constitution and bylaws of a mutual benefit association must pro)ide that if its reser)e as to all or any class of certificates becomes impaired, its board of directors or trustees may re,uire that there shall be paid by the members to the association the amount of the members' e,uitable proportion of such deficiency as ascertained by said board and that if the payment be not made it shall stand as an indebtedness a*ainst the membership certificates of the defaultin* members and draw interest not to e+ceed fi)e percent -5C. per annum compounded annually.

!ection 311. / mutual benefit association may in)est such portion of its funds as shall not be re,uired to meet pendin* claims and other obli*ations in any of the classes of in)estments or types of securities in which life insurance companies doin* business in the Philippines may in)est. %t may also *rant loans to members on the security of a pled*e or chattel mort*a*e of personal properties of the borrowers, or in the absence thereof, on the security of the membership certificate of the borrowin* members, in which e)ent such loan shall become a first lien on the proceeds thereof. !ection 312. "he &ommissioner or any of his duly desi*nated representati)es, shall ha)e the power of )isitation, audit and e+amination into the affairs, financial condition, and methods of doin* business of all mutual benefit associations, and he shall cause such e+amination to be made at least once e)ery two -2. years or whene)er it may be deemed proper and necessary. >ree access to the boo#s, records and documents of the association shall be accorded to the &ommissioner, or to his representati)es, in such manner that the &ommissioner or his representati)es may readily )erify or determine the true affairs, financial condition, and method of doin* business of such association. %n the course of such e+amination, the &ommissioner or his duly desi*nated representati)es shall ha)e authority to administer oaths and ta#e testimony or other e)idence on any matter relatin* to the affairs of the association. /ll minutes of the proceedin*s of the board of directors or trustees of the association, and those of the re*ular or special meetin*s of the members, shall be ta#en, and a copy thereof, in 6n*lish or in Pilipino, shall be submitted to the &ommissioner's representati)es or e+aminers in the course of such e+amination. / copy of the findin*s of such e+amination, to*ether with the recommendations of the &ommissioner, shall be furnished the association for its information and compliance, and the same shall be ta#en up immediately in the meetin*s of the board of directors or trustees and of the members of the association. !ection 311. 6)ery mutual benefit association shall, annually on or before the thirtieth day of /pril of each year, render to the &ommissioner an annual statement in such form and detail as may be prescribed by the &ommissioner, si*ned and sworn to by the president, secretary, treasurer, and actuary of the association, showin* the e+act condition of its affairs on the precedin* thirty=first day of December. !ection 313. No money, aid or benefit to be paid, pro)ided or tendered by any mutual benefit association, shall be liable to attachment, *arnishment, or other process, or be sei2ed, ta#en, appropriated, or applied by any le*al or e,uitable process to pay any debt or liability of a member or beneficiary, or any other person who may ha)e a ri*ht thereunder, either before or after payment.$%wphi$ !ection 315. /ny member of a mutual benefit association shall ha)e the ri*ht at all times to chan*e the beneficiary or beneficiaries or add another beneficiary or other beneficiaries in accordance with the rules and re*ulations of the association unless he has e+pressly wai)ed this ri*ht in the membership certificate. 6)ery association may, under such rules as it may adopt, limit the scope of beneficiaries and pro)ide that no beneficiary shall ha)e or obtain any )ested interest in the proceeds

of any certificate until the certificate has become due and payable under the terms of the membership certificate. !ection 316. /ny chapter affiliate independently licensed as a mutual benefit association may consolidate or mer*e with any other similar chapter affiliate or with the mother association. !ection 317. /ny mutual benefit association may be con)erted into and licensed as a mutual life insurance company by complyin* with the re,uirements of the pertinent pro)isions of this &ode and submittin* the specific plan for such con)ersion to the &ommissioner for his appro)al. !uch plan, as appro)ed, shall then be submitted to the members either in the re*ular meetin* or in a special meetin* called for the purpose for their adoption. "he affirmati)e )ote of at least two=thirds -2B1. of all the members shall be necessary in order to consider such plan as adopted. No such con)ersion shall ta#e effect unless and until appro)ed by the &ommissioner. !ection 318. No mutual benefit association shall be dissol)ed without first notifyin* the &ommissioner and furnishin* him with a certified copy of the resolution authori2in* the dissolution, duly adopted by the affirmati)e )ote of two=thirds -2B1. of the members at a meetin* called for that purpose, the financial statements as of the date of the resolution, and such other papers or documents as may be re,uired by the &ommissioner. No dissolution shall proceed until and unless appro)ed by the &ommissioner and all proceedin*s in connection therewith shall be witnessed and attested by his duly desi*nated representati)e. No mutual benefit association shall be officially declared as dissol)ed until after the &ommissioner so certifies that all outstandin* claims a*ainst the association ha)e been duly settled and li,uidated. !ection 31:. "he &ommissioner shall, after notice and hearin*, ha)e the power either to suspend or re)o#e the license issued to a mutual benefit association if he finds that the association has: -a. >ailed to comply with any pro)ision of this &ode0 -b. >ailed to comply with any other law or re*ulation obli*atory upon it0 -c. >ailed to comply with any order, rulin*, instruction, re,uirement or recommendation of the &ommissioner0 -d. 6+ceeded its power to the pre4udice of its members0 -e. &onducted its business fraudulently or ha2ardously0 -f. Rendered its affairs and condition to one of insol)ency0 or -*. >ailed to carry out its aims and purposes for which it was or*ani2ed due to any cause. /fter receipt of the order from the &ommissioner suspendin* or re)o#in* the license, the association must immediately e+ert efforts to remo)e such cause or causes which brou*ht about the order and,

upon proper showin*, may apply with the &ommissioner for the liftin* of the order and restoration or re)i)al of the license so re)o#ed or suspended. !ection 32;. >or failure to remo)e such cause or causes which brou*ht about the suspension or re)ocation of the license of a mutual benefit association, the &ommissioner shall apply under this &ode for an order from the proper court to li,uidate such association. "he pro)isions of "itles 13 and 15, &hapter %%%, pertainin* to the appointment of a conser)ator and proceedin*s upon insol)ency of an insurance company shall, insofar as practicable, apply to mutual benefit associations. !ection 321. "o secure the enforcement of any pro)ision under this title, the &ommissioner may issue such rules, rulin*s, instructions, orders and circulars. !ection 322. "he )iolation of any pro)ision of this title shall sub4ect the person )iolatin* or the officer of the association responsible therefor to a fine of not less than "en thousand pesos -P1;,;;;.;;., or imprisonment of not e+ceedin* three -1. years, or both such fine and imprisonment, at the discretion of the court. !ection 321. /ll pro)isions of this &ode *o)ernin* life insurance companies and such other pro)isions whene)er practicable and necessary, shall be applicable to mutual benefit associations. ,TITLE ) ,TRUSTS FOR CHARITABLE USES !ection 323. "he term trust for charitable uses, within the intent of this &ode, shall include, all the real or personal properties or funds, as well as those ac,uired with the fruits or income therefrom or in e+chan*e or substitution thereof, *i)en to or recei)ed by any person, corporation, association, foundation, or entity, e+cept the National Go)ernment, its instrumentalities or political subdi)isions, for charitable, bene)olent, educational, pious, reli*ious, or other uses for the benefit of the public at lar*e or a particular portion thereof or for the benefit of an indefinite number of persons. !ection 325. "he term trustee shall include any indi)idual, corporation, association, foundation, or entity, e+cept the National Go)ernment, its instrumentalities or political subdi)isions, in char*e of, or actin* for, or concerned with the administration of, the trust referred to in the section immediately precedin* and with the proper application of trust property. !ection 326. "he term trust property shall include all real or personal properties or funds pertainin* to the trust as well as those ac,uired with the fruits or income therefrom or in e+chan*e or substitution thereof. !ection 327. /ll trustees shall, before enterin* in the performance of the duties of their trust, obtain a certificate of re*istration from the &ommissioner. "he re*istration shall e+pire on December 11 of the third year followin* its issuance unless it is renewed.

/ll pro)isions of this &ode *o)ernin* mutual benefit associations and such other pro)isions herein, whene)er practicable and necessary, shall be applicable to trusts for charitable uses. !ection 328. "he treasurer of a charitable trust shall file a fidelity bond in the amount commensurate with the )alue of the trust property in his custody, as may be determined by the &ommissioner. ,CHAPTER 2III ,TRUST BUSINESS IN GENERAL !ection 32:. /n insurance company may en*a*e in limited trust business, consistin* of mana*in* funds pertainin* only to retirement and pre=need plans, pro)ided it has secured a license to do so from the @an*#o !entral n* Pilipinas. "his trust business shall be separate and distinct from the *eneral business of the insurance company and shall be sub4ect to rules and re*ulations as may be promul*ated by the @an*#o !entral n* Pilipinas in consultation with the &ommissioner. ,CHAPTER I6 ,REGISTRATION' RESPONSIBILITIES AN% O2ERSIGHT OF SELF4REGULATOR& ORGANI5ATIONS !ection 31;. "he &ommissioner shall ha)e the power to re*ister as a self=re*ulatory or*ani2ation, or otherwise *rant licenses, and to re*ulate, super)ise, e+amine, suspend or otherwise discontinue, as a condition for the operation of or*ani2ations whose operations are related to or connected with the insurance mar#et such as, but not limited to, associations of insurance companies, whether life or non=life, reinsurers, actuaries, a*ents, bro#ers, dealers, mutual benefit associations, trusts, ratin* a*encies, and other persons re*ulated by the &ommissioner, which are en*a*ed in the business re*ulated by this &ode. "he &ommissioner may prescribe rules and re*ulations which are necessary or appropriate in the public interest or for the protection of in)estors to *o)ern self=re*ulatory or*ani2ations and other or*ani2ations licensed or re*ulated pursuant to the authority *ranted hereunder includin*, but not limited to, the re,uirement of cooperation within and amon* all participants in the insurance mar#et to ensure transparency and facilitate e+chan*e of information. !ection 311. /n association cannot be re*istered as a self=re*ulatory or*ani2ation unless the &ommissioner determines that: -a. "he association is so or*ani2ed and has the capacity to be able to carry out the purposes of this &ode and to comply with, and to enforce compliance by its members and persons associated with its members, with the pro)isions of this &ode, the rules and re*ulations thereunder, and the rules of the association. -b. "he rules of the association, notwithstandin* anythin* in the &orporation &ode to the contrary, pro)ide the followin*: -1. Mualifications and the dis,ualifications on membership of the association0

-2. / fair representation of its members to ser)e on the board of directors of the association and the administration of its affairs, and that any natural person associated with a 4uridical entity that is a member shall also be deemed to be a member for this purpose0 -1. "he president of the association and at least two -2. independent directors as members of the board of directors of the association0 -3. 6,uitable allocation of reasonable dues, fees, and other char*es amon* members and other persons usin* any facility or system which the association operates or controls0 -5. "he pre)ention of fraudulent and manipulati)e acts and practices to protect the insurin* public and the promotion of 4ust and e,uitable principles of business0 -6. Members and persons associated with its members sub4ect to discipline for )iolation of any pro)ision of this &ode, the rules or re*ulations thereunder, or the rules of the association0 -7. >air procedure for the disciplinin* of members and persons associated with members0 and -8. "he prohibition or limitation of access to ser)ices offered by the association or a member thereof. !ection 312. / self=re*ulatory or*ani2ation may e+amine and )erify the ,ualifications of an applicant to become a member in accordance with procedures established by the rules of the association. / self=re*ulatory or*ani2ation shall deny membership or condition the membership of an entity, if it does not meet the standards of financial responsibility, operational capability, trainin*, e+perience, or competence that are prescribed by the rules of the association0 or has en*a*ed, and there is a reasonable li#elihood it will a*ain en*a*e, in acts or practices inconsistent with 4ust and e,uitable principles of fair trade. / self=re*ulatory or*ani2ation may deny membership to an entity not en*a*ed in a type of business in which the rules of the association re,uire members to be en*a*ed. !ection 311. 9pon the filin* of an application for re*istration as a self=re*ulatory or*ani2ation under this title, the &ommissioner shall ha)e ninety -:;. days within which to either *rant re*istration or institute a proceedin* to determine whether re*istration should be denied. %n the e)ent proceedin*s are instituted, the &ommissioner shall ha)e two hundred se)enty -27;. days within which to conclude such proceedin*s at which time he shall, by order, *rant or deny such re*istration. !ection 313. 6)ery self=re*ulatory or*ani2ation shall comply with the pro)isions of this &ode, the rules and re*ulations thereunder, and its own rules, and enforce compliance therewith by its

members, persons associated with its members or its participants, notwithstandin* any pro)ision of the &orporation &ode to the contrary. !ection 315. 6ach self=re*ulatory or*ani2ation shall submit to the &ommissioner for prior appro)al any proposed rule or amendment thereto, to*ether with a concise statement of the reason and effect of the proposed amendment. (ithin si+ty -6;. days after submission of a proposed amendment, the &ommissioner shall, by order, appro)e the proposed amendment. <therwise, the same may be made effecti)e by the self=re*ulatory or*ani2ation. %n the e)ent of an emer*ency re,uirin* action for the protection of the insurin* public, a self= re*ulatory or*ani2ation may put a proposed amendment into effect summarily: Provided, however, "hat a copy of the same shall be immediately submitted to the &ommissioner. "he &ommissioner is further authori2ed, if after ma#in* appropriate re,uest in writin* to a self= re*ulatory or*ani2ation that such or*ani2ation effect on its own behalf specified chan*es in its rules and practices and, after due notice and hearin*, it determines that such chan*es ha)e not been effected, and that such chan*es are necessary, by rule or re*ulation or by order, may alter, abro*ate or supplement the rules of such self=re*ulatory or*ani2ation insofar as necessary or appropriate to effect such chan*es in respect of such matters as: -a. !afe*uards in respect of the financial responsibility of members and ade,uate pro)ision a*ainst the e)asion of financial responsibility throu*h the use of corporate forms or special partnerships0 -b. "he super)ision of mar#et practices0 -c. "he manner, method and place of solicitin* business0 -d. "he fi+in* of reasonable rates of fees, interest, listin* and other char*es, but not rates of commission0 and self=re*ulatory or*ani2ation0 and -e. "he super)ision, auditin* and disciplinin* of members. %n addition to the *eneral powers of the &ommissioner o)er the entities under super)ision, the &ommissioner, after due notice and hearin*, is authori2ed, in the public interest and to protect the insurin* public: -1. "o suspend for a period not e+ceedin* twel)e -12. months or to re)o#e the re*istration of a self=re*ulatory or*ani2ation, or to censure or impose limitations on the acti)ities, functions and operations of such self=re*ulatory or*ani2ation, if the &ommission finds that such a self= re*ulatory or*ani2ation has willfully )iolated or is unable to comply with any pro)ision of this &ode or of the rules and re*ulations thereunder, or its own rules, or has failed to enforce compliance therewith by a member of, person associated with a member, or a participant in such self=re*ulatory or*ani2ation0

-2. "o e+pel from a self=re*ulatory or*ani2ation any member thereof or any participant therein who is found to ha)e willfully )iolated any pro)ision of this &ode or suspend for a period not e+ceedin* twel)e -12. months for )iolation of any pro)ision of this &ode or any other law administered by the &ommission, or the rules and re*ulations thereunder, or effected, directly or indirectly, any transaction for any person who, such member or participant had reason to belie)e, was )iolatin* in respect of such transaction any of such pro)isions0 and -1. "o remo)e from office or censure any officer or director of a self=re*ulatory or*ani2ation if it finds that such officer or director has )iolated any pro)ision of this &ode, any other law administered by the &ommissioner, the rules or re*ulations thereunder and the rules of such self=re*ulatory or*ani2ation, or has abused his authority, or without reasonable 4ustification or e+cuse has failed to enforce compliance with any of such pro)isions. !ection 316. -a. / self=re*ulatory or*ani2ation is authori2ed to discipline a member of or participant in such self=re*ulatory or*ani2ation, or any person associated with a member, includin* suspendin* or e+pellin* such member or participant, or suspendin* or barrin* such person from bein* associated with a member, if en*a*ed in acts or practices inconsistent with 4ust and e,uitable principles of fairness or in willful )iolation of any pro)ision of this &ode, any other law administered by the &ommission, the rules or re*ulations thereunder, or the rules of the self=re*ulatory or*ani2ation. %n any disciplinary proceedin* by a self=re*ulatory or*ani2ation -other than a summary proceedin* pursuant to para*raph -b. of this section. the self=re*ulatory or*ani2ation shall brin* specific char*es, pro)ide notice to the person char*ed, afford the person char*ed with an opportunity to defend a*ainst the char*es, and #eep a record of the proceedin*s. / determination to impose a disciplinary sanction shall be supported by a written statement of the offense, a summary of the e)idence presented and a statement of the sanction imposed. -b. / self=re*ulatory or*ani2ation may summarily: -1. !uspend a member, participant or person associated with a member who has been or is e+pelled or suspended from any other self=re*ulatory or*ani2ation0 or -2. !uspend a member who the self=re*ulatory or*ani2ation finds to be in such financial or operatin* difficulty that the member or participant cannot be permitted to continue to do business as a member with safety to in)estors, creditors, other members, participants or the self=re*ulatory or*ani2ation: Provided, "hat the self=re*ulatory or*ani2ation immediately notifies the &ommission of the action ta#en. /ny person a**rie)ed by a summary action pursuant to this para*raph shall be promptly afforded an opportunity for a hearin* by the association in accordance with the precedin* para*raph. "he &ommissioner, by order, may stay a summary action on his own or upon application by any person a**rie)ed thereby, if the &ommissioner determines summarily or after due notice and hearin* -which hearin* may consist solely of the submission of affida)its or presentation of oral ar*uments., that a stay is consistent with the public interest and the protection of the insurin* public. -c. / self=re*ulatory or*ani2ation shall promptly notify the &ommission of any disciplinary sanction on any member thereof or participant therein, any denial of membership or participation in such or*ani2ation, or the imposition of any disciplinary sanction on a person associated with a member or

a bar of such person from becomin* so associated. (ithin thirty -1;. days after such notice, any a**rie)ed person may appeal to the &ommissioner from, or the &ommissioner on its own motion within such period, may institute re)iew of, the decision of the self=re*ulatory or*ani2ation, at the conclusion of which, after due notice and hearin* -which may consist solely of re)iew of the record before the self=re*ulatory or*ani2ation., the &ommissioner shall affirm, modify or set aside the sanction. %n such proceedin*, the &ommissioner shall determine whether the a**rie)ed person has en*a*ed or omitted to en*a*e in the acts and practices as found by the self=re*ulatory or*ani2ation, whether such acts and practices constitute willful )iolations of this &ode, any other law administered by the &ommission, the rules or re*ulations thereunder, or the rules of the self=re*ulatory or*ani2ation as specified by such or*ani2ation, whether such pro)isions were applied in a manner consistent with the purposes of this &ode, and whether, with due re*ard for the public interest and the protection of in)estors, the sanction is e+cessi)e or oppressi)e. ,CHAPTER 6 ,THE INSURANCE CO((ISSIONER ,TITLE ! ,A%(INISTRATI2E AN% A%7U%ICATOR& PO*ERS !ection 317. "he %nsurance &ommissioner shall be appointed by the President of the Republic of the Philippines for a term of si+ -6. years without reappointment and who shall ser)e as such until the successor shall ha)e been appointed and ,ualified. %f the %nsurance &ommissioner is remo)ed before the e+piration of his term of office, the reason for the remo)al must be published. "he %nsurance &ommissioner shall ha)e the duty to see that all laws relatin* to insurance, insurance companies and other insurance matters, mutual benefit associations, and trusts for charitable uses are faithfully e+ecuted and to perform the duties imposed upon him by this &ode, and shall, notwithstandin* any e+istin* laws to the contrary, ha)e sole and e+clusi)e authority to re*ulate the issuance and sale of )ariable contracts as defined in !ection 218 hereof and to pro)ide for the licensin* of persons sellin* such contracts, and to issue such reasonable rules and re*ulations *o)ernin* the same. "he &ommissioner may issue such rulin*s, instructions, circulars, orders and decisions as may be deemed necessary to secure the enforcement of the pro)isions of this &ode, to ensure the efficient re*ulation of the insurance industry in accordance with *lobal best practices and to protect the insurin* public. 6+cept as otherwise specified, decisions made by the &ommissioner shall be appealable to the !ecretary of >inance. %n addition to the fore*oin*, the &ommissioner shall ha)e the followin* powers and functions: -a. >ormulate policies and recommendations on issues concernin* the insurance industry, ad)ise &on*ress and other *o)ernment a*encies on all aspects of the insurance industry and propose le*islation and amendments thereto0 -b. /ppro)e, re4ect, suspend or re)o#e licenses or certificates of re*istration pro)ided for by this &ode0

-c. %mpose sanctions for the )iolation of laws and the rules, re*ulations and orders issued pursuant thereto0 -d. Prepare, appro)e, amend or repeal rules, re*ulations and orders, and issue opinions and pro)ide *uidance on and super)ise compliance with such rules, re*ulations and orders0 -e. 6nlist the aid and support of, andBor deputi2e any and all enforcement a*encies of the *o)ernment in the implementation of its powers and functions under this &ode0 -f. %ssue cease and desist orders to pre)ent fraud or in4ury to the insurin* public0 -*. Punish for contempt of the &ommissioner, both direct and indirect, in accordance with the pertinent pro)isions of and penalties prescribed by the Rules of &ourt0 -h. &ompel the officers of any re*istered insurance corporation or association to call meetin*s of stoc#holders or members thereof under its super)ision0 -i. %ssue subpoena duces tecu! and summon witnesses to appear in any proceedin* of the &ommission and, in appropriate cases, order the e+amination, search and sei2ure of all documents, papers, files and records, ta+ returns, and boo#s of accounts of any entity or person under in)esti*ation as may be necessary for the proper disposition of the cases before it, sub4ect to the pro)isions of e+istin* laws0 -4. !uspend or re)o#e, after proper notice and hearin*, the license or certificate of authority of any entity or person under its re*ulation, upon any of the *rounds pro)ided by law0 -#. &onduct an e+amination to determine compliance with laws and re*ulations if the circumstances so warrant as determined by appropriate rules and re*ulations0 -l. %n)esti*ate not oftener than once a year from the last date of e+amination to determine whether an institution is conductin* its business on a safe and sound basis: Provided, "hat, the deficienciesBirre*ularities found by or disco)ered by an audit shall be immediately addressed0 -m. %n,uire into the sol)ency and li,uidity of the institutions under its super)ision and enforce prompt correcti)e action0 -n. "o retain and utili2e, in addition to its annual bud*et, all fees, char*es and other income deri)ed from the re*ulation of insurance companies and other super)ised persons or entities0 -o. "o fi+ and assess fees, char*es and penalties as the &ommissioner may find reasonable in the e+ercise of re*ulation0 and -p. 6+ercise such other powers as may be pro)ided by law as well as those which may be implied from, or which are necessary or incidental to the e+press powers *ranted the &ommission to achie)e the ob4ecti)es and purposes of this &ode.

"he &ommission shall indemnify the &ommissioner, Deputy &ommissioner, and other officials of the &ommission, includin* personnel performin* super)ision and e+amination functions, for all costs and e+penses reasonably incurred by such persons in connection with any ci)il or criminal actions, suits or proceedin*s to which they may be made a party to by the reason of the performance of their duties and functions, unless they are finally ad4ud*ed in such actions, suits or proceedin*s to be liable for ne*li*ence or misconduct. %n the e)ent of settlement or compromise, indemnification shall be pro)ided only in connection with such matters co)ered by the settlement as to which the &ommission is ad)ised by e+ternal counsel that the persons to be indemnified did not commit any ne*li*ence or misconduct: "he costs and e+penses incurred in defendin* the aforementioned action, suit or proceedin* may be paid by the &ommission in ad)ance of the final disposition of such action, suit or proceedin* upon receipt of an underta#in* by or on behalf of the &ommissioner, Deputy &ommissioner, officer or employee to repay the amount ad)anced should it ultimately be determined by the &ommission that the person is not entitled to be indemnified. !ection 318. %n addition to the administrati)e sanctions pro)ided elsewhere in this &ode, the %nsurance &ommissioner is hereby authori2ed, at his discretion, to impose upon insurance companies, their directors andBor officers andBor a*ents, for any willful failure or refusal to comply with, or )iolation of any pro)ision of this &ode, or any order, instruction, re*ulation, or rulin* of the %nsurance &ommissioner, or any commission or irre*ularities, andBor conductin* business in an unsafe or unsound manner as may be determined by the %nsurance &ommissioner, the followin*: -a. >ines not less than >i)e thousand pesos -P5,;;;.;;. and not more than "wo hundred thousand pesos -P2;;,;;;.;;.0 and -b. !uspension, or after due hearin*, remo)al of directors andBor officers andBor a*ents. !ection 31:. "he &ommissioner shall ha)e the power to ad4udicate claims and complaints in)ol)in* any loss, dama*e or liability for which an insurer may be answerable under any #ind of policy or contract of insurance, or for which such insurer may be liable under a contract of suretyship, or for which a reinsurer may be sued under any contract of reinsurance it may ha)e entered into0 or for which a mutual benefit association may be held liable under the membership certificates it has issued to its members, where the amount of any such loss, dama*e or liability, e+cludin* interest, cost and attorney's fees, bein* claimed or sued upon any #ind of insurance, bond, reinsurance contract, or membership certificate does not e+ceed in any sin*le claim >i)e million pesos -P5,;;;,;;;.;;.. "he power of the &ommissioner does not co)er the relationship between the insurance company and its a*entsBbro#ers but is limited to ad4udicatin* claims and complaints filed by the insured a*ainst the insurance company. "he &ommissioner may authori2e any officer or *roup of officers under him to conduct in)esti*ation, in,uiry andBor hearin* and decide claims and he may issue rules *o)ernin* the conduct of ad4udication and resolution of cases. "he Rules of &ourt shall ha)e suppletory application.

"he party filin* an action pursuant to the pro)isions of this section thereby submits his person to the 4urisdiction of the &ommissioner. "he &ommissioner shall ac,uire 4urisdiction o)er the person of the impleaded party or parties in accordance with and pursuant to the pro)isions of the Rules of &ourt. "he authority to ad4udicate *ranted to the &ommissioner under this section shall be concurrent with that of the ci)il courts, but the filin* of a complaint with the &ommissioner shall preclude the ci)il courts from ta#in* co*ni2ance of a suit in)ol)in* the same sub4ect matter. /ny decision, order or rulin* rendered by the &ommissioner after a hearin* shall ha)e the force and effect of a 4ud*ment. /ny party may appeal from a final order, rulin* or decision of the &ommissioner by filin* with the &ommissioner within thirty -1;. days from receipt of copy of such order, rulin* or decision a notice of appeal to the &ourt of /ppeals in the manner pro)ided for in the Rules of &ourt for appeals from the Re*ional "rial &ourt to the &ourt of /ppeals. >or the purpose of any proceedin* under this section, the &ommissioner, or any officer thereof desi*nated by him is empowered to administer oaths and affirmation, subpoena witnesses, compel their attendance, ta#e e)idence, and re,uire the production of any boo#s, papers, documents, or contracts or other records which are rele)ant or material to the in,uiry. / full and complete record shall be #ept of all proceedin*s had before the &ommissioner, or the officers thereof desi*nated by him, and all testimony shall be ta#en down and transcribed by a steno*rapher appointed by the &ommissioner. %n order to promote party autonomy in the resolution of cases, the &ommissioner shall establish a system for resol)in* cases throu*h the use of alternati)e dispute resolution. ,TITLE ) ,FEES AN% OTHER SOURCES OF FUN%S !ection 33;. -a. >or the issuance or renewal of certificates of authority, licenses and certificates of re*istration, pursuant to pertinent pro)isions of this &ode, the &ommissioner shall collect and recei)e fees which shall be not less than the followin*: >or each certificate of authority issued to an insurance company doin* business in the Philippines, "wo hundred pesos -P2;;.;;.. >or each special certificate of authority issued to a ser)icin* insurance company, <ne hundred pesos -P1;;.;;.. >or each license issued to a *eneral a*ent of an insurance company, >ifty pesos -P5;.;;.. >or each license issued to an insurance a*ent, "wenty=fi)e pesos -P25.;;.. >or each license issued to an a*ent of )ariable contract policy, "wenty=fi)e pesos -P25.;;.. >or each license issued to an insurance bro#er, <ne hundred pesos -P1;;.;;..

>or each license issued to a reinsurance bro#er, <ne hundred pesos -P1;;.;;.. >or each license issued to an insurance ad4uster, <ne hundred pesos -P1;;.;;.. >or each certificate of re*istration issued to an actuary, >ifty pesos -P5;.;;.. >or each certificate of re*istration issued to a resident a*ent, >ifty pesos -P5;.;;.. >or each license issued to a ratin* or*ani2ation, <ne hundred pesos -P1;;.;;.. >or each certificate of re*istration issued to a non=life company underwriter, >ifty pesos -P5;.;;.. >or each license issued to a mutual benefit association, "en pesos -P1;.;;.. >or each certificate of re*istration issued to a trust for charitable uses, "en pesos -P1;.;;.. /ll certificates of authority and all other licenses, as well as all certificates of re*istration, issued to any person, partnership, association or corporation under the pertinent pro)isions of this &ode for which no e+piration date has been prescribed, shall e+pire on the last day of December of the third year from its issuance and shall be renewed upon application therefor and payment of the correspondin* fee, if the licensee or holder of such license or certificate is continuin* to comply with all the applicable pro)isions of e+istin* laws, and of rules, instructions, orders and decisions of the &ommissioner. -b. >or the filin* of the annual statement referred to in !ection 22:, the &ommissioner shall collect and recei)e from the insurance company so filin* a fee of not less than >i)e hundred pesos -P5;;.;;.: Provided, "hat a fine of not less than <ne hundred pesos -P1;;.;;. shall be imposed and collected by the &ommissioner for each wee# of delay, or any fraction thereof, in the filin* of the annual statement. >or the filin* of annual statement referred to in !ection 311, the &ommissioner shall collect and recei)e from the mutual benefit association so filin* a fee of not less than "en pesos -P1;.;;.: Provided, "hat a fine of not less than "en pesos -P1;.;;. shall be imposed and collected by the &ommissioner for each wee# of delay, or any fraction thereof, in the filin* of the annual statement. -c. >or the e+amination prescribed in !ection 251, the &ommissioner shall collect and recei)e fees accordin* to the amount of its total assets, in the case of a domestic company, or of its assets in the Philippines, in the case of a forei*n company, not less than the amount as follows: -1. "wo million pesos or more but less than >our million pesos, >our hundred pesos -P3;;.;;.0 -2. >our million pesos or more but less than !i+ million pesos, 6i*ht hundred pesos -P8;;.;;.0

-1. !i+ million pesos or more but less than 6i*ht million pesos, <ne thousand two hundred pesos -P1,2;;.;;.0 -3. 6i*ht million pesos or more but less than "en million pesos, <ne thousand si+ hundred pesos -P1,6;;.;;.0 -5. "en million pesos or more, "wo thousand pesos -P2,;;;.;;.0 Provided, "hat if the said e+amination is made in places outside the Metropolitan Manila area, besides these fees, the &ommissioner shall re,uire of the company e+amined the payment of the actual and necessary tra)ellin* and subsistence e+penses of the e+aminer or e+aminers concerned. >or the e+amination prescribed in !ection 312, the &ommissioner shall collect and recei)e a minimum fee of not less than <ne hundred pesos -P1;;.;;. from the mutual benefit association e+amined: Provided, "hat if such association has total assets of more than <ne hundred thousand pesos -P1;;,;;;.;;., an additional fee of not less than "en pesos -P1;.;;. for e)ery >ifty thousand pesos -P5;,;;;.;;. in e+cess thereof shall be imposed: -d. >or the filin* of an application to withdraw from the Philippines under "itle 18, the &ommissioner shall collect and recei)e from the forei*n company so withdrawin* a fee of not less than <ne thousand pesos -P1,;;;.;;.. -e. "he &ommissioner may fi+ and collect fees or char*es for documents, transcripts, or other materials which may be furnished by him not in e+cess of reasonable cost. !ection 331. "he &ommissioner, in accordance with the rules and re*ulations of the Department of @ud*et and Mana*ement and other rele)ant re*ulatory a*encies, shall source the salary, allowances and other e+penses from the retained amount of the fees, char*es, penalties and other income from the re*ulation of insurance companies and other co)ered persons and entities, and from the %nsurance >und, which is created out of the proceeds of ta+es on insurance premiums mentioned in !ection 255 of the National %nternal Re)enue &ode, as amended. ,(ISCELLANEOUS PRO2ISIONS !ection 332. /ny person, company or corporation sub4ect to the super)ision and control of the &ommissioner who )iolates any pro)ision of this &ode, for which no penalty is pro)ided, shall be deemed *uilty of a penal offense, and upon con)iction be punished by a fine not e+ceedin* "wo hundred thousand pesos -P2;;,;;;.;;. or imprisonment of si+ -6. months, or both, at the discretion of the court. %f the offense is committed by a company or corporation, the officers, directors, or other persons responsible for its operation, mana*ement, or administration, unless it can be pro)ed that they ha)e ta#en no part in the commission of the offense, shall li#ewise be *uilty of a penal offense, and upon con)iction be punished by a fine not e+ceedin* "wo hundred thousand pesos -P2;;,;;;.;;. or imprisonment of si+ -6. months, or both, at the discretion of the court.

!ection 331. /ll criminal actions for the )iolation of any of the pro)isions of this &ode shall prescribe after three -1. years from the disco)ery of such )iolation: Provided, "hat such actions shall in any e)ent prescribe after ten -1;. years from the commission of such )iolation. !ection 333. /ny person, partnership, association or corporation heretofore authori2ed, licensed or re*istered by the &ommissioner shall be deemed to ha)e been authori2ed, licensed or re*istered under the pro)isions of this &ode and shall be *o)erned by the pro)isions thereof: Provided, however, "hat where any such person, partnership, association or corporation is affected by the new re,uirements of this &ode, said person, partnership, association or corporation shall, unless otherwise herein pro)ided, be *i)en a period of one -1. year from the effecti)ity of this &ode within which to comply with the same. !ection 335. ,ransitory Provision. N Renewal of e+istin* licenses, certificates of authority or accreditation which will e+pire on Eune 1;, 2;11 shall be )alid until December 11, 2;15. "hereafter, renewal shall be filed on the last day of December e)ery third year followin* the date of e+piry of the license, certificate of authority or accreditation. !ection 336. Repealing lause. N 6+cept as e+pressly pro)ided by this &ode, all laws, decrees, orders, rules and re*ulations or parts thereof, inconsistent with any pro)ision of this &ode shall be deemed repealed, amended or modified accordin*ly. !ection 337. Separability lause. N %f any pro)ision of this &ode or any part hereof be declared in)alid or unconstitutional, the remainder of the law or other pro)isions not otherwise affected shall remain )alid and subsistin*. !ection 338. "his &ode shall ta#e effect fifteen -15. days followin* its publication in a newspaper of *eneral circuation.