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.
[REPUBLI !" #$. %&'&()
!# !" *"RE#+",E#I#+ ",E I#*UR!#E I#-U*"R.,
/UR",ER !ME#-I#+ PRE*I-E#"I!L -EREE #$. '%0,
$",ER1I*E 2#$1# !* 3",E I#*UR!#E $-E4, !*
!ME#-E- B. PRE*I-E#"I!L -EREE #$*. %%5%, %06&,
%577, %5'&, %6%5 !#- %86%, !#- B!"!* P!MB!#*! BL+.
6(5, !#- /$R $",ER PURP$*E*
Be it ena9ted :y the *enate and ,ouse of Re;resentatives
of the Phili;;ines in ongress asse<:led=
*E"I$# %. Presidential -e9ree #o. '%0, as a<ended, is
here:y further a<ended to read as follows=
3+E#ER!L PR$>I*I$#*
3*E"I$# %. "his -e9ree shall :e ?nown as @"he Insuran9e
odeA.
3*E. 0. 1henever used in this ode, the following ter<s
shall have the res;e9tive <eanings hereinafter set forth or
indi9ated, unless the 9onteBt otherwise reCuires=
3DaE ! 9ontra9t of insuran9e is an agree<ent where:y one
underta?es for a 9onsideration to inde<nify another against
loss, da<age or lia:ility arising fro< an un?nown or
9ontingent event.
3! 9ontra9t of suretyshi; shall :e dee<ed to :e an insuran9e
9ontra9t, within the <eaning of this ode, only if <ade :y a
surety who or whi9h, as su9h, is doing an insuran9e
:usiness as hereinafter ;rovided.
3D:E "he ter< doing an insuran9e :usiness or transa9ting an
insuran9e :usiness, within the <eaning of this ode, shall
in9lude=
3D%E Ma?ing or ;ro;osing to <a?e, as insurer, any insuran9e
9ontra9tF
3D0E Ma?ing or ;ro;osing to <a?e, as surety, any 9ontra9t of
suretyshi; as a vo9ation and not as <erely in9idental to any
other legiti<ate :usiness or a9tivity of the suretyF
3DGE -oing any ?ind of :usiness, in9luding a reinsuran9e
:usiness, s;e9ifi9ally re9ogniHed as 9onstituting the doing of
an insuran9e :usiness within the <eaning of this odeF
3D5E -oing or ;ro;osing to do any :usiness in su:stan9e
eCuivalent to any of the foregoing in a <anner designed to
evade the ;rovisions of this ode.
3In the a;;li9ation of the ;rovisions of this ode, the fa9t that
no ;rofit is derived fro< the <a?ing of insuran9e 9ontra9ts,
agree<ents or transa9tions or that no se;arate or dire9t
9onsideration is re9eived therefor, shall not :e dee<ed
9on9lusive to show that the <a?ing thereof does not
9onstitute the doing or transa9ting of an insuran9e :usiness.
3D9E !s used in this ode, the ter< o<<issioner <eans the
Insuran9e o<<issioner.
3,!P"ER I
3",E $#"R!" $/ I#*UR!#E
3"I"LE %
31,!" M!. BE I#*URE-
3*E. G. !ny 9ontingent or un?nown event, whether ;ast or
future, whi9h <ay da<nify a ;erson having an insura:le
interest, or 9reate a lia:ility against hi<, <ay :e insured
against, su:Ie9t to the ;rovisions of this 9ha;ter.
3"he 9onsent of the s;ouse is not ne9essary for the validity
of an insuran9e ;oli9y ta?en out :y a <arried ;erson on his
or her life or that of his or her 9hildren.
3!ll rights, title and interest in the ;oli9y of insuran9e ta?en
out :y an original owner on the life or health of the ;erson
insured shall auto<ati9ally vest in the latter u;on the death
of the original owner, unless otherwise ;rovided for in the
;oli9y.
3*E. 5. "he ;re9eding se9tion does not authoriHe an
insuran9e for or against the drawing of any lottery, or for or
against any 9han9e or ti9?et in a lottery drawing a ;riHe.
3*E. 7. !ll ?inds of insuran9e are su:Ie9t to the ;rovisions
of this 9ha;ter so far as the ;rovisions 9an a;;ly.
3"I"LE 0
3P!R"IE* "$ ",E $#"R!"
3*E. '. Every 9or;oration, ;artnershi;, or asso9iation, duly
authoriHed to transa9t insuran9e :usiness as elsewhere
;rovided in this ode, <ay :e an insurer.
3*E. (. !nyone eB9e;t a ;u:li9 ene<y <ay :e insured.
1 | P a g e
R.A. 10607 The nsurance Code
3*E. 6. Unless the ;oli9y otherwise ;rovides, where a
<ortgagor of ;ro;erty effe9ts insuran9e in his own na<e
;roviding that the loss shall :e ;aya:le to the <ortgagee, or
assigns a ;oli9y of insuran9e to a <ortgagee, the insuran9e
is dee<ed to :e u;on the interest of the <ortgagor, who
does not 9ease to :e a ;arty to the original 9ontra9t, and any
a9t of his, ;rior to the loss, whi9h would otherwise avoid the
insuran9e, will have the sa<e effe9t, although the ;ro;erty is
in the hands of the <ortgagee, :ut any a9t whi9h, under the
9ontra9t of insuran9e, is to :e ;erfor<ed :y the <ortgagor,
<ay :e ;erfor<ed :y the <ortgagee therein na<ed, with the
sa<e effe9t as if it had :een ;erfor<ed :y the <ortgagor.
3*E. 8. If an insurer assents to the transfer of an insuran9e
fro< a <ortgagor to a <ortgagee, and, at the ti<e of his
assent, i<;oses further o:ligations on the assignee, <a?ing
a new 9ontra9t with hi<, the a9ts of the <ortgagor 9annot
affe9t the rights of said assignee.
3"I"LE G
3I#*UR!BLE I#"ERE*"
3*E. %&. Every ;erson has an insura:le interest in the life
and health=
3DaE $f hi<self, of his s;ouse and of his 9hildrenF
3D:E $f any ;erson on who< he de;ends wholly or in ;art for
edu9ation or su;;ort, or in who< he has a ;e9uniary
interestF
3D9E $f any ;erson under a legal o:ligation to hi< for the
;ay<ent of <oney, or res;e9ting ;ro;erty or servi9es, of
whi9h death or illness <ight delay or ;revent the
;erfor<an9eF and
3DdE $f any ;erson u;on whose life any estate or interest
vested in hi< de;ends.
3*E. %%. "he insured shall have the right to 9hange the
:enefi9iary he designated in the ;oli9y, unless he has
eB;ressly waived this right in said ;oli9y. #otwithstanding the
foregoing, in the event the insured does not 9hange the
:enefi9iary during his lifeti<e, the designation shall :e
dee<ed irrevo9a:le.
3*E. %0. "he interest of a :enefi9iary in a life insuran9e
;oli9y shall :e forfeited when the :enefi9iary is the ;rin9i;al,
a99o<;li9e, or a99essory in willfully :ringing a:out the death
of the insured. In su9h a 9ase, the share forfeited shall ;ass
on to the other :enefi9iaries, unless otherwise disCualified. In
the a:sen9e of other :enefi9iaries, the ;ro9eeds shall :e
;aid in a99ordan9e with the ;oli9y 9ontra9t. If the ;oli9y
9ontra9t is silent, the ;ro9eeds shall :e ;aid to the estate of
the insured.
3*E. %G. Every interest in ;ro;erty, whether real or
;ersonal, or any relation thereto, or lia:ility in res;e9t
thereof, of su9h nature that a 9onte<;lated ;eril <ight
dire9tly da<nify the insured, is an insura:le interest.
3*E. %5. !n insura:le interest in ;ro;erty <ay 9onsist in=
3DaE !n eBisting interestF
3D:E !n in9hoate interest founded on an eBisting interestF or
3D9E !n eB;e9tan9y, 9ou;led with an eBisting interest in that
out of whi9h the eB;e9tan9y arises.
3*E. %7. ! 9arrier or de;ository of any ?ind has an
insura:le interest in a thing held :y hi< as su9h, to the
eBtent of his lia:ility :ut not to eB9eed the value thereof.
3*E. %'. ! <ere 9ontingent or eB;e9tant interest in any
thing, not founded on an a9tual right to the thing, nor u;on
any valid 9ontra9t for it, is not insura:le.
3*E. %(. "he <easure of an insura:le interest in ;ro;erty is
the eBtent to whi9h the insured <ight :e da<nified :y loss or
inIury thereof.
3*E. %6. #o 9ontra9t or ;oli9y of insuran9e on ;ro;erty
shall :e enfor9ea:le eB9e;t for the :enefit of so<e ;erson
having an insura:le interest in the ;ro;erty insured.
3*E. %8. !n interest in ;ro;erty insured <ust eBist when the
insuran9e ta?es effe9t, and when the loss o99urs, :ut need
not eBist in the <eanti<eF and interest in the life or health of
a ;erson insured <ust eBist when the insuran9e ta?es effe9t,
:ut need not eBist thereafter or when the loss o99urs.
3*E. 0&. EB9e;t in the 9ases s;e9ified in the neBt four
se9tions, and in the 9ases of life, a99ident, and health
insuran9e, a 9hange of interest in any ;art of a thing insured
una99o<;anied :y a 9orres;onding 9hange of interest in the
insuran9e, sus;ends the insuran9e to an eCuivalent eBtent,
until the interest in the thing and the interest in the insuran9e
are vested in the sa<e ;erson.
3*E. 0%. ! 9hange of interest in a thing insured, after the
o99urren9e of an inIury whi9h results in a loss, does not
affe9t the right of the insured to inde<nity for the loss.
3*E. 00. ! 9hange of interest in one or <ore of several
distin9t things, se;arately insured :y one ;oli9y, does not
avoid the insuran9e as to the others.
3*E. 0G. ! 9hange of interest, :y will or su99ession, on the
death of the insured, does not avoid an insuran9eF and his
interest in the insuran9e ;asses to the ;erson ta?ing his
interest in the thing insured.
3*E. 05. ! transfer of interest :y one of several ;artners,
Ioint owners, or owners in 9o<<on, who are Iointly insured,
to the others, does not avoid an insuran9e even though it
has :een agreed that the insuran9e shall 9ease u;on an
alienation of the thing insured.
3*E. 07. Every sti;ulation in a ;oli9y of insuran9e for the
;ay<ent of loss whether the ;erson insured has or has not
any interest in the ;ro;erty insured, or that the ;oli9y shall :e
2 | P a g e
R.A. 10607 The nsurance Code
re9eived as ;roof of su9h interest, and every ;oli9y eBe9uted
:y way of ga<ing or wagering, is void.
3"I"LE 5
3$#E!LME#"
3*E. 0'. ! negle9t to 9o<<uni9ate that whi9h a ;arty
?nows and ought to 9o<<uni9ate, is 9alled a 9on9eal<ent.
3*E. 0(. ! 9on9eal<ent whether intentional or unintentional
entitles the inIured ;arty to res9ind a 9ontra9t of insuran9e.
3*E. 06. Ea9h ;arty to a 9ontra9t of insuran9e <ust
9o<<uni9ate to the other, in good faith, all fa9ts within his
?nowledge whi9h are <aterial to the 9ontra9t and as to whi9h
he <a?es no warranty, and whi9h the other has not the
<eans of as9ertaining.
3*E. 08. !n intentional and fraudulent o<ission, on the ;art
of one insured, to 9o<<uni9ate infor<ation of <atters
;roving or tending to ;rove the falsity of a warranty, entitles
the insurer to res9ind.
3*E. G&. #either ;arty to a 9ontra9t of insuran9e is :ound to
9o<<uni9ate infor<ation of the <atters following, eB9e;t in
answer to the inCuiries of the other=
3DaE "hose whi9h the other ?nowsF
3D:E "hose whi9h, in the eBer9ise of ordinary 9are, the other
ought to ?now, and of whi9h the for<er has no reason to
su;;ose hi< ignorantF
3D9E "hose of whi9h the other waives 9o<<uni9ationF
3DdE "hose whi9h ;rove or tend to ;rove the eBisten9e of a
ris? eB9luded :y a warranty, and whi9h are not otherwise
<aterialF and
3DeE "hose whi9h relate to a ris? eB9e;ted fro< the ;oli9y and
whi9h are not otherwise <aterial.
3*E. G%. Materiality is to :e deter<ined not :y the event,
:ut solely :y the ;ro:a:le and reasona:le influen9e of the
fa9ts u;on the ;arty to who< the 9o<<uni9ation is due, in
for<ing his esti<ate of the disadvantages of the ;ro;osed
9ontra9t, or in <a?ing his inCuiries.
3*E. G0. Ea9h ;arty to a 9ontra9t of insuran9e is :ound to
?now all the general 9auses whi9h are o;en to his inCuiry,
eCually with that of the other, and whi9h <ay affe9t the
;oliti9al or <aterial ;erils 9onte<;latedF and all general
usages of trade.
3*E. GG. "he right to infor<ation of <aterial fa9ts <ay :e
waived, either :y the ter<s of insuran9e or :y negle9t to
<a?e inCuiry as to su9h fa9ts, where they are distin9tly
i<;lied in other fa9ts of whi9h infor<ation is 9o<<uni9ated.
3*E. G5. Infor<ation of the nature or a<ount of the interest
of one insured need not :e 9o<<uni9ated unless in answer
to an inCuiry, eB9e;t as ;res9ri:ed :y *e9tion 7%.
3*E. G7. #either ;arty to a 9ontra9t of insuran9e is :ound to
9o<<uni9ate, even u;on inCuiry, infor<ation of his own
Iudg<ent u;on the <atters in Cuestion.
3"I"LE 7
3REPRE*E#"!"I$#
3*E. G'. ! re;resentation <ay :e oral or written.
3*E. G(. ! re;resentation <ay :e <ade at the ti<e of, or
:efore, issuan9e of the ;oli9y.
3*E. G6. "he language of a re;resentation is to :e
inter;reted :y the sa<e rules as the language of 9ontra9ts in
general.
3*E. G8. ! re;resentation as to the future is to :e dee<ed a
;ro<ise, unless it a;;ears that it was <erely a state<ent of
:elief or eB;e9tation.
3*E. 5&. ! re;resentation 9annot Cualify an eB;ress
;rovision in a 9ontra9t of insuran9e, :ut it <ay Cualify an
i<;lied warranty.
3*E. 5%. ! re;resentation <ay :e altered or withdrawn
:efore the insuran9e is effe9ted, :ut not afterwards.
3*E. 50. ! re;resentation <ust :e ;resu<ed to refer to the
date on whi9h the 9ontra9t goes into effe9t.
3*E. 5G. 1hen a ;erson insured has no ;ersonal
?nowledge of a fa9t, he <ay nevertheless re;eat infor<ation
whi9h he has u;on the su:Ie9t, and whi9h he :elieves to :e
true, with the eB;lanation that he does so on the infor<ation
of othersF or he <ay su:<it the infor<ation, in its whole
eBtent, to the insurerF and in neither 9ase is he res;onsi:le
for its truth, unless it ;ro9eeds fro< an agent of the insured,
whose duty it is to give the infor<ation.
3*E. 55. ! re;resentation is to :e dee<ed false when the
fa9ts fail to 9orres;ond with its assertions or sti;ulations.
3*E. 57. If a re;resentation is false in a <aterial ;oint,
whether affir<ative or ;ro<issory, the inIured ;arty is entitled
to res9ind the 9ontra9t fro< the ti<e when the re;resentation
:e9o<es false.
3*E. 5'. "he <ateriality of a re;resentation is deter<ined
:y the sa<e rules as the <ateriality of a 9on9eal<ent.
3*E. 5(. "he ;rovisions of this 9ha;ter a;;ly as well to a
<odifi9ation of a 9ontra9t of insuran9e as to its original
for<ation.
3 | P a g e
R.A. 10607 The nsurance Code
3*E. 56. 1henever a right to res9ind a 9ontra9t of
insuran9e is given to the insurer :y any ;rovision of this
9ha;ter, su9h right <ust :e eBer9ised ;revious to the
9o<<en9e<ent of an a9tion on the 9ontra9t.
3!fter a ;oli9y of life insuran9e <ade ;aya:le on the death of
the insured shall have :een in for9e during the lifeti<e of the
insured for a ;eriod of two D0E years fro< the date of its issue
or of its last reinstate<ent, the insurer 9annot ;rove that the
;oli9y is void a: initio or is res9inda:le :y reason of the
fraudulent 9on9eal<ent or <isre;resentation of the insured
or his agent.
3"I"LE '
3",E P$LI.
3*E. 58. "he written instru<ent in whi9h a 9ontra9t of
insuran9e is set forth, is 9alled a ;oli9y of insuran9e.
3*E. 7&. "he ;oli9y shall :e in ;rinted for< whi9h <ay
9ontain :lan? s;a9esF and any word, ;hrase, 9lause, <ar?,
sign, sy<:ol, signature, nu<:er, or word ne9essary to
9o<;lete the 9ontra9t of insuran9e shall :e written on the
:lan? s;a9es ;rovided therein.
3!ny rider, 9lause, warranty or endorse<ent ;ur;orting to :e
;art of the 9ontra9t of insuran9e and whi9h is ;asted or
atta9hed to said ;oli9y is not :inding on the insured, unless
the des9ri;tive title or na<e of the rider, 9lause, warranty or
endorse<ent is also <entioned and written on the :lan?
s;a9es ;rovided in the ;oli9y.
3Unless a;;lied for :y the insured or owner, any rider,
9lause, warranty or endorse<ent issued after the original
;oli9y shall :e 9ountersigned :y the insured or owner, whi9h
9ountersignature shall :e ta?en as his agree<ent to the
9ontents of su9h rider, 9lause, warranty or endorse<ent.
3#otwithstanding the foregoing, the ;oli9y <ay :e in
ele9troni9 for< su:Ie9t to the ;ertinent ;rovisions of Re;u:li9
!9t #o. 6(80, otherwise ?nown as the @Ele9troni9 o<<er9e
!9tA and to su9h rules and regulations as <ay :e ;res9ri:ed
:y the o<<issioner.
3*E. 7%. ! ;oli9y of insuran9e <ust s;e9ify=
3DaE "he ;arties :etween who< the 9ontra9t is <adeF
3D:E "he a<ount to :e insured eB9e;t in the 9ases of o;en or
running ;oli9iesF
3D9E "he ;re<iu<, or if the insuran9e is of a 9hara9ter where
the eBa9t ;re<iu< is only deter<ina:le u;on the ter<ination
of the 9ontra9t, a state<ent of the :asis and rates u;on
whi9h the final ;re<iu< is to :e deter<inedF
3DdE "he ;ro;erty or life insuredF
3DeE "he interest of the insured in ;ro;erty insured, if he is
not the a:solute owner thereofF
3DfE "he ris?s insured againstF and
3DgE "he ;eriod during whi9h the insuran9e is to 9ontinue.
3*E. 70. over notes <ay :e issued to :ind insuran9e
te<;orarily ;ending the issuan9e of the ;oli9y. 1ithin siBty
D'&E days after issue of a 9over note, a ;oli9y shall :e issued
in lieu thereof, in9luding within its ter<s the identi9al
insuran9e :ound under the 9over note and the ;re<iu<
therefor.
3over notes <ay :e eBtended or renewed :eyond su9h
siBty D'&E days with the written a;;roval of the o<<issioner
if he deter<ines that su9h eBtension is not 9ontrary to and is
not for the ;ur;ose of violating any ;rovisions of this ode.
"he o<<issioner <ay ;ro<ulgate rules and regulations
governing su9h eBtensions for the ;ur;ose of ;reventing
su9h violations and <ay :y su9h rules and regulations
dis;ense with the reCuire<ent of written a;;roval :y hi< in
the 9ase of eBtension in 9o<;lian9e with su9h rules and
regulations.
3*E. 7G. "he insuran9e ;ro9eeds shall :e a;;lied
eB9lusively to the ;ro;er interest of the ;erson in whose
na<e or for whose :enefit it is <ade unless otherwise
s;e9ified in the ;oli9y.
3*E. 75. 1hen an insuran9e 9ontra9t is eBe9uted with an
agent or trustee as the insured, the fa9t that his ;rin9i;al or
:enefi9iary is the real ;arty in interest <ay :e indi9ated :y
des9ri:ing the insured as agent or trustee, or :y other
general words in the ;oli9y.
3*E. 77. "o render an insuran9e effe9ted :y one ;artner or
;art-owner, a;;li9a:le to the interest of his 9o-;artners or
other ;art-owners, it is ne9essary that the ter<s of the ;oli9y
should :e su9h as are a;;li9a:le to the Ioint or 9o<<on
interest.
3*E. 7'. 1hen the des9ri;tion of the insured in a ;oli9y is
so general that it <ay 9o<;rehend any ;erson or any 9lass
of ;ersons, only he who 9an show that it was intended to
in9lude hi<, 9an 9lai< the :enefit of the ;oli9y.
3*E. 7(. ! ;oli9y <ay :e so fra<ed that it will inure to the
:enefit of who<soever, during the 9ontinuan9e of the ris?,
<ay :e9o<e the owner of the interest insured.
3*E. 76. "he <ere transfer of a thing insured does not
transfer the ;oli9y, :ut sus;ends it until the sa<e ;erson
:e9o<es the owner of :oth the ;oli9y and the thing insured.
3*E. 78. ! ;oli9y is either o;en, valued or running.
3*E. '&. !n o;en ;oli9y is one in whi9h the value of the
thing insured is not agreed u;on, and the a<ount of the
insuran9e <erely re;resents the insurerAs <aBi<u< lia:ility.
"he value of su9h thing insured shall :e as9ertained at the
ti<e of the loss.
4 | P a g e
R.A. 10607 The nsurance Code
3*E. '%. ! valued ;oli9y is one whi9h eB;resses on its fa9e
an agree<ent that the thing insured shall :e valued at a
s;e9ifi9 su<.
3*E. '0. ! running ;oli9y is one whi9h 9onte<;lates
su99essive insuran9es, and whi9h ;rovides that the o:Ie9t of
the ;oli9y <ay :e fro< ti<e to ti<e defined, es;e9ially as to
the su:Ie9ts of insuran9e, :y additional state<ents or
indorse<ents.
3*E. 'G. ! 9ondition, sti;ulation, or agree<ent in any ;oli9y
of insuran9e, li<iting the ti<e for 9o<<en9ing an a9tion
thereunder to a ;eriod of less than one D%E year fro< the ti<e
when the 9ause of a9tion a99rues, is void.
3*E. '5. #o ;oli9y of insuran9e other than life shall :e
9an9elled :y the insurer eB9e;t u;on ;rior noti9e thereof to
the insured, and no noti9e of 9an9ellation shall :e effe9tive
unless it is :ased on the o99urren9e, after the effe9tive date
of the ;oli9y, of one or <ore of the following=
3DaE #on;ay<ent of ;re<iu<F
3D:E onvi9tion of a 9ri<e arising out of a9ts in9reasing the
haHard insured againstF
3D9E -is9overy of fraud or <aterial <isre;resentationF
3DdE -is9overy of willful or re9?less a9ts or o<issions
in9reasing the haHard insured againstF
3DeE Physi9al 9hanges in the ;ro;erty insured whi9h result in
the ;ro;erty :e9o<ing uninsura:leF
3DfE -is9overy of other insuran9e 9overage that <a?es the
total insuran9e in eB9ess of the value of the ;ro;erty insuredF
or
3DgE ! deter<ination :y the o<<issioner that the
9ontinuation of the ;oli9y would violate or would ;la9e the
insurer in violation of this ode.
3*E. '7. !ll noti9es of 9an9ellation <entioned in the
;re9eding se9tion shall :e in writing, <ailed or delivered to
the na<ed insured at the address shown in the ;oli9y, or to
his :ro?er ;rovided the :ro?er is authoriHed in writing :y the
;oli9y owner to re9eive the noti9e of 9an9ellation on his
:ehalf, and shall state=
3DaE 1hi9h of the grounds set forth in *e9tion '5 is relied
u;onF and
3D:E "hat, u;on written reCuest of the na<ed insured, the
insurer will furnish the fa9ts on whi9h the 9an9ellation is
:ased.
3*E. ''. In 9ase of insuran9e other than life, unless the
insurer at least forty-five D57E days in advan9e of the end of
the ;oli9y ;eriod <ails or delivers to the na<ed insured at
the address shown in the ;oli9y noti9e of its intention not to
renew the ;oli9y or to 9ondition its renewal u;on redu9tion of
li<its or eli<ination of 9overages, the na<ed insured shall
:e entitled to renew the ;oli9y u;on ;ay<ent of the ;re<iu<
due on the effe9tive date of the renewal. !ny ;oli9y written
for a ter< of less than one D%E year shall :e 9onsidered as if
written for a ter< of one D%E year. !ny ;oli9y written for a
ter< longer than one D%E year or any ;oli9y with no fiBed
eB;iration date shall :e 9onsidered as if written for
su99essive ;oli9y ;eriods or ter<s of one D%E year.
3"I"LE (
31!RR!#"IE*
3*E. '(. ! warranty is either eB;ressed or i<;lied.
3*E. '6. ! warranty <ay relate to the ;ast, the ;resent, the
future, or to any or all of these.
3*E. '8. #o ;arti9ular for< of words is ne9essary to 9reate
a warranty.
3*E. (&. 1ithout ;reIudi9e to *e9tion 7%, every eB;ress
warranty, <ade at or :efore the eBe9ution of a ;oli9y, <ust
:e 9ontained in the ;oli9y itself, or in another instru<ent
signed :y the insured and referred to in the ;oli9y as <a?ing
a ;art of it.
3*E. (%. ! state<ent in a ;oli9y, of a <atter relating to the
;erson or thing insured, or to the ris?, as fa9t, is an eB;ress
warranty thereof.
3*E. (0. ! state<ent in a ;oli9y, whi9h i<;arts that it is
intended to do or not to do a thing whi9h <aterially affe9ts
the ris?, is a warranty that su9h a9t or o<ission shall ta?e
;la9e.
3*E. (G. 1hen, :efore the ti<e arrives for the ;erfor<an9e
of a warranty relating to the future, a loss insured against
ha;;ens, or ;erfor<an9e :e9o<es unlawful at the ;la9e of
the 9ontra9t, or i<;ossi:le, the o<ission to fulfill the warranty
does not avoid the ;oli9y.
3*E. (5. "he violation of a <aterial warranty, or other
<aterial ;rovision of a ;oli9y, on the ;art of either ;arty
thereto, entitles the other to res9ind.
3*E. (7. ! ;oli9y <ay de9lare that a violation of s;e9ified
;rovisions thereof shall avoid it, otherwise the :rea9h of an
i<<aterial ;rovision does not avoid the ;oli9y.
3*E. ('. ! :rea9h of warranty without fraud <erely
eBonerates an insurer fro< the ti<e that it o99urs, or where it
is :ro?en in its in9e;tion, ;revents the ;oli9y fro< atta9hing
to the ris?.
3"I"LE 6
3PREMIUM
3*E. ((. !n insurer is entitled to ;ay<ent of the ;re<iu<
as soon as the thing insured is eB;osed to the ;eril insured
5 | P a g e
R.A. 10607 The nsurance Code
against. #otwithstanding any agree<ent to the 9ontrary, no
;oli9y or 9ontra9t of insuran9e issued :y an insuran9e
9o<;any is valid and :inding unless and until the ;re<iu<
thereof has :een ;aid, eB9e;t in the 9ase of a life or an
industrial life ;oli9y whenever the gra9e ;eriod ;rovision
a;;lies, or whenever under the :ro?er and agen9y
agree<ents with duly li9ensed inter<ediaries, a ninety D8&E-
day 9redit eBtension is given. #o 9redit eBtension to a duly
li9ensed inter<ediary should eB9eed ninety D8&E days fro<
date of issuan9e of the ;oli9y.
3*E. (6. E<;loyees of the Re;u:li9 of the Phili;;ines,
in9luding its ;oliti9al su:divisions and instru<entalities, and
govern<ent-owned or -9ontrolled 9or;orations, <ay ;ay their
insuran9e ;re<iu<s and loan o:ligations through salary
dedu9tion= Provided, "hat the treasurer, 9ashier, ;ay<aster
or offi9ial of the entity e<;loying the govern<ent e<;loyee
is authoriHed, notwithstanding the ;rovisions of any eBisting
law, rules and regulations to the 9ontrary, to <a?e
dedu9tions fro< the salary, wage or in9o<e of the latter
;ursuant to the agree<ent :etween the insurer and the
govern<ent e<;loyee and to re<it su9h dedu9tions to the
insurer 9on9erned, and 9olle9t su9h reasona:le fee for its
servi9es.
3*E. (8. !n a9?nowledg<ent in a ;oli9y or 9ontra9t of
insuran9e or the re9ei;t of ;re<iu< is 9on9lusive eviden9e
of its ;ay<ent, so far as to <a?e the ;oli9y :inding,
notwithstanding any sti;ulation therein that it shall not :e
:inding until the ;re<iu< is a9tually ;aid.
3*E. 6&. ! ;erson insured is entitled to a return of ;re<iu<,
as follows=
3DaE "o the whole ;re<iu< if no ;art of his interest in the
thing insured :e eB;osed to any of the ;erils insured againstF
3D:E 1here the insuran9e is <ade for a definite ;eriod of ti<e
and the insured surrenders his ;oli9y, to su9h ;ortion of the
;re<iu< as 9orres;onds with the uneB;ired ti<e, at a ;ro
rata rate, unless a short ;eriod rate has :een agreed u;on
and a;;ears on the fa9e of the ;oli9y, after dedu9ting fro<
the whole ;re<iu< any 9lai< for loss or da<age under the
;oli9y whi9h has ;reviously a99rued= Provided, "hat no
holder of a life insuran9e ;oli9y <ay avail hi<self of the
;rivileges of this ;aragra;h without suffi9ient 9ause as
otherwise ;rovided :y law.
3*E. 6%. If a ;eril insured against has eBisted, and the
insurer has :een lia:le for any ;eriod, however short, the
insured is not entitled to return of ;re<iu<s, so far as that
;arti9ular ris? is 9on9erned.
3*E. 60. ! ;erson insured is entitled to a return of the
;re<iu< when the 9ontra9t is voida:le, and su:seCuently
annulled under the ;rovisions of the ivil odeF or on
a99ount of the fraud or <isre;resentation of the insurer, or of
his agent, or on a99ount of fa9ts, or the eBisten9e of whi9h
the insured was ignorant of without his faultF or when :y any
default of the insured other than a9tual fraud, the insurer
never in9urred any lia:ility under the ;oli9y.
3! ;erson insured is not entitled to a return of ;re<iu< if the
;oli9y is annulled, res9inded or if a 9lai< is denied :y reason
of fraud.
3*E. 6G. In 9ase of an over insuran9e :y several insurers
other than life, the insured is entitled to a rata:le return of the
;re<iu<, ;ro;ortioned to the a<ount :y whi9h the
aggregate su< insured in all the ;oli9ies eB9eeds the
insura:le value of the thing at ris?.
3*E. 65. !n insurer <ay 9ontra9t and a99e;t ;ay<ents, in
addition to regular ;re<iu<, for the ;ur;ose of ;aying future
;re<iu<s on the ;oli9y or to in9rease the :enefits thereof.
3"I"LE 8
3L$**
3*E. 67. !n agree<ent not to transfer the 9lai< of the
insured against the insurer after the loss has ha;;ened, is
void if <ade :efore the loss eB9e;t as otherwise ;rovided in
the 9ase of life insuran9e.
3*E. 6'. Unless otherwise ;rovided :y the ;oli9y, an
insurer is lia:le for a loss of whi9h a ;eril insured against
was the ;roBi<ate 9ause, although a ;eril not 9onte<;lated
:y the 9ontra9t <ay have :een a re<ote 9ause of the lossF
:ut he is not lia:le for a loss of whi9h the ;eril insured
against was only a re<ote 9ause.
3*E. 6(. !n insurer is lia:le where the thing insured is
res9ued fro< a ;eril insured against that would otherwise
have 9aused a loss, if, in the 9ourse of su9h res9ue, the
thing is eB;osed to a ;eril not insured against, whi9h
;er<anently de;rives the insured of its ;ossession, in whole
or in ;artF or where a loss is 9aused :y efforts to res9ue the
thing insured fro< a ;eril insured against.
3*E. 66. 1here a ;eril is es;e9ially eB9e;ted in a 9ontra9t
of insuran9e, a loss, whi9h would not have o99urred :ut for
su9h ;eril, is there:y eB9e;ted although the i<<ediate
9ause of the loss was a ;eril whi9h was not eB9e;ted.
3*E. 68. !n insurer is not lia:le for a loss 9aused :y the
willful a9t or through the 9onnivan9e of the insuredF :ut he is
not eBonerated :y the negligen9e of the insured, or of the
insuran9e agents or others.
3"I"LE %&
3#$"IE $/ L$**
3*E. 8&. In 9ase of loss u;on an insuran9e against fire, an
insurer is eBonerated, if written noti9e thereof :e not given to
hi< :y an insured, or so<e ;erson entitled to the :enefit of
the insuran9e, without unne9essary delay. /or other non-life
insuran9e, the o<<issioner <ay s;e9ify the ;eriod for the
su:<ission of the noti9e of loss.
6 | P a g e
R.A. 10607 The nsurance Code
3*E. 8%. 1hen a ;reli<inary ;roof of loss is reCuired :y a
;oli9y, the insured is not :ound to give su9h ;roof as would
:e ne9essary in a 9ourt of Iusti9eF :ut it is suffi9ient for hi< to
give the :est eviden9e whi9h he has in his ;ower at the ti<e.
3*E. 80. !ll defe9ts in a noti9e of loss, or in ;reli<inary
;roof thereof, whi9h the insured <ight re<edy, and whi9h the
insurer o<its to s;e9ify to hi<, without unne9essary delay,
as grounds of o:Ie9tion, are waived.
3*E. 8G. -elay in the ;resentation to an insurer of noti9e or
;roof of loss is waived if 9aused :y any a9t of hi<, or if he
o<its to ta?e o:Ie9tion ;ro<;tly and s;e9ifi9ally u;on that
ground.
3*E. 85. If the ;oli9y reCuires, :y way of ;reli<inary ;roof
of loss, the 9ertifi9ate or testi<ony of a ;erson other than the
insured, it is suffi9ient for the insured to use reasona:le
diligen9e to ;ro9ure it, and in 9ase of the refusal of su9h
;erson to give it, then to furnish reasona:le eviden9e to the
insurer that su9h refusal was not indu9ed :y any Iust
grounds of dis:elief in the fa9ts ne9essary to :e 9ertified or
testified.
3"I"LE %%
3-$UBLE I#*UR!#E
3*E. 87. ! dou:le insuran9e eBists where the sa<e ;erson
is insured :y several insurers se;arately in res;e9t to the
sa<e su:Ie9t and interest.
3*E. 8'. 1here the insured in a ;oli9y other than life is
over insured :y dou:le insuran9e=
3DaE "he insured, unless the ;oli9y otherwise ;rovides, <ay
9lai< ;ay<ent fro< the insurers in su9h order as he <ay
sele9t, u; to the a<ount for whi9h the insurers are severally
lia:le under their res;e9tive 9ontra9tsF
3D:E 1here the ;oli9y under whi9h the insured 9lai<s is a
valued ;oli9y, any su< re9eived :y hi< under any other
;oli9y shall :e dedu9ted fro< the value of the ;oli9y without
regard to the a9tual value of the su:Ie9t <atter insuredF
3D9E 1here the ;oli9y under whi9h the insured 9lai<s is an
unvalued ;oli9y, any su< re9eived :y hi< under any ;oli9y
shall :e dedu9ted against the full insura:le value, for any
su< re9eived :y hi< under any ;oli9yF
3DdE 1here the insured re9eives any su< in eB9ess of the
valuation in the 9ase of valued ;oli9ies, or of the insura:le
value in the 9ase of unvalued ;oli9ies, he <ust hold su9h
su< in trust for the insurers, a99ording to their right of
9ontri:ution a<ong the<selvesF
3DeE Ea9h insurer is :ound, as :etween hi<self and the other
insurers, to 9ontri:ute rata:ly to the loss in ;ro;ortion to the
a<ount for whi9h he is lia:le under his 9ontra9t.
3"I"LE %0
3REI#*UR!#E
3*E. 8(. ! 9ontra9t of reinsuran9e is one :y whi9h an
insurer ;ro9ures a third ;erson to insure hi< against loss or
lia:ility :y reason of su9h original insuran9e.
3*E. 86. 1here an insurer o:tains reinsuran9e, eB9e;t
under auto<ati9 reinsuran9e treaties, he <ust 9o<<uni9ate
all the re;resentations of the original insured, and also all the
?nowledge and infor<ation he ;ossesses, whether
;reviously or su:seCuently a9Cuired, whi9h are <aterial to
the ris?.
3*E. 88. ! reinsuran9e is ;resu<ed to :e a 9ontra9t of
inde<nity against lia:ility, and not <erely against da<age.
3*E. %&&. "he original insured has no interest in a 9ontra9t
of reinsuran9e.
3,!P"ER II
3L!**E* $/ I#*UR!#E
3"I"LE I
3M!RI#E I#*UR!#E
3*UB-"I"LE %-!
3-E/I#I"I$#
3*E. %&%. Marine Insuran9e in9ludes=
3DaE Insuran9e against loss of or da<age to=
3D%E >essels, 9raft, air9raft, vehi9les, goods, freights,
9argoes, <er9handise, effe9ts, dis:urse<ents, ;rofits,
<oneys, se9urities, 9hoses in a9tion, instru<ents of de:ts,
valua:le ;a;ers, :otto<ry, and res;ondentia interests and all
other ?inds of ;ro;erty and interests therein, in res;e9t to,
a;;ertaining to or in 9onne9tion with any and all ris?s or
;erils of navigation, transit or trans;ortation, or while :eing
asse<:led, ;a9?ed, 9rated, :aled, 9o<;ressed or si<ilarly
;re;ared for shi;<ent or while awaiting shi;<ent, or during
any delays, storage, transhi;<ent, or reshi;<ent in9ident
thereto, in9luding war ris?s, <arine :uilderAs ris?s, and all
;ersonal ;ro;erty floater ris?sF
3D0E Person or ;ro;erty in 9onne9tion with or a;;ertaining to
a <arine, inland <arine, transit or trans;ortation insuran9e,
in9luding lia:ility for loss of or da<age arising out of or in
9onne9tion with the 9onstru9tion, re;air, o;eration,
<aintenan9e or use of the su:Ie9t <atter of su9h insuran9e
D:ut not in9luding life insuran9e or surety :onds nor
insuran9e against loss :y reason of :odily inIury to any
;erson arising out of ownershi;, <aintenan9e, or use of
auto<o:ilesEF
7 | P a g e
R.A. 10607 The nsurance Code
3DGE Pre9ious stones, Iewels, Iewelry, ;re9ious <etals,
whether in 9ourse of trans;ortation or otherwiseF and
3D5E Bridges, tunnels and other instru<entalities of
trans;ortation and 9o<<uni9ation DeB9luding :uildings, their
furniture and furnishings, fiBed 9ontents and su;;lies held in
storageEF ;iers, wharves, do9?s and sli;s, and other aids to
navigation and trans;ortation, in9luding dry do9?s and
<arine railways, da<s and a;;urtenant fa9ilities for the
9ontrol of waterways.
3D:E Marine ;rote9tion and inde<nity insuran9e, <eaning
insuran9e against, or against legal lia:ility of the insured for
loss, da<age, or eB;ense in9ident to ownershi;, o;eration,
9hartering, <aintenan9e, use, re;air, or 9onstru9tion of any
vessel, 9raft or instru<entality in use of o9ean or inland
waterways, in9luding lia:ility of the insured for ;ersonal
inIury, illness or death or for loss of or da<age to the
;ro;erty of another ;erson.
3*UB-"I"LE %-B
3I#*UR!BLE I#"ERE*"
3*E. %&0. "he owner of a shi; has in all 9ases an insura:le
interest in it, even when it has :een 9hartered :y one who
9ovenants to ;ay hi< its value in 9ase of loss= Provided, "hat
in this 9ase the insurer shall :e lia:le for only that ;art of the
loss whi9h the insured 9annot re9over fro< the 9harterer.
3*E. %&G. "he insura:le interest of the owner of the shi;
hy;othe9ated :y :otto<ry is only the eB9ess of its value over
the a<ount se9ured :y :otto<ry.
3*E. %&5. /reightage, in the sense of a ;oli9y of <arine
insuran9e, signifies all the :enefits derived :y the owner,
either fro< the 9hartering of the shi; or its e<;loy<ent for
the 9arriage of his own goods or those of others.
3*E. %&7. "he owner of a shi; has an insura:le interest in
eB;e9ted freightage whi9h a99ording to the ordinary and
;ro:a:le 9ourse of things he would have earned :ut for the
intervention of a ;eril insured against or other ;eril in9ident
to the voyage.
3*E. %&'. "he interest <entioned in the last se9tion eBists,
in 9ase of a 9harter ;arty, when the shi; has :ro?en ground
on the 9hartered voyage. If a ;ri9e is to :e ;aid for the
9arriage of goods it eBists when they are a9tually on :oard,
or there is so<e 9ontra9t for ;utting the< on :oard, and :oth
shi; and goods are ready for the s;e9ified voyage.
3*E. %&(. $ne who has an interest in the thing fro< whi9h
;rofits are eB;e9ted to ;ro9eed has an insura:le interest in
the ;rofits.
3*E. %&6. "he 9harterer of a shi; has an insura:le interest
in it, to the eBtent that he is lia:le to :e da<nified :y its loss.
3*UB-"I"LE %-
3$#E!LME#"
3*E. %&8. In <arine insuran9e, ea9h ;arty is :ound to
9o<<uni9ate, in addition to what is reCuired :y *e9tion 06,
all the infor<ation whi9h he ;ossesses, <aterial to the ris?,
eB9e;t su9h as is <entioned in *e9tion G&, and to state the
eBa9t and whole truth in relation to all <atters that he
re;resents, or u;on inCuiry dis9loses or assu<es to dis9lose.
3*E. %%&. In <arine insuran9e, infor<ation of the :elief or
eB;e9tation of a third ;erson, in referen9e to a <aterial fa9t,
is <aterial.
3*E. %%%. ! ;erson insured :y a 9ontra9t of <arine
insuran9e is ;resu<ed to have ?nowledge, at the ti<e of
insuring, of a ;rior loss, if the infor<ation <ight ;ossi:ly
have rea9hed hi< in the usual <ode of trans<ission and at
the usual rate of 9o<<uni9ation.
3*E. %%0. ! 9on9eal<ent in a <arine insuran9e, in res;e9t
to any of the following <atters, does not vitiate the entire
9ontra9t, :ut <erely eBonerates the insurer fro< a loss
resulting fro< the ris? 9on9ealed=
3DaE "he national 9hara9ter of the insuredF
3D:E "he lia:ility of the thing insured to 9a;ture and detentionF
3D9E "he lia:ility to seiHure fro< :rea9h of foreign laws of
tradeF
3DdE "he want of ne9essary do9u<entsF and
3DeE "he use of false and si<ulated ;a;ers.
3*UB-"I"LE %--
3REPRE*E#"!"I$#
3*E. %%G. If a re;resentation :y a ;erson insured :y a
9ontra9t of <arine insuran9e, is intentionally false in any
<aterial res;e9t, or in res;e9t of any fa9t on whi9h the
9hara9ter and nature of the ris? de;ends, the insurer <ay
res9ind the entire 9ontra9t.
3*E. %%5. "he eventual falsity of a re;resentation as to
eB;e9tation does not, in the a:sen9e of fraud, avoid a
9ontra9t of <arine insuran9e.
3*UB-"I"LE %-E
3IMPLIE- 1!RR!#"IE*
3*E. %%7. In every <arine insuran9e u;on a shi; or freight,
or freightage, or u;on any thing whi9h is the su:Ie9t of
8 | P a g e
R.A. 10607 The nsurance Code
<arine insuran9e, a warranty is i<;lied that the shi; is
seaworthy.
3*E. %%'. ! shi; is seaworthy when reasona:ly fit to
;erfor< the servi9e and to en9ounter the ordinary ;erils of
the voyage 9onte<;lated :y the ;arties to the ;oli9y.
3*E. %%(. !n i<;lied warranty of seaworthiness is 9o<;lied
with if the shi; :e seaworthy at the ti<e of the
9o<<en9e<ent of the ris?, eB9e;t in the following 9ases=
3DaE 1hen the insuran9e is <ade for a s;e9ified length of
ti<e, the i<;lied warranty is not 9o<;lied with unless the
shi; :e seaworthy at the 9o<<en9e<ent of every voyage it
underta?es during that ti<eF
3D:E 1hen the insuran9e is u;on the 9argo whi9h, :y the
ter<s of the ;oli9y, des9ri;tion of the voyage, or esta:lished
9usto< of the trade, is to :e transhi;;ed at an inter<ediate
;ort, the i<;lied warranty is not 9o<;lied with unless ea9h
vessel u;on whi9h the 9argo is shi;;ed, or transhi;;ed, :e
seaworthy at the 9o<<en9e<ent of ea9h ;arti9ular voyage.
3*E. %%6. ! warranty of seaworthiness eBtends not only to
the 9ondition of the stru9ture of the shi; itself, :ut reCuires
that it :e ;ro;erly laden, and ;rovided with a 9o<;etent
<aster, a suffi9ient nu<:er of 9o<;etent offi9ers and
sea<en, and the reCuisite a;;urtenan9es and eCui;<ent,
su9h as :allasts, 9a:les and an9hors, 9ordage and sails,
food, water, fuel and lights, and other ne9essary or ;ro;er
stores and i<;le<ents for the voyage.
3*E. %%8. 1here different ;ortions of the voyage
9onte<;lated :y a ;oli9y differ in res;e9t to the things
reCuisite to <a?e the shi; seaworthy therefor, a warranty of
seaworthiness is 9o<;lied with if, at the 9o<<en9e<ent of
ea9h ;ortion, the shi; is seaworthy with referen9e to that
;ortion.
3*E. %0&. 1hen the shi; :e9o<es unseaworthy during the
voyage to whi9h an insuran9e relates, an unreasona:le
delay in re;airing the defe9t eBonerates the insurer on shi;
or shi;ownerAs interest fro< lia:ility fro< any loss arising
therefro<.
3*E. %0%. ! shi; whi9h is seaworthy for the ;ur;ose of an
insuran9e u;on the shi; <ay, nevertheless, :y reason of
:eing unfitted to re9eive the 9argo, :e unseaworthy for the
;ur;ose of insuran9e u;on the 9argo.
3*E. %00. 1here the nationality or neutrality of a shi; or
9argo is eB;ressly warranted, it is i<;lied that the shi; will
9arry the reCuisite do9u<ents to show su9h nationality or
neutrality and that it will not 9arry any do9u<ents whi9h 9ast
reasona:le sus;i9ion thereon.
3*UB-"I"LE %-/
3",E >$.!+E !#- -E>I!"I$#
3*E. %0G. 1hen the voyage 9onte<;lated :y a <arine
insuran9e ;oli9y is des9ri:ed :y the ;la9es of :eginning and
ending, the voyage insured is one whi9h 9onfor<s to the
9ourse of sailing fiBed :y <er9antile usage :etween those
;la9es.
3*E. %05. If the 9ourse of sailing is not fiBed :y <er9antile
usage, the voyage insured :y a <arine insuran9e ;oli9y is
that way :etween the ;la9es s;e9ified, whi9h to a <aster of
ordinary s?ill and dis9retion, would <ean the <ost natural,
dire9t and advantageous.
3*E. %07. -eviation is a de;arture fro< the 9ourse of the
voyage insured, <entioned in the last two D0E se9tions, or an
unreasona:le delay in ;ursuing the voyage or the
9o<<en9e<ent of an entirely different voyage.
3*E. %0'. ! deviation is ;ro;er=
3DaE 1hen 9aused :y 9ir9u<stan9es over whi9h neither the
<aster nor the owner of the shi; has any 9ontrolF
3D:E 1hen ne9essary to 9o<;ly with a warranty, or to avoid a
;eril, whether or not the ;eril is insured againstF
3D9E 1hen <ade in good faith, and u;on reasona:le grounds
of :elief in its ne9essity to avoid a ;erilF or
3DdE 1hen <ade in good faith, for the ;ur;ose of saving
hu<an life or relieving another vessel in distress.
3*E. %0(. Every deviation not s;e9ified in the last se9tion is
i<;ro;er.
3*E. %06. !n insurer is not lia:le for any loss ha;;ening to
the thing insured su:seCuent to an i<;ro;er deviation.
3*UB-"I"LE %-+
3L$**
3*E. %08. ! loss <ay :e either total or ;artial.
3*E. %G&. Every loss whi9h is not total is ;artial.
3*E. %G%. ! total loss <ay :e either a9tual or 9onstru9tive.
3*E. %G0. !n a9tual total loss is 9aused :y=
3DaE ! total destru9tion of the thing insuredF
3D:E "he irretrieva:le loss of the thing :y sin?ing, or :y :eing
:ro?en u;F
3D9E !ny da<age to the thing whi9h renders it valueless to
the owner for the ;ur;ose for whi9h he held itF or
3DdE !ny other event whi9h effe9tively de;rives the owner of
the ;ossession, at the ;ort of destination, of the thing
insured.
9 | P a g e
R.A. 10607 The nsurance Code
3*E. %GG. ! 9onstru9tive total loss is one whi9h gives to a
;erson insured a right to a:andon, under *e9tion %5%.
3*E. %G5. !n a9tual loss <ay :e ;resu<ed fro< the
9ontinued a:sen9e of a shi; without :eing heard of. "he
length of ti<e whi9h is suffi9ient to raise this ;resu<;tion
de;ends on the 9ir9u<stan9es of the 9ase.
3*E. %G7. 1hen a shi; is ;revented, at an inter<ediate
;ort, fro< 9o<;leting the voyage, :y the ;erils insured
against, the lia:ility of a <arine insurer on the 9argo
9ontinues after they are thus reshi;;ed.
3#othing in this se9tion shall ;revent an insurer fro<
reCuiring an additional ;re<iu< if the haHard :e in9reased
:y this eBtension of lia:ility.
3*E. %G'. In addition to the lia:ility <entioned in the last
se9tion, a <arine insurer is :ound for da<ages, eB;enses of
dis9harging, storage, reshi;<ent, eBtra freightage, and all
other eB;enses in9urred in saving 9argo reshi;;ed ;ursuant
to the last se9tion, u; to the a<ount insured.
3#othing in this or in the ;re9eding se9tion shall render a
<arine insurer lia:le for any a<ount in eB9ess of the insured
value or, if there :e none, of the insura:le value.
3*E. %G(. U;on an a9tual total loss, a ;erson insured is
entitled to ;ay<ent without noti9e of a:andon<ent.
3*E. %G6. 1here it has :een agreed that an insuran9e
u;on a ;arti9ular thing, or 9lass of things, shall :e free fro<
;arti9ular average, a <arine insurer is not lia:le for any
;arti9ular average loss not de;riving the insured of the
;ossession, at the ;ort of destination, of the whole of su9h
thing, or 9lass of things, even though it :e9o<es entirely
worthlessF :ut su9h insurer is lia:le for his ;ro;ortion of all
general average loss assessed u;on the thing insured.
3*E. %G8. !n insuran9e 9onfined in ter<s to an a9tual loss
does not 9over a 9onstru9tive total loss, :ut 9overs any loss,
whi9h ne9essarily results in de;riving the insured of the
;ossession, at the ;ort of destination, of the entire thing
insured.
3*UB-"I"LE %-,
3!B!#-$#ME#"
3*E. %5&. !:andon<ent, in <arine insuran9e, is the a9t of
the insured :y whi9h, after a 9onstru9tive total loss, he
de9lares the relinCuish<ent to the insurer of his interest in
the thing insured.
3*E. %5%. ! ;erson insured :y a 9ontra9t of <arine
insuran9e <ay a:andon the thing insured, or any ;arti9ular
;ortion thereof se;arately valued :y the ;oli9y, or otherwise
se;arately insured, and re9over for a total loss thereof, when
the 9ause of the loss is a ;eril insured against=
3DaE If <ore than three-fourths DJE thereof in value is a9tually
lost, or would have to :e eB;ended to re9over it fro< the
;erilF
3D:E If it is inIured to su9h an eBtent as to redu9e its value
<ore than three-fourths DJEF
3D9E If the thing insured is a shi;, and the 9onte<;lated
voyage 9annot :e lawfully ;erfor<ed without in9urring either
an eB;ense to the insured of <ore than three-fourths DJE the
value of the thing a:andoned or a ris? whi9h a ;rudent <an
would not ta?e under the 9ir9u<stan9esF or
3DdE If the thing insured, :eing 9argo or freightage, and the
voyage 9annot :e ;erfor<ed, nor another shi; ;ro9ured :y
the <aster, within a reasona:le ti<e and with reasona:le
diligen9e, to forward the 9argo, without in9urring the li?e
eB;ense or ris? <entioned in the ;re9eding su:;aragra;h.
But freightage 9annot in any 9ase :e a:andoned unless the
shi; is also a:andoned.
3*E. %50. !n a:andon<ent <ust :e neither ;artial nor
9onditional.
3*E. %5G. !n a:andon<ent <ust :e <ade within a
reasona:le ti<e after re9ei;t of relia:le infor<ation of the
loss, :ut where the infor<ation is of a dou:tful 9hara9ter, the
insured is entitled to a reasona:le ti<e to <a?e inCuiry.
3*E. %55. 1here the infor<ation u;on whi9h an
a:andon<ent has :een <ade ;roves in9orre9t, or the thing
insured was so far restored when the a:andon<ent was
<ade that there was then in fa9t no total loss, the
a:andon<ent :e9o<es ineffe9tual.
3*E. %57. !:andon<ent is <ade :y giving noti9e thereof to
the insurer, whi9h <ay :e done orally, or in writing= Provided,
"hat if the noti9e :e done orally, a written noti9e of su9h
a:andon<ent shall :e su:<itted within seven D(E days fro<
su9h oral noti9e.
3*E. %5'. ! noti9e of a:andon<ent <ust :e eB;li9it, and
<ust s;e9ify the ;arti9ular 9ause of the a:andon<ent, :ut
need state only enough to show that there is ;ro:a:le 9ause
therefor, and need not :e a99o<;anied with ;roof of interest
or of loss.
3*E. %5(. !n a:andon<ent 9an :e sustained only u;on the
9ause s;e9ified in the noti9e thereof.
3*E. %56. !n a:andon<ent is eCuivalent to a transfer :y
the insured of his interest to the insurer, with all the 9han9es
of re9overy and inde<nity.
3*E. %58. If a <arine insurer ;ays for a loss as if it were an
a9tual total loss, he is entitled to whatever <ay re<ain of the
thing insured, or its ;ro9eeds or salvage, as if there had
:een a for<al a:andon<ent.
3*E. %7&. U;on an a:andon<ent, a9ts done in good faith
:y those who were agents of the insured in res;e9t to the
thing insured, su:seCuent to the loss, are at the ris? of the
insurer, and for his :enefit.
10 | P a g e
R.A. 10607 The nsurance Code
3*E. %7%. 1here noti9e of a:andon<ent is ;ro;erly given,
the rights of the insured are not ;reIudi9ed :y the fa9t that
the insurer refuses to a99e;t the a:andon<ent.
3*E. %70. "he a99e;tan9e of an a:andon<ent <ay :e
either eB;ress or i<;lied fro< the 9ondu9t of the insurer. "he
<ere silen9e of the insurer for an unreasona:le length of
ti<e after noti9e shall :e 9onstrued as an a99e;tan9e.
3*E. %7G. "he a99e;tan9e of an a:andon<ent, whether
eB;ress or i<;lied, is 9on9lusive u;on the ;arties, and
ad<its the loss and the suffi9ien9y of the a:andon<ent.
3*E. %75. !n a:andon<ent on9e <ade and a99e;ted is
irrevo9a:le, unless the ground u;on whi9h it was <ade
;roves to :e unfounded.
3*E. %77. $n an a99e;ted a:andon<ent of a shi;,
freightage earned ;revious to the loss :elongs to the insurer
of said freightageF :ut freightage su:seCuently earned
:elongs to the insurer of the shi;.
3*E. %7'. If an insurer refuses to a99e;t a valid
a:andon<ent, he is lia:le as u;on an a9tual total loss,
dedu9ting fro< the a<ount any ;ro9eeds of the thing insured
whi9h <ay have 9o<e to the hands of the insured.
3*E. %7(. If a ;erson insured o<its to a:andon, he <ay
nevertheless re9over his a9tual loss.
3*UB-"I"LE %-I
3ME!*URE $/ I#-EM#I".
3*E. %76. ! valuation in a ;oli9y of <arine insuran9e is
9on9lusive :etween the ;arties thereto in the adIust<ent of
either a ;artial or total loss, if the insured has so<e interest
at ris?, and there is no fraud on his ;artF eB9e;t that when a
thing has :een hy;othe9ated :y :otto<ry or res;ondentia,
:efore its insuran9e, and without the ?nowledge of the
;erson a9tually ;ro9uring the insuran9e, he <ay show the
real value. But a valuation fraudulent in fa9t, entitles the
insurer to res9ind the 9ontra9t.
3*E. %78. ! <arine insurer is lia:le u;on a ;artial loss, only
for su9h ;ro;ortion of the a<ount insured :y hi< as the loss
:ears to the value of the whole interest of the insured in the
;ro;erty insured.
3*E. %'&. 1here ;rofits are se;arately insured in a 9ontra9t
of <arine insuran9e, the insured is entitled to re9over, in
9ase of loss, a ;ro;ortion of su9h ;rofits eCuivalent to the
;ro;ortion whi9h the value of the ;ro;erty lost :ears to the
value of the whole.
3*E. %'%. In 9ase of a valued ;oli9y of <arine insuran9e on
freightage or 9argo, if a ;art only of the su:Ie9t is eB;osed to
ris?, the valuation a;;lies only in ;ro;ortion to su9h ;art.
3*E. %'0. 1hen ;rofits are valued and insured :y a
9ontra9t of <arine insuran9e, a loss of the< is 9on9lusively
;resu<ed fro< a loss of the ;ro;erty out of whi9h they are
eB;e9ted to arise, and the valuation fiBes their a<ount.
3*E. %'G. In esti<ating a loss under an o;en ;oli9y of
<arine insuran9e the following rules are to :e o:served=
3DaE "he value of a shi; is its value at the :eginning of the
ris?, in9luding all arti9les or 9harges whi9h add to its
;er<anent value or whi9h are ne9essary to ;re;are it for the
voyage insuredF
3D:E "he value of the 9argo is its a9tual 9ost to the insured,
when laden on :oard, or where the 9ost 9annot :e
as9ertained, its <ar?et value at the ti<e and ;la9e of lading,
adding the 9harges in9urred in ;ur9hasing and ;la9ing it on
:oard, :ut without referen9e to any loss in9urred in raising
<oney for its ;ur9hase, or to any draw:a9? on its
eB;ortation, or to the flu9tuation of the <ar?et at the ;ort of
destination, or to eB;enses in9urred on the way or on arrivalF
3D9E "he value of freightage is the gross freightage, eB9lusive
of ;ri<age, without referen9e to the 9ost of earning itF and
3DdE "he 9ost of insuran9e is in ea9h 9ase to :e added to the
value thus esti<ated.
3*E. %'5. If 9argo insured against ;artial loss arrives at the
;ort of destination in a da<aged 9ondition, the loss of the
insured is dee<ed to :e the sa<e ;ro;ortion of the value
whi9h the <ar?et ;ri9e at that ;ort, of the thing so da<aged,
:ears to the <ar?et ;ri9e it would have :rought if sound.
3*E. %'7. ! <arine insurer is lia:le for all the eB;enses
attendant u;on a loss whi9h for9es the shi; into ;ort to :e
re;airedF and where it is sti;ulated in the ;oli9y that the
insured shall la:or for the re9overy of the ;ro;erty, the
insurer is lia:le for the eB;ense in9urred there:y, su9h
eB;ense, in either 9ase, :eing in addition to a total loss, if
that afterwards o99urs.
3*E. %''. ! <arine insurer is lia:le for a loss falling u;on
the insured, through a 9ontri:ution in res;e9t to the thing
insured, reCuired to :e <ade :y hi< towards a general
average loss 9alled for :y a ;eril insured against= Provided,
"hat the lia:ility of the insurer shall :e li<ited to the
;ro;ortion of 9ontri:ution atta9hing to his ;oli9y value where
this is less than the 9ontri:uting value of the thing insured.
3*E. %'(. 1hen a ;erson insured :y a 9ontra9t of <arine
insuran9e has a de<and against others for 9ontri:ution, he
<ay 9lai< the whole loss fro< the insurer, su:rogating hi<
to his own right to 9ontri:ution. But no su9h 9lai< 9an :e
<ade u;on the insurer after the se;aration of the interests
lia:le to 9ontri:ution, nor when the insured, having the right
and o;;ortunity to enfor9e 9ontri:ution fro< others, has
negle9ted or waived the eBer9ise of that right.
3*E. %'6. In the 9ase of a ;artial loss of shi; or its
eCui;<ent, the old <aterials are to :e a;;lied towards
;ay<ent for the new. Unless otherwise sti;ulated in the
;oli9y, a <arine insurer is lia:le for only two-thirds D0KGE of
11 | P a g e
R.A. 10607 The nsurance Code
the re<aining 9ost of re;airs after su9h dedu9tion, eB9e;t
that an9hors <ust :e ;aid in full.
3"I"LE 0
3/IRE I#*UR!#E
3*E. %'8. !s used in this ode, the ter< fire insuran9e
shall in9lude insuran9e against loss :y fire, lightning,
windstor<, tornado or earthCua?e and other allied ris?s,
when su9h ris?s are 9overed :y eBtension to fire insuran9e
;oli9ies or under se;arate ;oli9ies.
3*E. %(&. !n alteration in the use or 9ondition of a thing
insured fro< that to whi9h it is li<ited :y the ;oli9y <ade
without the 9onsent of the insurer, :y <eans within the
9ontrol of the insured, and in9reasing the ris?s, entitles an
insurer to res9ind a 9ontra9t of fire insuran9e.
3*E. %(%. !n alteration in the use or 9ondition of a thing
insured fro< that to whi9h it is li<ited :y the ;oli9y, whi9h
does not in9rease the ris?, does not affe9t a 9ontra9t of fire
insuran9e.
3*E. %(0. ! 9ontra9t of fire insuran9e is not affe9ted :y any
a9t of the insured su:seCuent to the eBe9ution of the ;oli9y,
whi9h does not violate its ;rovisions, even though it
in9reases the ris? and is the 9ause of the loss.
3*E. %(G. If there is no valuation in the ;oli9y, the <easure
of inde<nity in an insuran9e against fire is the eB;ense it
would :e to the insured at the ti<e of the 9o<<en9e<ent of
the fire to re;la9e the thing lost or inIured in the 9ondition in
whi9h it was at the ti<e of the inIuryF :ut if there is a
valuation in a ;oli9y of fire insuran9e, the effe9t shall :e the
sa<e as in a ;oli9y of <arine insuran9e.
3*E. %(5. 1henever the insured desires to have a
valuation na<ed in his ;oli9y, insuring any :uilding or
stru9ture against fire, he <ay reCuire su9h :uilding or
stru9ture to :e eBa<ined :y an inde;endent a;;raiser and
the value of the insuredAs interest therein <ay then :e fiBed
as :etween the insurer and the insured. "he 9ost of su9h
eBa<ination shall :e ;aid for :y the insured. ! 9lause shall
:e inserted in su9h ;oli9y stating su:stantially that the value
of the insuredAs interest in su9h :uilding or stru9ture has
:een thus fiBed. In the a:sen9e of any 9hange in9reasing the
ris? without the 9onsent of the insurer or of fraud on the ;art
of the insured, then in 9ase of a total loss under su9h ;oli9y,
the whole a<ount so insured u;on the insuredAs interest in
su9h :uilding or stru9ture, as stated in the ;oli9y u;on whi9h
the insurers have re9eived a ;re<iu<, shall :e ;aid, and in
9ase of a ;artial loss the full a<ount of the ;artial loss shall
:e so ;aid, and in 9ase there are two D0E or <ore ;oli9ies
9overing the insuredAs interest therein, ea9h ;oli9y shall
9ontri:ute ;ro rata to the ;ay<ent of su9h whole or ;artial
loss. But in no 9ase shall the insurer :e reCuired to ;ay <ore
than the a<ount thus stated in su9h ;oli9y. "his se9tion shall
not ;revent the ;arties fro< sti;ulating in su9h ;oli9ies
9on9erning the re;airing, re:uilding or re;la9ing of :uildings
or stru9tures wholly or ;artially da<aged or destroyed.
3*E. %(7. #o ;oli9y of fire insuran9e shall :e ;ledged,
hy;othe9ated, or transferred to any ;erson, fir< or 9o<;any
who a9ts as agent for or otherwise re;resents the issuing
9o<;any, and any su9h ;ledge, hy;othe9ation, or transfer
hereafter <ade shall :e void and of no effe9t insofar as it
<ay affe9t other 9reditors of the insured.
3"I"LE G
3!*U!L". I#*UR!#E
3*E. %('. asualty insuran9e is insuran9e 9overing loss or
lia:ility arising fro< a99ident or <isha;, eB9luding 9ertain
ty;es of loss whi9h :y law or 9usto< are 9onsidered as
falling eB9lusively within the s9o;e of other ty;es of
insuran9e su9h as fire or <arine. It in9ludes, :ut is not
li<ited to, e<;loyerAs lia:ility insuran9e, <otor vehi9le
lia:ility insuran9e, ;late glass insuran9e, :urglary and theft
insuran9e, ;ersonal a99ident and health insuran9e as written
:y non-life insuran9e 9o<;anies, and other su:stantially
si<ilar ?inds of insuran9e.
3"I"LE 5
3*URE".*,IP
3*E. %((. ! 9ontra9t of suretyshi; is an agree<ent where:y
a ;arty 9alled the surety guarantees the ;erfor<an9e :y
another ;arty 9alled the ;rin9i;al or o:ligor of an o:ligation
or underta?ing in favor of a third ;arty 9alled the o:ligee. It
in9ludes offi9ial re9ogniHan9es, sti;ulations, :onds or
underta?ings issued :y any 9o<;any :y virtue of and under
the ;rovisions of !9t #o. 7G', as a<ended :y !9t #o. 00&'.
3*E. %(6. "he lia:ility of the surety or sureties shall :e Ioint
and several with the o:ligor and shall :e li<ited to the
a<ount of the :ond. It is deter<ined stri9tly :y the ter<s of
the 9ontra9t of suretyshi; in relation to the ;rin9i;al 9ontra9t
:etween the o:ligor and the o:ligee.
3*E. %(8. "he surety is entitled to ;ay<ent of the ;re<iu<
as soon as the 9ontra9t of suretyshi; or :ond is ;erfe9ted
and delivered to the o:ligor. #o 9ontra9t of suretyshi; or
:onding shall :e valid and :inding unless and until the
;re<iu< therefor has :een ;aid, eB9e;t where the o:ligee
has a99e;ted the :ond, in whi9h 9ase the :ond :e9o<es
valid and enfor9ea:le irres;e9tive of whether or not the
;re<iu< has :een ;aid :y the o:ligor to the surety=
Provided, "hat if the 9ontra9t of suretyshi; or :ond is not
a99e;ted :y, or filed with the o:ligee, the surety shall 9olle9t
only a reasona:le a<ount, not eB9eeding fifty ;er9ent D7&LE
of the ;re<iu< due thereon as servi9e fee ;lus the 9ost of
sta<;s or other taBes i<;osed for the issuan9e of the
9ontra9t or :ond= Provided, however, "hat if the
nona99e;tan9e of the :ond :e due to the fault or negligen9e
12 | P a g e
R.A. 10607 The nsurance Code
of the surety, no su9h servi9e fee, sta<;s or taBes shall :e
9olle9ted.
3In the 9ase of a 9ontinuing :ond, the o:ligor shall ;ay the
su:seCuent annual ;re<iu< as it falls due until the 9ontra9t
of suretyshi; is 9an9elled :y the o:ligee or :y the
o<<issioner or :y a 9ourt of 9o<;etent Iurisdi9tion, as the
9ase <ay :e.
3*E. %6&. Pertinent ;rovisions of the ivil ode of the
Phili;;ines shall :e a;;lied in a su;;letory 9hara9ter
whenever ne9essary in inter;reting the ;rovisions of a
9ontra9t of suretyshi;.
3"I"LE 7
3LI/E I#*UR!#E
3*E. %6%. Life insuran9e is insuran9e on hu<an lives and
insuran9e a;;ertaining thereto or 9onne9ted therewith.
3Every 9ontra9t or underta?ing for the ;ay<ent of annuities
in9luding 9ontra9ts for the ;ay<ent of lu<; su<s under a
retire<ent ;rogra< where a life insuran9e 9o<;any
<anages or a9ts as a trustee for su9h retire<ent ;rogra<
shall :e 9onsidered a life insuran9e 9ontra9t for ;ur;oses of
this ode.
3*E. %60. !n insuran9e u;on life <ay :e <ade ;aya:le on
the death of the ;erson, or on his surviving a s;e9ified
;eriod, or otherwise 9ontingently on the 9ontinuan9e or
9essation of life.
3Every 9ontra9t or ;ledge for the ;ay<ent of endow<ents or
annuities shall :e 9onsidered a life insuran9e 9ontra9t for
;ur;oses of this ode.
3In the a:sen9e of a Iudi9ial guardian, the father, or in the
latterAs a:sen9e or in9a;a9ity, the <other, of any <inor, who
is an insured or a :enefi9iary under a 9ontra9t of life, health,
or a99ident insuran9e, <ay eBer9ise, in :ehalf of said <inor,
any right under the ;oli9y, without ne9essity of 9ourt authority
or the giving of a :ond, where the interest of the <inor in the
;arti9ular a9t involved does not eB9eed /ive hundred
thousand ;esos DP7&&,&&&.&&E or in su9h reasona:le
a<ount as <ay :e deter<ined :y the o<<issioner. *u9h
right <ay in9lude, :ut shall not :e li<ited to, o:taining a
;oli9y loan, surrendering the ;oli9y, re9eiving the ;ro9eeds of
the Poli9y, and giving the <inorAs 9onsent to any transa9tion
on the ;oli9y.
3In the a:sen9e or in 9ase of the in9a;a9ity of the father or
<other, the grand;arent, the eldest :rother or sister at least
eighteen D%6E years of age, or any relative who has a9tual
9ustody of the <inor insured or :enefi9iary, shall a9t as a
guardian without need of a 9ourt order or Iudi9ial
a;;oint<ent as su9h guardian, as long as su9h ;erson is not
otherwise disCualified or in9a;a9itated. Pay<ent <ade :y
the insurer ;ursuant to this se9tion shall relieve su9h insurer
of any lia:ility under the 9ontra9t.
3*E. %6G. "he insurer in a life insuran9e 9ontra9t shall :e
lia:le in 9ase of sui9ide only when it is 9o<<itted after the
;oli9y has :een in for9e for a ;eriod of two D0E years fro< the
date of its issue or of its last reinstate<ent, unless the ;oli9y
;rovides a shorter ;eriod= Provided, however, "hat sui9ide
9o<<itted in the state of insanity shall :e 9o<;ensa:le
regardless of the date of 9o<<ission.
3*E. %65. ! ;oli9y of insuran9e u;on life or health <ay
;ass :y transfer, will or su99ession to any ;erson, whether
he has an insura:le interest or not, and su9h ;erson <ay
re9over u;on it whatever the insured <ight have re9overed.
3*E. %67. #oti9e to an insurer of a transfer or :eCuest
thereof is not ne9essary to ;reserve the validity of a ;oli9y of
insuran9e u;on life or health, unless there:y eB;ressly
reCuired.
3*E. %6'. Unless the interest of a ;erson insured is
sus9e;ti:le of eBa9t ;e9uniary <easure<ent, the <easure of
inde<nity under a ;oli9y of insuran9e u;on life or health is
the su< fiBed in the ;oli9y.
3"I"LE '
3MIR$I#*UR!#E
3*E. %6(. Mi9roinsuran9e is a finan9ial ;rodu9t or servi9e
that <eets the ris? ;rote9tion needs of the ;oor where=
3DaE "he a<ount of 9ontri:utions, ;re<iu<s, fees or 9harges,
9o<;uted on a daily :asis, does not eB9eed seven and a
half ;er9ent D(.7LE of the 9urrent daily <ini<u< wage rate
for nonagri9ultural wor?ers in Metro ManilaF and
3D:E "he <aBi<u< su< of guaranteed :enefits is not <ore
than one thousand D%,&&&E ti<es of the 9urrent daily
<ini<u< wage rate for nonagri9ultural wor?ers in Metro
Manila.
3*E. %66. #o insuran9e 9o<;any or <utual :enefit
asso9iation shall engage in the :usiness of <i9roinsuran9e
unless it ;ossesses all the reCuire<ents as <ay :e
;res9ri:ed :y the o<<issioner. "he o<<issioner shall
issue su9h rules and regulations governing <i9roinsuran9e.
3,!P"ER II-!
3/I#!#I!L REP$R"I#+ /R!ME1$R2
3*E. %68. !ll 9o<;anies regulated :y the o<<ission,
unless otherwise reCuired :y law, should 9o<;ly with the
finan9ial re;orting fra<ewor?s ado;ted :y the o<<ission
for ;ur;oses of 9reating the statutory finan9ial re;orts and
the annual state<ents to :e su:<itted to the o<<ission.
13 | P a g e
R.A. 10607 The nsurance Code
/inan9ial re;orting fra<ewor? <eans a set of a99ounting
and re;orting ;rin9i;les, standards, inter;retations and
;ronoun9e<ents that <ust :e ado;ted in the ;re;aration
and su:<ission of the statutory finan9ial state<ents and
re;orts reCuired :y the o<<ission. "his finan9ial re;orting
fra<ewor? is not the sa<e as the finan9ial re;orting
fra<ewor? used to ;re;are the finan9ial state<ents that the
*e9urities and EB9hange o<<ission <ay reCuire. "he
<ain ;ur;ose of the statutory state<ents is to ;resent
i<;ortant infor<ation a:out the level of ris? and solven9y
situation of insurers. In ;res9ri:ing the a;;li9a:le statutory
finan9ial re;orting fra<ewor?, the o<<issioner shall ta?e
into a99ount international standards 9on9erning solven9y
and insuran9e 9o<;any re;orting as well as generally
a99e;ted a9tuarial ;rin9i;les 9on9erning finan9ial re;orting
;ro<ulgated :y the !9tuarial *o9iety of the Phili;;ines.
3"he assets and invest<ents dis9ussed in *e9tions 0&5 to
0%7 shall :e a99ounted for in a99ordan9e with this se9tion.
3"he valuation of reserves shall :e a99ounted for in
a99ordan9e with "itle 7 of this ode.
3,!P"ER III
3",E BU*I#E** $/ I#*UR!#E
3"I"LE %
3I#*UR!#E $MP!#IE*, $R+!#IM!"I$#,
!PI"!LIM!"I$# !#- !U",$RIM!"I$#
3*E. %8&. /or ;ur;oses of this ode, the ter< insurer or
insuran9e 9o<;any shall in9lude all ;artnershi;s,
asso9iations, 9oo;eratives or 9or;orations, in9luding
govern<ent-owned or -9ontrolled 9or;orations or entities,
engaged as ;rin9i;als in the insuran9e :usiness, eB9e;ting
<utual :enefit asso9iations. Unless the 9onteBt otherwise
reCuires, the ter< shall also in9lude ;rofessional reinsurers
defined in *e9tion 066. -o<esti9 9o<;any shall in9lude
9o<;anies for<ed, organiHed or eBisting under the laws of
the Phili;;ines. /oreign 9o<;any when used without
li<itation shall in9lude 9o<;anies for<ed, organiHed, or
eBisting under any laws other than those of the Phili;;ines.
3*E. %8%. "he ;rovisions of the or;oration ode, as
a<ended, shall a;;ly to all insuran9e 9or;orations now or
hereafter engaged in :usiness in the Phili;;ines insofar as
they do not 9onfli9t with the ;rovisions of this 9ha;ter.
3*E. %80. #o 9or;oration, ;artnershi;, or asso9iation of
;ersons shall transa9t any insuran9e :usiness in the
Phili;;ines eB9e;t as agent of a 9or;oration, ;artnershi; or
asso9iation authoriHed to do the :usiness of insuran9e in the
Phili;;ines, unless ;ossessed of the 9a;ital and assets
reCuired of an insuran9e 9or;oration doing the sa<e ?ind of
:usiness in the Phili;;ines and invested in the sa<e
<annerF unless the o<<issioner shall have granted it a
9ertifi9ate to the effe9t that it has 9o<;lied with all the
;rovisions of this ode.
3Every entity re9eiving any su9h 9ertifi9ate of authority shall
:e su:Ie9t to the insuran9e and other a;;li9a:le laws of the
Phili;;ines and to the Iurisdi9tion and su;ervision of the
o<<issioner.
3*E. %8G. #o insuran9e 9o<;any shall transa9t any
insuran9e :usiness in the Phili;;ines until after it shall have
o:tained a 9ertifi9ate of authority for that ;ur;ose fro< the
o<<issioner u;on a;;li9ation therefor and ;ay<ent :y the
9o<;any 9on9erned of the fees hereinafter ;res9ri:ed.
3"he o<<issioner <ay refuse to issue a 9ertifi9ate of
authority to any insuran9e 9o<;any if, in his Iudg<ent, su9h
refusal will :est ;ro<ote the interest of the ;eo;le of this
9ountry. #o su9h 9ertifi9ate of authority shall :e granted to
any su9h 9o<;any until the o<<issioner shall have
satisfied hi<self :y su9h eBa<ination as he <ay <a?e and
su9h eviden9e as he <ay reCuire that su9h 9o<;any is
Cualified :y the laws of the Phili;;ines to transa9t :usiness
therein, that the grant of su9h authority a;;ears to :e
Iustified in the light of lo9al e9ono<i9 reCuire<ents, and that
the dire9tion and ad<inistration, as well as the integrity and
res;onsi:ility of the organiHers and ad<inistrators, the
finan9ial organiHation and the a<ount of 9a;ital, reasona:ly
assure the safety of the interests of the ;oli9yholders and the
;u:li9.
3In order to <aintain the Cuality of the <anage<ent of the
insuran9e 9o<;anies and afford :etter ;rote9tion to
;oli9yholders and the ;u:li9 in general, any ;erson of good
<oral 9hara9ter, unCuestioned integrity and re9ogniHed
9o<;eten9e <ay :e ele9ted or a;;ointed dire9tor or offi9er
of insuran9e 9o<;anies in a99ordan9e with the ;ertinent
;rovisions 9ontained in the 9or;orate governan9e 9ir9ulars
;res9ri:ed :y the o<<issioner. In addition hereto, the
o<<issioner shall ;res9ri:e the Cualifi9ations of dire9tors,
eBe9utive offi9ers and other ?ey offi9ials of insuran9e
9o<;anies for ;ur;oses of this se9tion.
3#o ;erson shall 9on9urrently :e a -ire9tor andKor $ffi9er of
an insuran9e 9o<;any and an adIust<ent 9o<;any.
3Before issuing su9h 9ertifi9ate of authority, the
o<<issioner <ust :e satisfied that the na<e of the
9o<;any is not that of any other ?nown 9o<;any transa9ting
a si<ilar :usiness in the Phili;;ines, or a na<e so si<ilar as
to :e 9al9ulated to <islead the ;u:li9. "he o<<issioner
<ay issue rules and regulations on the use of na<es of
insuran9e 9o<;anies and other su;ervised ;ersons or
entities.
3"he 9ertifi9ate of authority issued :y the o<<issioner shall
eB;ire on the last day of -e9e<:er, three DGE years following
its date of issuan9e, and shall :e renewa:le every three DGE
years thereafter, su:Ie9t to the 9o<;anyAs 9ontinuing
9o<;lian9e with the ;rovisions of this ode, 9ir9ulars,
instru9tions, rulings or de9isions of the o<<ission.
3Every 9o<;any re9eiving any su9h 9ertifi9ates of authority
shall :e su:Ie9t to the ;rovisions of this ode and other
14 | P a g e
R.A. 10607 The nsurance Code
related laws and to the Iurisdi9tion and su;ervision of the
o<<issioner.
3#o insuran9e 9o<;any <ay :e authoriHed to transa9t in the
Phili;;ines the :usiness of life and non-life insuran9e
9on9urrently, unless s;e9ifi9ally authoriHed to do so :y the
o<<issioner= Provided, "hat the ter<s life and non-life
insuran9e shall :e dee<ed to in9lude health, a99ident and
disa:ility insuran9e.
3#o insuran9e 9o<;any shall have eCuity in an adIust<ent
9o<;any and neither shall an adIust<ent 9o<;any have
eCuity in an insuran9e 9o<;any.
3#o insuran9e 9o<;any issued with a valid 9ertifi9ate of
authority to transa9t insuran9e :usiness anywhere in the
Phili;;ines :y the Insuran9e o<<issioner, shall :e :arred,
;revented, or disenfran9hised fro< issuing any insuran9e
;oli9y or fro< transa9ting any insuran9e :usiness within the
s9o;e or 9overage of its 9ertifi9ate of authority, anywhere in
the Phili;;ines, :y any lo9al govern<ent unit or authority, for
whatever guise or reason whatsoever, in9luding under any
?ind of ordinan9e, a99reditation syste<, or s9he<e. !ny
lo9al ordinan9e or lo9al govern<ent unit regulatory issuan9e
i<;osing su9h restri9tion or disenfran9hise<ent on any
insuran9e 9o<;any shall :e dee<ed null and void a: initio.
3*E. %85. EB9e;t as ;rovided in *e9tion 068, no new
do<esti9 life or non-life insuran9e 9o<;any shall, in a sto9?
9or;oration, engage in :usiness in the Phili;;ines unless
;ossessed of a ;aid-u; 9a;ital eCual to at least $ne :illion
;esos DP%,&&&,&&&,&&&.&&E= Provided, "hat a do<esti9
insuran9e 9o<;any already doing :usiness in the Phili;;ines
shall have a net worth :y June G&, 0&%G of "wo hundred fifty
<illion ;esos DP07&,&&&,&&&.&&E. /urther<ore, said
9o<;any <ust have :y -e9e<:er G%, 0&%', an additional
"hree hundred <illion ;esos DPG&&,&&&,&&&.&&E in net worthF
:y -e9e<:er G%, 0&%8, an additional "hree hundred fifty
<illion ;esos DPG7&,&&&,&&&.&&E in net worthF and :y
-e9e<:er G%, 0&00, an additional /our hundred <illion
;esos DP5&&,&&&,&&&.&&E in net worth.
3"he o<<issioner <ay, as a ;re-li9ensing reCuire<ent of a
new insuran9e 9o<;any, in addition to the ;aid-u; 9a;ital
sto9?, reCuire the sto9?holders to ;ay in 9ash to the
9o<;any in ;ro;ortion to their su:s9ri;tion interests a
9ontri:uted sur;lus fund of not less than $ne hundred <illion
;esos DP%&&,&&&,&&&.&&E. ,e <ay also reCuire su9h
9o<;any to su:<it to hi< a :usiness ;lan showing the
9o<;anyAs esti<ated re9ei;ts and dis:urse<ents, as well as
the :asis therefor, for the neBt su99eeding three DGE years.
3If organiHed as a <utual 9o<;any, in lieu of su9h net worth,
it <ust have availa:le total <e<:ers eCuity in an a<ount to
:e deter<ined :y the Insuran9e o<<ission a:ove all
lia:ilities for losses re;ortedF eB;enses, taBes, legal reserve,
and reinsuran9e of all outstanding ris?s, and the 9ontri:uted
sur;lus fund eCual to the a<ounts reCuired of sto9?
9or;orations. ! sto9? insuran9e 9o<;any doing :usiness in
the Phili;;ines <ay, su:Ie9t to the ;ertinent law and
regulation whi9h now or hereafter <ay :e in for9e, alter its
organiHation and transfor< itself into a <utual insuran9e
9o<;any.
3"he *e9retary of /inan9e <ay, u;on re9o<<endation of the
o<<issioner, in9rease su9h <ini<u< ;aid-u; 9a;ital sto9?
or 9ash assets reCuire<ent under su9h ter<s and 9onditions
as he <ay i<;ose, to an a<ount whi9h, in his o;inion, would
reasona:ly assure the safety of the interests of the
;oli9yholders and the ;u:li9. "he <ini<u< ;aid-u; 9a;ital
and net worth reCuire<ent <ust re<ain uni<;aired for the
9ontinuan9e of the li9ense. "he o<<issioner <ay reCuire
the ado;tion of the ris?-:ased 9a;ital a;;roa9h and other
internationally a99e;ted for<s of 9a;ital fra<ewor?.
3/or the ;ur;ose of this se9tion, net worth shall 9onsist of=
3DaE Paid-u; 9a;italF
3D:E Retained earningsF
3D9E Uni<;aired sur;lusF and
3DdE Revaluation of assets as <ay :e a;;roved :y the
o<<issioner.
3"he o<<ission <ay ado;t for ;ur;oses of 9o<;lian9e
with 9a;ital :uild u; reCuire<ent under this ode the
re9ognition as ;art of the 9a;ital a99ount, 9a;ital notes or
de:entures whi9h are su:ordinate to all 9redits and senior
only to 9o<<on 9a;ital sto9?s.
3"he President of the Phili;;ines <ay order a ;eriodi9 review
every two D0E years the 9a;ital stru9ture set out a:ove to
deter<ine the 9a;ital adeCua9y of the lo9al insuran9e
industry fro< and after the integration and li:eraliHation of
the finan9ial servi9es, in9luding insuran9e, in the !*E!#
Region. /or this ;ur;ose, a review 9o<<ittee 9onsisting of
re;resentatives fro< the -e;art<ent of /inan9e D-$/E, the
Insuran9e o<<ission DIE, the #ational E9ono<i9 and
-evelo;<ent !uthority D#E-!E, the *e9urities and
EB9hange o<<ission D*EE and other agen9ies whi9h the
President <ay designate shall 9ondu9t the review and <ay
re9o<<end to the President to ado;t for i<;le<entation the
ne9essary 9a;ital adIust<ent.
3*E. %87. Every 9o<;any <ust, :efore engaging in the
:usiness of insuran9e in the Phili;;ines, file with the
o<<issioner the following=
3DaE ! 9ertified 9o;y of the last annual state<ent or a verified
finan9ial state<ent eBhi:iting the 9ondition and affairs of
su9h 9o<;anyF
3D:E If in9or;orated under the laws of the Phili;;ines, a 9o;y
of the arti9les of in9or;oration and :ylaws, and any
a<end<ents to either, 9ertified :y the *e9urities and
EB9hange o<<ission to :e a 9o;y of that whi9h is filed in
its $ffi9eF
15 | P a g e
R.A. 10607 The nsurance Code
3D9E If in9or;orated under any laws other than those of the
Phili;;ines, a 9ertifi9ate fro< the *e9urities and EB9hange
o<<ission showing that it is duly registered in the
<er9antile registry of that o<<ission in a99ordan9e with
the or;oration ode. ! 9o;y of the arti9les of in9or;oration
and :ylaws, and any a<end<ents to either, if organiHed or
for<ed under any law reCuiring su9h to :e filed, duly 9ertified
:y the offi9er having the 9ustody of sa<e, or if not so
organiHed, a 9o;y of the law, 9harter or deed of settle<ent
under whi9h the deed of organiHation is <ade, duly 9ertified
:y the ;ro;er 9ustodian thereof, or ;roved :y affidavit to :e a
9o;yF also, a 9ertifi9ate under the hand and seal of the
;ro;er offi9er of su9h state or 9ountry having su;ervision of
insuran9e :usiness therein, if any there :e, that su9h
9or;oration or 9o<;any is organiHed under the laws of su9h
state or 9ountry, with the a<ount of 9a;ital sto9? or assets
and legal reserve reCuired :y this odeF
3DdE If not in9or;orated and of foreign do<i9ile, aside fro<
the 9ertifi9ate <entioned in ;aragra;h D9E of this se9tion, a
9ertifi9ate setting forth the nature and 9hara9ter of the
:usiness, the lo9ation of the ;rin9i;al offi9e, the na<e of the
individual or na<es of the ;ersons 9o<;osing the
;artnershi; or asso9iation, the a<ount of a9tual 9a;ital
e<;loyed or to :e e<;loyed therein, and the na<es of all
offi9ers and ;ersons :y who< the :usiness is or <ay :e
<anaged.
3"he 9ertifi9ate <ust :e verified :y the affidavit of the 9hief
offi9er, se9retary, agent, or <anager of the 9o<;anyF and if
there are any written arti9les of agree<ent of the 9o<;any, a
9o;y thereof <ust a99o<;any su9h 9ertifi9ate.
3*E. %8'. "he o<<issioner <ust reCuire as a 9ondition
;re9edent to the transa9tion of insuran9e :usiness in the
Phili;;ines :y any foreign insuran9e 9o<;any, that su9h
9o<;any file in his offi9e a written ;ower of attorney
designating so<e ;erson who shall :e a resident of the
Phili;;ines as its general agent, on who< any noti9e
;rovided :y law or :y any insuran9e ;oli9y, ;roof of loss,
su<<ons and other legal ;ro9esses <ay :e served in all
a9tions or other legal ;ro9eedings against su9h 9o<;any,
and 9onsenting that servi9e u;on su9h general agent shall
:e ad<itted and held as valid as if served u;on the foreign
9o<;any at its ho<e offi9e. !ny su9h foreign 9o<;any shall,
as further 9ondition ;re9edent to the transa9tion of insuran9e
:usiness in the Phili;;ines, <a?e and file with the
o<<issioner an agree<ent or sti;ulation, eBe9uted :y the
;ro;er authorities of said 9o<;any in for< and su:stan9e as
follows=
3"he Dna<e of 9o<;anyE does here:y sti;ulate and agree in
9onsideration of the ;er<ission granted :y the Insuran9e
o<<issioner to transa9t :usiness in the Phili;;ines, that if
at any ti<e said 9o<;any shall leave the Phili;;ines, or
9ease to transa9t :usiness therein, or shall :e without any
agent in the Phili;;ines on who< any noti9e, ;roof of loss,
su<<ons, or legal ;ro9ess <ay :e served, then in any
a9tion or ;ro9eeding arising out of any :usiness or
transa9tion whi9h o99urred in the Phili;;ines, servi9e of any
noti9e ;rovided :y law, or insuran9e ;oli9y, ;roof of loss,
su<<ons, or other legal ;ro9ess <ay :e <ade u;on the
Insuran9e o<<issioner, and that su9h servi9e u;on the
Insuran9e o<<issioner shall have the sa<e for9e and
effe9t as if <ade u;on the 9o<;any.
31henever su9h servi9e of noti9e, ;roof of loss, su<<ons,
or other legal ;ro9ess shall :e <ade u;on the
o<<issioner, he <ust, within ten D%&E days thereafter,
trans<it :y <ail, ;ostage ;aid, a 9o;y of su9h noti9e, ;roof
of loss, su<<ons, or other legal ;ro9ess to the 9o<;any at
its ho<e or ;rin9i;al offi9e. "he sending of su9h 9o;y :y the
o<<issioner shall :e a ne9essary ;art of the servi9e of the
noti9e, ;roof of loss, or other legal ;ro9ess.
3*E. %8(. #o insuran9e 9o<;any organiHed or eBisting
under the govern<ent or laws other than those of the
Phili;;ines shall engage in :usiness in the Phili;;ines
unless ;ossessed of uni<;aired 9a;ital or assets and
reserve of not less than $ne :illion ;esos
DP%,&&&,&&&,&&&.&&E, nor until it shall have de;osited with
the o<<issioner for the :enefit and se9urity of the
;oli9yholders and 9reditors of su9h 9o<;any in the
Phili;;ines, se9urities satisfa9tory to the o<<issioner
9onsisting of good se9urities of the Phili;;ines, in9luding
new issues of sto9? of registered enter;rises, as this ter< is
defined in EBe9utive $rder #o. 00' of %86(, as a<ended, to
the a9tual <ar?et value of not less than the a<ount herein
reCuired= Provided, "hat at least fifty ;er9ent D7&LE of su9h
se9urities shall 9onsist of :onds or other instru<ents of de:t
of the +overn<ent of the Phili;;ines, its ;oliti9al
su:divisions and instru<entalities, or of govern<ent-owned
or -9ontrolled 9or;orations and entities, in9luding the Bang?o
*entral ng Pili;inas= Provided, further, "hat the total
invest<ent of a foreign insuran9e 9o<;any in any registered
enter;rise shall not eB9eed twenty ;er9ent D0&LE of the net
worth of said foreign insuran9e 9o<;any nor twenty ;er9ent
D0&LE of the 9a;ital of the registered enter;rise, unless
;reviously authoriHed in writing :y the o<<issioner.
3"he o<<issioner <ay, as a ;re-li9ensing reCuire<ent of a
new :ran9h offi9e of a foreign insuran9e 9o<;any, in
addition to the reCuired asset or net worth, reCuire the
9o<;any to have an additional sur;lus fund in an a<ount to
:e deter<ined :y the Insuran9e o<<ission.
3/or ;ur;oses of this ode, the net worth of a foreign
insuran9e 9o<;any shall refer only to its net worth in the
Phili;;ines.
3*E. %86. "he o<<issioner shall hold the se9urities,
de;osited as reCuired in the i<<ediately ;re9eding se9tion,
for the :enefit and se9urity of all the ;oli9yholders and
9reditors of the 9o<;any de;ositing the sa<e= Provided,
"hat the o<<issioner <ay as long as the 9o<;any is
solvent, ;er<it the 9o<;any to 9olle9t the interest or
dividends on the se9urities so de;osited, and, fro< ti<e to
ti<e, with his assent, to withdraw any of su9h se9urities,
u;on de;ositing with said o<<issioner other li?e se9urities,
the <ar?et value of whi9h shall :e eCual to the <ar?et value
16 | P a g e
R.A. 10607 The nsurance Code
of su9h as <ay :e withdrawn. In the event of any 9o<;any
9easing to do :usiness in the Phili;;ines, the se9urities
de;osited as aforesaid shall :e returned to the 9o<;any
u;on the o<<issionerAs written a;;roval and only after the
9o<;any has duly ;roven in its a;;li9ation therefor that it
has no further lia:ility whatsoever under any of its ;oli9ies
nor to any of its 9reditors in the Phili;;ines.
3*E. %88. Every foreign 9o<;any doing :usiness in the
Phili;;ines shall set aside an a<ount 9orres;onding to the
legal reserves of the ;oli9ies written in the Phili;;ines and
invest and ?ee; the sa<e therein in a99ordan9e with the
;rovisions of this se9tion. "he legal reserve therein reCuired
to :e set aside shall :e invested only in the 9lasses of
Phili;;ine se9urities des9ri:ed in *e9tion 0&'= Provided,
however, "hat no invest<ent in sto9?s or :onds of any single
entity shall, in the aggregate eB9eed twenty ;er9ent D0&LE of
the net worth of the investing 9o<;any or twenty ;er9ent
D0&LE of the 9a;ital of the issuing 9o<;any, whi9hever is the
lesser, unless otherwise a;;roved in writing :y the
o<<issioner. "he se9urities ;ur9hased and ?e;t in the
Phili;;ines under this se9tion, shall not :e sent out of the
territorial Iurisdi9tion of the Phili;;ines without the written
9onsent of the o<<issioner.
3"I"LE 0
3*$L>E#.
3*E. 0&&. !n insuran9e 9o<;any doing :usiness in the
Phili;;ines shall at all ti<es <aintain the <ini<u< ;aid-u;
9a;ital, and net worth reCuire<ents as ;res9ri:ed :y the
o<<issioner. *u9h solven9y reCuire<ents shall :e :ased
on internationally a99e;ted solven9y fra<ewor?s and
ado;ted only after due 9onsultation with the insuran9e
industry asso9iations.
31henever the afore<entioned reCuire<ent :e found to :e
less than that herein reCuired to :e <aintained, the
o<<issioner shall forthwith dire9t the 9o<;any to <a?e
good any su9h defi9ien9y :y 9ash, to :e 9ontri:uted :y all
sto9?holders of re9ord in ;ro;ortion to their res;e9tive
interests, and ;aid to the treasurer of the 9o<;any, within
fifteen D%7E days fro< re9ei;t of the order= Provided, "hat the
9o<;any in the interi< shall not :e ;er<itted to ta?e any
new ris? of any ?ind or 9hara9ter unless and until it <a?e
good any su9h defi9ien9y= ProvidedF further, "hat a
sto9?holder who aside fro< ;aying the 9ontri:ution due fro<
hi<, ;ays the 9ontri:ution due fro< another sto9?holder :y
reason of the failure or refusal of the latter to do so, shall
have a lien on the 9ertifi9ates of sto9? of the insuran9e
9o<;any 9on9erned a;;earing in its :oo?s in the na<e of
the defaulting sto9?holder on the date of default, as well as
on any interests or dividends that have a99rued or will
a99rue to the said 9ertifi9ates of sto9?, until the
9orres;onding ;ay<ent or rei<:urse<ent is <ade :y the
defaulting sto9?holder.
3*E. 0&%. #o do<esti9 insuran9e 9or;oration shall de9lare
or distri:ute any dividend on its outstanding sto9?s unless it
has <et the <ini<u< ;aid-u; 9a;ital and net worth
reCuire<ents under *e9tion %85 and eB9e;t fro< ;rofits
attested in a sworn state<ent to the o<<issioner :y the
;resident or treasurer of the 9or;oration to :e re<aining on
hand after retaining uni<;aired=
3DaE "he entire ;aid-u; 9a;ital sto9?F
3D:E "he solven9y reCuire<ents defined :y *e9tion 0&&F
3D9E In the 9ase of life insuran9e 9or;orations, the legal
reserve fund reCuired :y *e9tion 0%(F
3DdE In the 9ase of 9or;orations other than life, the legal
reserve fund reCuired :y *e9tion 0%8F and
3DeE ! su< suffi9ient to ;ay all net losses re;orted, or in the
9ourse of settle<ent, and all lia:ilities for eB;enses and
taBes.
3!ny dividend de9lared or distri:uted under the ;re9eding
;aragra;h shall :e re;orted to the o<<issioner within thirty
DG&E days after su9h de9laration or distri:ution.
3If the o<<issioner finds that any su9h 9or;oration has
de9lared or distri:uted any su9h dividend in violation of this
se9tion, he <ay order su9h 9or;oration to 9ease and desist
fro< doing :usiness until the a<ount of su9h dividend or the
;ortion thereof in eB9ess of the a<ount allowed under this
se9tion has :een restored to said 9or;oration.
3"he o<<issioner shall ;res9ri:e solven9y reCuire<ents
for :ran9hes of foreign insuran9e 9o<;anies o;erating in the
Phili;;ines.
3"I"LE G
3!**E"*
3*E. 0&0. In any deter<ination of the finan9ial 9ondition of
any insuran9e 9o<;any doing :usiness in the Phili;;ines,
there shall :e allowed and ad<itted as assets only su9h
assets legally or :enefi9ially owned :y the insuran9e
9o<;any 9on9erned as deter<ined :y the o<<issioner
whi9h 9onsist of=
3DaE ash in the ;ossession of the insuran9e 9o<;any or in
transit under its 9ontrol, and the true and duly verified
:alan9e of any de;osit of su9h 9o<;any in a finan9ially
sound :an? or trust 9o<;any duly authoriHed :y the Bang?o
*entral ng Pili;inas.
3D:E Invest<ents in se9urities, in9luding <oney <ar?et
instru<ents, and in real ;ro;erty a9Cuired or held in
a99ordan9e with and su:Ie9t to the a;;li9a:le ;rovisions of
this ode and the in9o<e realiHed therefro< or a99rued
thereon.
3D9E Loans granted :y the insuran9e 9o<;any 9on9erned to
the eBtent of that ;ortion thereof adeCuately se9ured :y non-
s;e9ulative assets with readily realiHa:le values in
17 | P a g e
R.A. 10607 The nsurance Code
a99ordan9e with and su:Ie9t to the li<itations i<;osed :y
a;;li9a:le ;rovisions of this ode.
3DdE Poli9y loans and other ;oli9y assets and liens on
;oli9ies, 9ontra9ts or 9ertifi9ates of a life insuran9e 9o<;any,
in an a<ount not eB9eeding legal reserves and other ;oli9y
lia:ilities 9arried on ea9h individual life insuran9e ;oli9y,
9ontra9t or 9ertifi9ate.
3DeE "he net a<ount of un9olle9ted and deferred ;re<iu<s
and annuity 9onsiderations in the 9ase of a life insuran9e
9o<;any whi9h 9arries the full <ean ta:ular reserve lia:ility.
3DfE Reinsuran9e re9overa:le :y the 9eding insurer=
3D%E /ro< an insurer authoriHed to transa9t :usiness in this
9ountry, the full a<ount thereofF or
3D0E /ro< an insurer not authoriHed in this 9ountry, in an
a<ount not eB9eeding the lia:ilities 9arried :y the 9eding
insurer for a<ounts withheld under a reinsuran9e treaty with
su9h unauthoriHed insurer as se9urity for the ;ay<ent of
o:ligations thereunder if su9h funds are held su:Ie9t to
withdrawal :y, and under the 9ontrol of, the 9eding insurer.
"he o<<issioner <ay ;res9ri:e the 9onditions under
whi9h a 9eding insurer <ay :e allowed 9redit, as an asset or
as a dedu9tion fro< loss and unearned ;re<iu< reserves,
for reinsuran9e re9overa:le fro< an insurer not authoriHed in
this 9ountry :ut whi9h ;resents satisfa9tory eviden9e that it
<eets the a;;li9a:le standards of solven9y reCuired in this
9ountry.
3DgE /unds withheld :y a 9eding insurer under a reinsuran9e
treaty, ;rovided reserves for un;aid losses and unearned
;re<iu<s are adeCuately ;rovided.
3DhE -e;osits or a<ounts re9overa:le fro< underwriting
asso9iations, syndi9ates and reinsuran9e funds, or fro< any
sus;ended :an?ing institution, to the eBtent dee<ed :y the
o<<issioner to :e availa:le for the ;ay<ent of losses and
9lai<s and values to :e deter<ined :y hi<.
3DiE Ele9troni9 data ;ro9essing <a9hines, as <ay :e
authoriHed :y the o<<issioner to :e a9Cuired :y the
insuran9e 9o<;any 9on9erned, the a9Cuisition 9ost of whi9h
to :e a<ortiHed in eCual annual a<ounts within a ;eriod of
five D7E years fro< the date of a9Cuisition thereof.
3DIE Invest<ents in <utual funds, real estate invest<ent
trusts, salary loans, unit invest<ent trust funds and s;e9ial
de;osit a99ounts, su:Ie9t to the 9onditions as <ay :e
;rovided for :y the o<<issioner.
3D?E $ther assets, not in9onsistent with the ;rovisions of
;aragra;hs DaE to DIE hereof, whi9h are dee<ed :y the
o<<issioner to :e readily realiHa:le and availa:le for the
;ay<ent of losses and 9lai<s at values to :e deter<ined :y
hi< in a 9ir9ular, rule or regulation.
3*E. 0&G. In addition to su9h assets as the o<<issioner
<ay fro< ti<e to ti<e deter<ine to :e non-ad<itted assets
of insuran9e 9o<;anies doing :usiness in the Phili;;ines,
the following assets shall in no 9ase :e allowed as ad<itted
assets of an insuran9e 9o<;any doing :usiness in the
Phili;;ines, in any deter<ination of its finan9ial 9ondition=
3DaE +oodwill, trade na<es, and other li?e intangi:le assets.
3D:E Pre;aid or deferred 9harges for eB;enses and
9o<<issions ;aid :y su9h insuran9e 9o<;any.
3D9E !dvan9es to offi9ers Dother than ;oli9y loansE, whi9h are
not adeCuately se9ured and whi9h are not ;reviously
authoriHed :y the o<<issioner, as well as advan9es to
e<;loyees, agents, and other ;ersons on <ere ;ersonal
se9urity.
3DdE *hares of sto9? of su9h insuran9e 9o<;any, owned :y it,
or any eCuity therein as well as loans se9ured there:y, or
any ;ro;ortionate interest in su9h shares of sto9? through
the ownershi; :y su9h insuran9e 9o<;any of an interest in
another 9or;oration or :usiness unit.
3DeE /urniture, furnishing, fiBtures, safes, eCui;<ent, li:rary,
stationery, literature, and su;;lies.
3DfE Ite<s of :an? 9redits re;resenting 9he9?s, drafts or notes
returned un;aid after the date of state<ent.
3DgE "he a<ount, if any, :y whi9h the aggregate value of
invest<ents as 9arried in the ledger assets of su9h
insuran9e 9o<;any eB9eeds the aggregate value thereof as
deter<ined in a99ordan9e with the ;rovisions of this ode
andKor the rules of the o<<issioner.
3!ll non-ad<itted assets and all other assets of dou:tful
value or 9hara9ter in9luded as ledger or non-ledger assets in
any state<ent su:<itted :y an insuran9e 9o<;any to the
o<<issioner, or in any insuran9e eBa<inerAs re;ort to hi<,
shall also :e re;orted, to the eBtent of the value disallowed
as dedu9tions fro< the gross assets of su9h insuran9e
9o<;any, eB9e;t where the o<<issioner ;er<its a reserve
to :e 9arried a<ong the lia:ilities of su9h insuran9e
9o<;any in lieu of any su9h dedu9tion.
3"I"LE 5
3I#>E*"ME#"*
3*E. 0&5. ! life insuran9e 9o<;any <ay lend to any of its
;oli9yholders u;on the se9urity of the value of its ;oli9y su9h
su< as <ay :e deter<ined ;ursuant to the ;rovisions of the
;oli9y.
3#o insuran9e 9o<;any shall loan any of its <oney or
de;osits to any ;erson, 9or;oration or asso9iation, eB9e;t
u;on the se9urity of any of the following=
3DaE /irst <ortgage or deeds of trust of registered,
unen9u<:ered, i<;roved or uni<;roved real estate,
in9luding 9ondo<iniu<sF
18 | P a g e
R.A. 10607 The nsurance Code
3D:E /irst <ortgages or deeds of trust of a9tually 9ultivated,
i<;roved and unen9u<:ered agri9ultural lands in the
Phili;;inesF
3D9E Pur9hase <oney <ortgages, lease ;ur9hase
agree<ents or si<ilar se9urities eBe9uted or re9eived :y it
on a99ount of the sale or eB9hange of real ;ro;erty a9Cuired
;ursuant to *e9tions 0&' and 0&6F
3DdE Bonds or other instru<ents of inde:tedness issued or
guaranteed :y the +overn<ent of the Phili;;ines or its
;oliti9al su:divisions authoriHed :y law to in9ur su9h
o:ligations or issue su9h guarantees or of govern<ent-
owned or -9ontrolled 9or;orations and instru<entalities
in9luding the Bang?o *entral ng Pili;inasF or
3DeE $:ligations issued or guaranteed :y universal :an?s,
9o<<er9ial :an?s, offshore :an?ing units, invest<ent
houses or other finan9ial inter<ediaries duly registered with
the Bang?o *entral ng Pili;inasF or
3DfE $:ligations issued or guaranteed :y foreign :an?s or
9or;orations, ea9h of whi9h shall have total net worth of at
least $ne hundred fifty <illion U* dollars
DNU*%7&,&&&,&&&.&&E or su9h other higher net worth as <ay
:e ;res9ri:ed :y the Insuran9e o<<ission, as shown in
their finan9ial state<ents as of the i<<ediately ;re9eding
fis9al yearF or
3DgE !ssign<ents of <onetary instru<ents su9h as 9ash
de;osits, de;osit 9ertifi9ates or other si<ilar instru<ents of
universal :an?s, 9o<<er9ial :an?s, invest<ent houses or
other finan9ial inter<ediaries duly registered with the Bang?o
*entral ng Pili;inasF or
3DhE Pledges of shares of sto9?, :onds or other instru<ents
of inde:tedness s;e9ified in *e9tion 0&8F or
3DiE hattel <ortgages over eCui;<ent not <ore than three
DGE years oldF and
3DIE *u9h other se9urity as <ay :e a;;roved :y the
o<<issioner.
3"he loans ;rovided in the ;re9eding su:se9tion shall :e
su:Ie9t to the following 9onditions=
3D%E "he a<ount of loan se9ured :y real estate <ortgage
over a non-agri9ultural land shall not eB9eed seventy ;er9ent
D(&LE of its a;;raised value, and in the 9ase of a loan
se9ured :y a real estate <ortgage over an agri9ultural land,
the a<ount of loan shall not eB9eed forty ;er9ent D5&LE of its
<ar?et value= Provided, "hat, in no 9ase shall su9h loan
have a <aturity ;eriod in eB9ess of twenty-five D07E yearsF
3D0E Unless a;;roved :y the o<<issioner, no loan <ay :e
granted u;on the se9urity of a <ortgage on i<;roved real
estate if the i<;rove<ents thereon do not :elong to the
owner of the land, and the owner of the i<;rove<ents does
not sign the deed of <ortgage. ,owever, if the owner of the
land is the +overn<ent of the Phili;;ines or any of its
;oliti9al su:divisions and a long-ter< lease has :een
eBe9uted in favor of the owner of the i<;rove<ents, the
owner of the land need not :e a ;arty to the deed of
<ortgage. "he eB;iration date of the lease shall not,
however, ;re9ede the <aturity of the loan. "he ;hrase
@i<;roved real estateA as used herein shall <ean land with
;er<anent :uilding or :uildings ere9ted thereonF
3DGE Lease-agree<ents or si<ilar se9urities re9eived on the
sale of real estate ;ro;erty shall not eB9eed one hundred
;er9ent D%&&LE of the selling ;ri9e of said ;ro;erty, or one
hundred ;er9ent D%&&LE of its <ar?et value at the ti<e of its
dis;osition, whi9hever a<ount is lower. ,owever, in no 9ase
shall su9h agree<ent have a <aturity ;eriod not eB9eeding
thirty DG&E yearsF
3D5E Loans se9ured :y shares of sto9? of solvent
9or;orations or institutions shall not eB9eed fifty ;er9ent
D7&LE of=
3DiE "he weighted average <ar?et ;ri9e for the one hundred
eighty D%6&E days ;re9eding the a;;roval of the loan for
shares listed in the sto9? eB9hangeF and
3DiiE /or unlisted shares, the adIusted :oo? value of su9h
shares.
3D7E Loans se9ured :y the 9hattel <ortgages over eCui;<ent
shall not eB9eed seventy ;er9ent D(&LE of the <ar?et value
of said eCui;<ent.
3*E. 0&7. #o loan :y any insuran9e 9o<;any on the
se9urity of real estate shall :e <ade unless the title to su9h
real estate shall have first :een registered in a99ordan9e
with the eBisting Land Registration !9t, or shall have :een
;reviously registered under the ;rovisions of the eBisting
Mortgage Law and the lien or interest of the insuran9e
9o<;any as <ortgagee has :een registered.
3*E. 0&'. DaE !n insuran9e 9o<;any <ay ;ur9hase, hold,
own and 9onvey su9h ;ro;erty, real and ;ersonal, as <ay
have :een <ortgaged, ;ledged, or 9onveyed to it in good
faith in trust for its :enefit :y reason of <oney loaned :y it in
;ursuan9e of the regular :usiness of the 9o<;any, and su9h
real or ;ersonal ;ro;erty as <ay have :een ;ur9hased :y it
at sales under ;ledges, <ortgages or deeds of trust for its
:enefit on a99ount of <oney loaned :y itF and su9h real and
;ersonal ;ro;erty as <ay have :een 9onveyed to it :y
:orrowers in satisfa9tion and dis9harge of loans <ade :y the
9o<;any in ;ay<ent or :y reason of any loan <ade :y the
9o<;any in ;ay<ent or :y reason of any loan <ade :y it
shall :e sold :y the 9o<;any within twenty D0&E years after
the title thereto has :een vested in it.
3D:E !n insuran9e 9o<;any <ay ;ur9hase, hold, and own the
following=
3D%E Real ;ro;erties whi9h serve as its <ain ;la9e of
:usiness andKor :ran9h offi9es= Provided, "hat su9h
invest<ent shall not in the overall eB9eed twenty ;er9ent
D0&LE of its net worth as shown :y its latest finan9ial
state<ent a;;roved :y the o<<issioner.
19 | P a g e
R.A. 10607 The nsurance Code
3D0E Bonds or other instru<ents of inde:tedness of the
+overn<ent of the Phili;;ines or its ;oliti9al su:divisions
authoriHed :y law to issue :onds at the reasona:le <ar?et
value thereof.
3DGE Bonds or other instru<ents of de:t of govern<ent-
owned or -9ontrolled 9or;orations and entities, in9luding the
Bang?o *entral ng Pili;inas.
3D5E Bonds, de:entures or other instru<ents of inde:tedness
of any solvent 9or;oration or institution 9reated or eBisting
under the laws of the Phili;;ines= Provided, however, "hat
the issuing, assu<ing or guaranteeing entity or its
;rede9essors shall not have defaulted in the ;ay<ent of
interest on any of its se9urities and that during ea9h of any
three DGE in9luding the last two D0E of the five D7E fis9al years
neBt ;re9eding the date of a9Cuisition :y su9h insuran9e
9o<;any of su9h :onds, de:entures, or other instru<ents of
inde:tedness, the net earnings of the issuing, assu<ing or
guaranteeing institution availa:le for its fiBed 9harges, as
hereinafter defined, shall have :een not less than one and
one-Cuarter D%OE ti<es the total of its fiBed 9harges for su9h
year= Provided, further, "hat no life insuran9e 9o<;any shall
invest in or loan u;on the o:ligations of any one institution in
the ?inds ;er<itted under this su:se9tion an a<ount in
eB9ess of twenty-five ;er9ent D07LE of the total ad<itted
assets of su9h insurer as of -e9e<:er thirty-first neBt
;re9eding the date of su9h invest<ent.
3!s used in this su:se9tion the ter< net earnings availa:le
for fiBed 9harges shall <ean net in9o<e after dedu9ting
o;erating and <aintenan9e eB;enses, taBes other than
in9o<e taBes, de;re9iation and de;letionF :ut eB9luding
eBtraordinary nonre9urring ite<s of in9o<e or eB;ense
a;;earing in the regular finan9ial state<ent of the issuing,
assu<ing or guaranteeing institution. "he ter< fiBed 9harges
shall in9lude interest on funded and unfunded de:t,
a<ortiHation of de:t dis9ount, and rentals for leased
;ro;erties.
3D7E Preferred or guaranteed sto9?s of any solvent
9or;oration or institution 9reated or eBisting under the laws of
the Phili;;ines= Provided, "hat if the sto9?s are guaranteed,
the a<ount of sto9?s so guaranteed is not in eB9ess of fifty
;er9ent D7&LE of the a<ount of the ;referred or 9o<<on
sto9?s, as the 9ase <ay :e, of the guaranteeing 9or;oration=
Provided, finally, "hat no life insuran9e 9o<;any shall invest
in or loan u;on o:ligations of any one institution in the ?inds
;er<itted under this su:se9tion an a<ount in eB9ess of ten
;er9ent D%&LE of the total ad<itted assets of su9h insurer as
of -e9e<:er thirty-first neBt ;re9eding the date of su9h
invest<ent.
3D'E o<<on sto9?s of any solvent 9or;oration or institution
9reated or eBisting under the laws of the Phili;;ines=
Provided, however, "hat no life insuran9e 9o<;any shall
invest in or loan u;on the o:ligations of any one 9or;oration
or institution in the ?inds ;er<itted under this su:se9tion an
a<ount in eB9ess of ten ;er9ent D%&LE of the total ad<itted
assets of su9h insurer as of -e9e<:er thirty-first neBt
;re9eding the date of su9h invest<ent.
3D(E *e9urities issued :y a registered enter;rise, as this ter<
is defined in EBe9utive $rder #o. 00', otherwise ?nown as
the $<ni:us Invest<ents ode of %86(, as a<ended=
Provided, "hat the total invest<ent of a do<esti9 non-life
insuran9e 9o<;any in any registered enter;rise shall not
eB9eed twenty ;er9ent D0&LE of the net worth of said
insuran9e 9o<;any as shown :y its aforesaid finan9ial
state<ent unless ;reviously authoriHed :y the
o<<issioner.
3D6E ertifi9ates, notes and other o:ligations issued :y the
trustees or re9eivers of any institution 9reated or eBisting
under the laws of the Phili;;ines whi9h, or the assets of
whi9h, are :eing ad<inistered under the dire9tion of any
9ourt having Iurisdi9tion= Provided, however, "hat su9h
9ertifi9ates, notes or other o:ligations are adeCuately
se9ured as to ;rin9i;al and interests.
3D8E ECui;<ent trust o:ligations or 9ertifi9ates whi9h are
adeCuately se9ured or other adeCuately se9ured instru<ents
eviden9ing an interest in eCui;<ent wholly or in ;art within
the Phili;;ines= Provided, however, "hat there is a right to
re9eive deter<ined ;ortions of rental, ;ur9hase or other fiBed
o:ligatory ;ay<ents for the use or ;ur9hase of su9h
eCui;<ent.
3D%&E !ny o:ligation of any 9or;oration or institution 9reated
or eBisting under the laws of the Phili;;ines whi9h is, on the
date of a9Cuisition :y the insurer, adeCuately se9ured and
has Cualities and 9hara9teristi9s wherein the s;e9ulative
ele<ents are not ;redo<inant.
3D%%E *u9h other se9urities as <ay :e a;;roved :y the
o<<issioner.
3D9E !ny do<esti9 insurer whi9h has outstanding insuran9e,
annuity or reinsuran9e 9ontra9ts in 9urren9ies other than the
national 9urren9y of the Phili;;ines <ay invest in, or
otherwise a9Cuire or loan u;on se9urities and invest<ents in
su9h 9urren9y whi9h are su:stantially of the sa<e ?inds,
9lasses and invest<ent grades as those eligi:le for
invest<ent under the foregoing su:divisions of this se9tionF
:ut the aggregate a<ount of su9h invest<ents and of su9h
9ash in su9h 9urren9y whi9h is at any ti<e held :y su9h
insurer shall not eB9eed one and one-half D%PE ti<es the
a<ount of its reserves and other o:ligations under su9h
9ontra9ts or the a<ount whi9h su9h insurer is reCuired :y the
law of any 9ountry or ;ossession outside the Re;u:li9 of the
Phili;;ines to :e invested in su9h 9ountry or ;ossession,
whi9hever shall :e greater.
3*E. 0&(. !n insuran9e 9o<;any <ay=
3D%E Invest in eCuities of other finan9ial institutionsF and
3D0E Engage in the :uying and selling of long-ter< de:t
instru<ents= Provided, "hat any or all of su9h invest<ents
shall :e with the ;rior a;;roval of the o<<issioner.
Insuran9e 9o<;anies <ay, however, invest in listed eCuities
of other finan9ial institutions without need of ;rior a;;roval
:y the o<<issioner.
3*E. 0&6. !ny life insuran9e 9o<;any <ay=
20 | P a g e
R.A. 10607 The nsurance Code
3DaE !9Cuire or 9onstru9t housing ;roIe9ts and, in 9onne9tion
with any su9h ;roIe9t, <ay a9Cuire land or any interest
therein :y ;ur9hase, lease or otherwise, or use land
a9Cuired ;ursuant to any other ;rovision of this ode. *u9h
9o<;any <ay thereafter own, <aintain, <anage, 9olle9t or
re9eive in9o<e fro<, or sell and 9onvey, any land or interest
therein so a9Cuired and any i<;rove<ents thereon. "he
aggregate :oo? value of the invest<ents of any su9h
9o<;any in all su9h ;roIe9ts shall not eB9eed at the ti<e of
su9h invest<ents twenty-five ;er9ent D07LE of the total
ad<itted assets of su9h 9o<;any on the thirty-first day of
-e9e<:er neBt ;re9eding= Provided, "hat the funds of the
9o<;any for the ;ay<ent of ;ending 9lai<s and o:ligations
shall not :e used for su9h invest<ents.
3D:E !9Cuire real ;ro;erty, other than ;ro;erty to :e used
;ri<arily for ;roviding housing and ;ro;erty for
a99o<<odation of its own :usiness, as an invest<ent for the
;rodu9tion of in9o<e, or <ay a9Cuire real ;ro;erty to :e
i<;roved or develo;ed for su9h invest<ent ;ur;ose
;ursuant to a ;rogra< therefor, su:Ie9t to the 9ondition that
the 9ost of ea9h ;ar9el of real ;ro;erty so a9Cuired under the
authority of this ;aragra;h D:E, in9luding the esti<ated 9ost
to the 9o<;any of the i<;rove<ent or develo;<ent thereof,
when added to the :oo? value of all other real ;ro;erty held
:y it ;ursuant to this ;aragra;h D:E, shall not eB9eed twenty-
five ;er9ent D07LE of its ad<itted assets as of the thirty-first
day of -e9e<:er neBt ;re9eding.
3*E. 0&8. Every do<esti9 insuran9e 9o<;any shall, to the
eBtent of an a<ount eCual in value to twenty-five ;er9ent
D07LE of the <ini<u< net worth reCuired under *e9tion %85,
invest its funds only in se9urities, satisfa9tory to the
o<<issioner, 9onsisting of :onds or other instru<ents of
de:t of the +overn<ent of the Phili;;ines or its ;oliti9al
su:divisions or instru<entalities, or of govern<ent-owned or
-9ontrolled 9or;orations and entities, in9luding the Bang?o
*entral ng Pili;inas= Provided, "hat su9h invest<ents shall at
all ti<es :e <aintained free fro< any lien or en9u<:ran9e=
Provided, further, "hat su9h se9urities shall :e de;osited
with and held :y the o<<issioner for the faithful
;erfor<an9e :y the de;ositing insurer of all its o:ligations
under its insuran9e 9ontra9ts. "he ;rovisions of *e9tion %86
shall, so far as ;ra9ti9a:le, a;;ly to the se9urities de;osited
under this se9tion.
3EB9e;t as otherwise ;rovided in this ode, no Iudg<ent
9reditor or other 9lai<ant shall have the right to levy u;on
any of the se9urities of the insurer held on de;osit under this
se9tion or held on de;osit ;ursuant to the reCuire<ent of the
o<<issioner.
3*E. 0%&. !fter satisfying the reCuire<ents 9ontained in the
;re9eding se9tion, any do<esti9 non-life insuran9e 9o<;any,
shall invest, to an a<ount ;res9ri:ed :elow, its funds in, or
otherwise, a9Cuire or loan u;on, only the 9lasses of
invest<ents des9ri:ed in *e9tion 0&', in9luding se9urities
issued :y any registered enter;rise, as this ter< is defined in
EBe9utive $rder #o. 00', otherwise ?nown as @"he $<ni:us
Invest<ents ode of %86(Q and su9h other 9lasses of
invest<ents as <ay :e authoriHed :y the o<<issioner for
;ur;oses of this se9tion= Provided, "hat=
3DaE #o <ore than twenty ;er9ent D0&LE of the net worth of
su9h 9o<;any as shown :y its latest finan9ial state<ent
a;;roved :y the o<<issioner shall :e invested in the lot
and :uilding in whi9h the insuran9e 9o<;any 9ondu9ts its
:usinessF and
3D:E "he total invest<ent of an insuran9e 9o<;any in any
registered enter;rise shall not eB9eed twenty ;er9ent D0&LE
of the net worth of said insuran9e 9o<;any as shown :y its
aforesaid finan9ial state<ent nor twenty ;er9ent D0&LE of the
;aid-u; 9a;ital of the registered enter;rise eB9luding the
intended invest<ent, unless ;reviously authoriHed :y the
o<<issioner= Provided, further, "hat su9h invest<ents,
free fro< any lien or en9u<:ran9e, shall :e at least eCual in
a<ount to the aggregate a<ount of= D%E its legal reserve, as
;rovided in *e9tion 0%8, and D0E its reserve fund held for
reinsuran9e as ;rovided for in the ;ertinent treaty ;rovision
in the 9ase of reinsuran9e 9eded to authoriHed insurers.
3*E. 0%%. !fter satisfying the reCuire<ents 9ontained in
*e9tions %8(, %88, 0&8 and 0%&, any non-life insuran9e
9o<;any <ay invest any ;ortion of its funds re;resenting
earned sur;lus in any of the invest<ents des9ri:ed in
*e9tions 0&5, 0&' and 0&(, or in any se9urities issued :y a
registered enter;rise <entioned in the ;re9eding se9tions=
Provided, "hat no invest<ent in sto9?s or :onds of any
single entity shall in the aggregate, eB9eed twenty ;er9ent
D0&LE of the net worth of the insuran9e 9o<;any as shown
in its latest finan9ial state<ent a;;roved :y the
o<<issioner or twenty ;er9ent D0&LE of the ;aid-u; 9a;ital
of the issuing 9o<;any, whi9hever is lesser, unless
otherwise a;;roved :y the o<<issioner.
3*E. 0%0. !fter satisfying the <ini<u< 9a;ital invest<ent
reCuired in *e9tion 0&8, any life insuran9e 9o<;any <ay
invest its legal ;oli9y reserve, as ;rovided in *e9tion 0%( or
in *e9tion 0%6, in any of the 9lasses of se9urities or ty;es of
invest<ents des9ri:ed in *e9tions 0&5, 0&', 0&( and 0&6,
su:Ie9t to the li<itations therein 9ontained, and in any
se9urities issued :y any registered enter;rise <entioned in
*e9tion 0%&, free fro< any lien or en9u<:ran9e, in su9h
a<ounts as <ay :e a;;roved :y the o<<issioner. *u9h
9o<;any <ay li?ewise invest any ;ortion of its earned
sur;lus in the aforesaid se9urities or invest<ents su:Ie9t to
the aforesaid li<itations.
3*E. 0%G. !ny invest<ent <ade in violation of the
a;;li9a:le ;rovisions of this title shall :e 9onsidered non-
ad<itted assets.
3*E. 0%5. DaE !ll :onds or other instru<ents of
inde:tedness having a fiBed ter< and rate of interest and
held :y any life insuran9e 9o<;any authoriHed to do
:usiness in this 9ountry, if a<;ly se9ured and if not in default
as to ;rin9i;al or interest, shall :e valued :ased on their
a<ortiHed 9ost using effe9tive interest <ethod less
i<;air<ent and unre9overa:le a<ount :ased on a;;ro;riate
<easure<ent <ethods whi9h are generally a99e;ted in the
industry and a99e;ted :y the o<<issioner. "he
o<<issioner shall have the ;ower to deter<ine the
21 | P a g e
R.A. 10607 The nsurance Code
eligi:ility of any su9h invest<ents for valuation on the :asis
of a<ortiHation, and <ay :y regulation ;res9ri:e or li<it the
9lasses of se9urities so eligi:le for a<ortiHation. !ll :onds or
other instru<ents of inde:tedness whi9h in the Iudg<ent of
the o<<issioner are not a<;ly se9ured shall not :e eligi:le
for a<ortiHation and shall :e valued in a99ordan9e with
;aragra;h two. "he o<<issioner <ay, if he finds that the
interest of ;oli9yholders so ;er<it or reCuire, :y offi9ial
regulation ;er<it or reCuire any 9lass or 9lasses of insurers,
other than life insuran9e 9o<;anies authoriHed to do
:usiness in this 9ountry, to value their :onds or other
instru<ents of inde:tedness in a99ordan9e with the
foregoing rule.
3D:E "he invest<ents of all insurers authoriHed to do :usiness
in this 9ountry, eB9e;t se9urities su:Ie9t to a<ortiHation and
eB9e;t as otherwise ;rovided in this 9ha;ter, shall :e valued,
in the dis9retion of the o<<issioner, at their a<ortiHed 9ost
using effe9tive interest <ethod less i<;air<ent and
unre9overa:le a<ount or at valuation re;resenting their fair
<ar?et value. If the o<<issioner finds that in view of the
9hara9ter of invest<ents of any insurer authoriHed to do
:usiness in this 9ountry it would :e ;rudent for su9h insurer
to esta:lish a s;e9ial reserve for ;ossi:le losses or
flu9tuations in the values of its invest<ents, he <ay reCuire
su9h insurer to esta:lish su9h reserve, reasona:le in
a<ount, and in9lude a re;ort thereon in any state<ent or
re;ort of the finan9ial 9ondition of su9h insurer. "he
o<<issioner <ay, in 9onne9tion with any eBa<ination or
reCuired finan9ial state<ent of an authoriHed insurer, reCuire
su9h insurer to furnish hi< 9o<;lete finan9ial state<ents
and audited re;ort of the finan9ial 9ondition of any
9or;oration of whi9h the se9urities are owned wholly or ;artly
:y su9h insurer and <ay 9ause an eBa<ination to :e <ade
of any su:sidiary or affiliate of su9h insurer as a;;ro;riate to
s;e9ifi9 invest<ents as ;rovided in a;;ro;riate 9ir9ulars
issued :y the o<<issioner.
3D9E Invest<ents in eCuity of an insuran9e 9o<;any shall :e
valued as follows=
3D%E Listed sto9?s shall :e valued at <ar?et value and
;eriodi9ally adIusted to refle9t <ar?et 9hanges through a
s;e9ial valuation a99ount to refle9t their realiHa:le value
when soldF
3D0E Unlisted sto9?s shall :e valued at adIusted :oo? value
:ased on the latest unCualified audited finan9ial state<ents
of the 9o<;any whi9h issued su9h sto9?sF and
3DGE *to9?s of a 9or;oration under the 9ontrol of the insurer
shall :e valued using the eCuity <ethod whi9h is the 9ost
;lus or <inus the share of the 9ontrolling 9o<;any in the
earnings or losses of the 9ontrolled 9o<;any after
a9Cuisition of su9h sto9?s.
3DdE "he sto9? of an insuran9e 9o<;any shall :e valued at
the lesser of its <ar?et value or its :oo? value as shown :y
its last a;;roved audited finan9ial state<ent or the last re;ort
on eBa<ination, whi9hever is <ore re9ent. "he :oo? value of
a share of 9o<<on sto9? of an insuran9e 9o<;any shall :e
as9ertained :y dividing D%E the a<ount of its 9a;ital and
sur;lus less the value of all of its ;referred sto9?, if any,
outstanding, :y D0E the nu<:er of shares of its 9o<<on
sto9? issued and outstanding.
3#otwithstanding the foregoing ;rovisions, an insurer <ay, at
its o;tion, value its holdings of sto9? in a su:sidiary
insuran9e 9o<;any in an a<ount not less than a9Cuisition
9ost if su9h a9Cuisition 9ost is less than the value deter<ined
as herein:efore ;rovided.
3DeE Real estate a9Cuired :y fore9losure or :y deed in lieu
thereof, in the a:sen9e of a re9ent a;;raisal dee<ed :y the
o<<issioner to :e relia:le, shall not :e valued at an
a<ount greater than the un;aid ;rin9i;al of the defaulted
loan at the date of su9h fore9losure or deed, together with
any taBes and eB;enses ;aid or in9urred :y su9h insurer at
su9h ti<e in 9onne9tion with su9h a9Cuisition, and the 9ost of
additions or i<;rove<ents thereafter ;aid :y su9h insurer
and any a<ount or a<ounts thereafter ;aid :y su9h insurer
or any assess<ents levied for i<;rove<ents in 9onne9tion
with the ;ro;erty.
3DfE Pur9hase <oney <ortgages re9eived on dis;ositions of
real ;ro;erty held ;ursuant to *e9tion 0&6 shall :e valued in
an a<ount eCuivalent to ninety ;er9ent D8&LE of the value of
su9h real ;ro;erty. Pur9hase <oney <ortgages re9eived on
dis;osition of real ;ro;erty otherwise held shall :e valued in
an a<ount not eB9eeding ninety ;er9ent D8&LE of the value
of su9h real ;ro;erty as deter<ined :y an a;;raisal <ade :y
an a;;raiser at or a:out the ti<e of dis;osition of su9h real
;ro;erty.
3DgE "he sto9? of a su:sidiary of an insurer shall :e valued on
the :asis of the greater of=
3D%E "he value of only su9h of the assets of su9h su:sidiary
as would 9onstitute lawful invest<ents for the insurer if
a9Cuired or held dire9tly :y the insurerF or
3D0E *u9h other value deter<ined ;ursuant to standards and
9u<ulative li<itations, 9ontained in a regulation to :e
;ro<ulgated :y the o<<issioner.
3DhE #otwithstanding any ;rovision 9ontained in this se9tion
or elsewhere in this 9ha;ter, if the o<<issioner finds that
the interests of ;oli9yholders so ;er<it or reCuire, he <ay
;er<it or reCuire any 9lass or 9lasses of insurers authoriHed
to do :usiness in this 9ountry to value their invest<ents or
any 9lass or 9lasses thereof as of any date heretofore or
hereafter in a99ordan9e with any a;;li9a:le valuation or
<ethod.
3*E. 0%7. It shall :e the duty of the offi9ers of the insuran9e
9o<;any to re;ort within the first fifteen D%7E days of every
<onth all su9h invest<ents as <ay :e <ade :y the< during
the ;re9eding <onth, and the o<<issioner <ay, if su9h
invest<ents or any of the< see< inIudi9ious to hi<, reCuire
the sale or dis;osal of the sa<e. "he re;ort shall also
in9lude a list of invest<ents sold or dis;osed of :y the
9o<;any during the sa<e ;eriod.
22 | P a g e
R.A. 10607 The nsurance Code
3"I"LE 7
3RE*ER>E*
3*E. 0%'. Every life insuran9e 9o<;any, doing :usiness in
the Phili;;ines, shall annually <a?e a valuation of all
;oli9ies, additions thereto, un;aid dividends, and all other
o:ligations outstanding on the thirty-first day of -e9e<:er of
the ;re9eding year. !ll su9h valuations shall :e <ade
a99ording to the standard ado;ted :y the 9o<;any, as
;res9ri:ed :y the o<<issioner in a99ordan9e with
internationally a99e;ted a9tuarial standards, whi9h standard
shall :e stated in its annual re;ort.
3*u9h standard of valuations shall :e a99ording to a
standard ta:le of <ortality with interest to :e deter<ined :y
the Insuran9e o<<issioner. 1hen the ;reli<inary ter<
:asis is used, the ter< insuran9e shall :e li<ited to the first
;oli9y year.
3"he results of su9h valuations shall :e re;orted to the
o<<issioner on or :efore the thirtieth day of !;ril of ea9h
year a99o<;anied :y a sworn state<ent of a designated
9o<;any offi9er and stating the <ethods and assu<;tions
used in arriving at the values re;orted.
3*E. 0%(. "he aggregate net value so as9ertained of the
;oli9ies of su9h 9o<;any shall :e dee<ed its reserve
lia:ility, to ;rovide for whi9h it shall hold funds in se9ure
invest<ents eCual to su9h net value, a:ove all its other
lia:ilitiesF and it shall :e the duty of the o<<issioner, after
having verified, to su9h an eBtent as he <ay dee<
ne9essary, the valuation of all ;oli9ies in for9e, to satisfy
hi<self that the 9o<;any has su9h a<ount in safe legal
se9urities after all other de:ts and 9lai<s against it have
:een ;rovided for.
3"he reserve lia:ility for varia:le 9ontra9ts defined in *e9tion
0G6 shall :e esta:lished in a99ordan9e with a9tuarial
;ro9edures that re9ogniHe the varia:le nature of the :enefits
;rovided, and shall :e a;;roved :y the o<<issioner.
3*E. 0%6. Every life insuran9e 9o<;any, 9ondu9ted on the
<utual ;lan or a ;lan in whi9h ;oli9yholders are :y the ter<s
of their ;oli9ies entitled to share in the ;rofits or sur;lus
shall, on all ;oli9ies of life insuran9e heretofore or hereafter
issued, under the 9onditions of whi9h the distri:ution of
sur;lus is deferred to a fiBed or s;e9ified ti<e and 9ontingent
u;on the ;oli9y :eing in for9e and the insured living at that
ti<e, annually as9ertain the a<ount of the sur;lus to whi9h
all su9h ;oli9ies as a se;arate 9lass are entitled, and shall
annually a;;ortion to su9h ;oli9ies as a 9lass the a<ount of
the sur;lus so as9ertained, and 9arry the a<ount of su9h
a;;ortioned sur;lus, ;lus the a9tual interest earnings and
a99retions to su9h fund, as a distin9t and se;arate lia:ility to
su9h 9lass of ;oli9ies on and for whi9h the sa<e was
a99u<ulated, and no 9o<;any or any of its offi9ers shall :e
;er<itted to use any ;art of su9h a;;ortioned sur;lus fund
for any ;ur;ose whatsoever other than for the eB;ress
;ur;ose for whi9h the sa<e was a99u<ulated.
3*E. 0%8. Every insuran9e 9o<;any, other than life, shall
<aintain a reserve for unearned ;re<iu<s on its ;oli9ies in
for9e, whi9h shall :e 9harged as a lia:ility in any
deter<ination of its finan9ial 9ondition. *u9h reserve shall :e
9al9ulated :ased on the twenty-fourth D05thE <ethod.
3*E. 00&. In addition to its lia:ilities and reserves on
9ontra9ts of insuran9e issued :y it, every insuran9e 9o<;any
shall :e 9harged with the esti<ated a<ount of all of its other
lia:ilities, in9luding taBes, eB;enses and other o:ligations
due or a99rued at the date of state<ent, and in9luding any
s;e9ial reserves reCuired :y the o<<issioner ;ursuant to
the ;rovisions of this ode.
"I"LE '
3LIMI" $/ *I#+LE RI*2
3*E. 00%. #o insuran9e 9o<;any other than life, whether
foreign or do<esti9, shall retain any ris? on any one su:Ie9t
of insuran9e in an a<ount eB9eeding twenty ;er9ent D0&LE
of its net worth. /or ;ur;oses of this se9tion, the ter< su:Ie9t
of insuran9e shall in9lude all ;ro;erties or ris?s insured :y
the sa<e insurer that 9usto<arily are 9onsidered :y non-life
9o<;any underwriters to :e su:Ie9t to loss or da<age fro<
the sa<e o99urren9e of any haHard insured against.
3"he o<<issioner <ay issue regulations ;roviding for a
<aBi<u< li<it on the overall retained ris?s of insurers to
serve as a 9atastro;he 9over reCuire<ent for the sa<e.
3Reinsuran9e 9eded as authoriHed under the su99eeding title
shall :e dedu9ted in deter<ining the ris? retained. !s to
surety ris?, dedu9tion shall also :e <ade of the a<ount
assu<ed :y any other 9o<;any authoriHed to transa9t
surety :usiness and the value of any se9urity <ortgaged,
;ledged, or held su:Ie9t to the suretyAs 9ontrol and for the
suretyAs ;rote9tion.
3"I"LE (
3REI#*UR!#E "R!#*!"I$#*
3*E. 000. !n insuran9e 9o<;any doing :usiness in the
Phili;;ines <ay a99e;t reinsuran9es only of su9h ris?s, and
retain ris? thereon within su9h li<its, as it is otherwise
authoriHed to insure.
3*E. 00G. #o insuran9e 9o<;any doing :usiness in the
Phili;;ines shall 9ede all or ;art of any ris?s situated in the
Phili;;ines :y way of reinsuran9e dire9tly to any foreign
insurer not authoriHed to do :usiness in the Phili;;ines
unless su9h foreign insurer or, if the servi9es of a
nonresident :ro?er are utiliHed, su9h nonresident :ro?er is
re;resented in the Phili;;ines :y a resident agent duly
registered with the o<<issioner as reCuired in this ode.
3"he resident agent of su9h unauthoriHed foreign insurer or
nonresident :ro?er shall i<<ediately u;on registration
23 | P a g e
R.A. 10607 The nsurance Code
furnish the o<<issioner with the annual state<ent of su9h
insurer, or of su9h 9o<;any or 9o<;anies where su9h
:ro?er <ay ;la9e Phili;;ine :usiness as of the year
;re9eding su9h registration, and annually thereafter as soon
as availa:le.
3*E. 005. !ll insuran9e 9o<;anies, :oth life and non-life,
authoriHed to do :usiness in the Phili;;ines shall 9ede their
eB9ess ris?s to other 9o<;anies si<ilarly authoriHed to do
:usiness in the Phili;;ines in su9h a<ounts and under su9h
arrange<ents as would :e 9onsistent with sound
underwriting ;ra9ti9es :efore they enter into reinsuran9e
arrange<ents with unauthoriHed foreign insurers.
3*E. 007. !ny insuran9e 9o<;any doing :usiness in the
Phili;;ines desiring to 9ede their eB9ess ris?s to foreign
insuran9e or reinsuran9e 9o<;anies not authoriHed to
transa9t :usiness in the Phili;;ines <ay do so under su9h
ter<s and 9onditions whi9h the o<<issioner <ay
;res9ri:e.
3*hould any reinsuran9e agree<ent :e for any reason
9an9elled or ter<inated, the 9eding 9o<;any 9on9erned
shall infor< the o<<issioner in writing of su9h 9an9ellation
or ter<ination within thirty DG&E days fro< the date of su9h
9an9ellation or ter<ination or fro< the date noti9e or
infor<ation of su9h 9an9ellation or ter<ination is re9eived :y
su9h 9o<;any as the 9ase <ay :e.
3*E. 00'. Every insuran9e 9o<;any authoriHed to do
:usiness in the Phili;;ines shall re;ort to the o<<issioner
on for<s ;res9ri:ed :y hi< the ;arti9ulars of reinsuran9e
treaties or any new treaties or 9hanges in eBisting treaties
within three DGE <onths fro< their effe9tivity.
3*E. 00(. #o 9redit shall :e allowed as an ad<itted asset
or as a dedu9tion fro< lia:ility, to any 9eding insurer for
reinsuran9e <ade, 9eded, renewed, or otherwise :e9o<ing
effe9tive after January %, %8(7, unless the reinsuran9e shall
:e ;aya:le :y the assu<ing insurer on the :asis of the
lia:ility of the 9eding insurer under the 9ontra9t or 9ontra9ts
reinsured without di<inution :e9ause of the insolven9y of the
9eding insurer nor unless under the 9ontra9t or 9ontra9ts of
reinsuran9e the lia:ility for su9h reinsuran9e is assu<ed :y
the assu<ing insurer or insurers as of the sa<e effe9tive
dateF nor unless the reinsuran9e agree<ent ;rovides that
;ay<ents :y the assu<ing insurer shall :e <ade dire9tly to
the 9eding insurer or to its liCuidator, re9eiver, or statutory
su99essor eB9e;t=
3DaE 1here the 9ontra9t s;e9ifi9ally ;rovides another ;ayee
of su9h reinsuran9e in the event of the insolven9y of the
9eding insurerF and
3D:E 1here the assu<ing insurer with the 9onsent of the
dire9t insured or insureds has assu<ed su9h ;oli9y
o:ligations of the 9eding insurer as dire9t o:ligations of the
assu<ing insurer to the ;ayees under su9h ;oli9ies and in
su:stitution for the o:ligations of the 9eding insurer to su9h
;ayees.
3*E. 006. #o life insuran9e 9o<;any doing :usiness in the
Phili;;ines shall reinsure its whole ris? on any individual life
or Ioint lives, or su:stantially all of its insuran9e in for9e,
without having first o:tained the written ;er<ission of the
o<<issioner.
3"I"LE 6
3!##U!L *"!"EME#"
3*E. 008. Every insuran9e 9o<;any doing :usiness in the
Phili;;ines shall ter<inate its fis9al ;eriod on the thirty-first
day of -e9e<:er every year, and shall annually on or :efore
the thirtieth day of !;ril of ea9h year render to the
o<<issioner a state<ent signed and sworn to :y the 9hief
offi9er of su9h 9o<;any showing, in su9h for< and details as
<ay :e ;res9ri:ed :y the o<<issioner, the eBa9t 9ondition
of its affairs on the ;re9eding thirty-first day of -e9e<:er.
3"he annual state<ent shall :e ;re;ared in a99ordan9e with
the finan9ial re;orting fra<ewor? as deter<ined :y the
o<<issioner. In addition, the o<<issioner <ay reCuire
other relevant infor<ation. "he for< and details of su9h other
relevant infor<ation shall :e ;res9ri:ed :y the
o<<issioner and shall for< ;art of the su;;le<entary
s9hedules to the annual state<ent.
3!ny entry in the state<ent whi9h is found to :e false shall
9onstitute a <isde<eanor and the offi9er signing su9h
state<ent shall :e su:Ie9t to the ;enalty ;rovided for under
*e9tion 550.
3*E. 0G&. Every insuran9e 9o<;any authoriHed under "itle
%& of this 9ha;ter to issue, deliver or use varia:le 9ontra9ts
shall annually file with the o<<issioner se;arate annual
state<ent of its se;arate varia:le a99ounts. *u9h state<ent
shall :e on a for< ;res9ri:ed or a;;roved :y the
o<<issioner and shall in9lude details as to all of the
in9o<e, dis:urse<ents, assets and lia:ility ite<s of and
asso9iated with the said se;arate varia:le a99ounts. *aid
state<ent shall :e under oath of two D0E offi9ers of the
9o<;any and shall :e filed si<ultaneously with the annual
state<ent reCuired :y the ;re9eding se9tion.
3*E. 0G%. 1ithin thirty DG&E days after re9ei;t of the annual
state<ent a;;roved :y the o<<issioner, every insuran9e
9o<;any doing :usiness in the Phili;;ines shall ;u:lish in a
news;a;er of general 9ir9ulation, a full syno;sis of its annual
finan9ial state<ent showing fully the 9onditions of its
:usiness, and setting forth its resour9es and lia:ilities in
a99ordan9e with su9h for< ;res9ri:ed :y the o<<issioner.
3"he o<<issioner shall have the authority to <a?e, a<end,
and res9ind su9h a99ounting rules and regulations as <ay
:e ne9essary to 9arry out the ;rovisions of this ode, and
define a99ounting, te9hni9al and trade ter<s used in this
ode= Provided, "hat su9h shall :e in a99ordan9e with
internationally a99e;ted a99ounting standards. !<ong other
things, the o<<issioner <ay ;res9ri:e the for< or for<s in
whi9h reCuired infor<ation shall :e set forth, the ite<s or
details to :e shown in the :alan9e sheet and in9o<e
24 | P a g e
R.A. 10607 The nsurance Code
state<ent, and the <ethods to :e followed in the ;re;aration
of a99ounts, a;;raisal or valuation of assets and lia:ilities,
deter<ination of re9urring and nonre9urring in9o<e,
differentiation of invest<ent and o;erating in9o<e, and in the
;re;aration, where the o<<issioner dee<s it ne9essary or
desira:le, of 9onsolidated :alan9e sheets or in9o<e
a99ounts of any ;erson dire9tly or indire9tly 9ontrolling or
9ontrolled :y the insuran9e 9o<;any.
3"I"LE 8
3P$LI. /$RM*
3*E. 0G0. #o ;oli9y, 9ertifi9ate or 9ontra9t of insuran9e
shall :e issued or delivered within the Phili;;ines unless in
the for< ;reviously a;;roved :y the o<<issioner, and no
a;;li9ation for< shall :e used with, and no rider, 9lause,
warranty or endorse<ent shall :e atta9hed to, ;rinted or
sta<;ed u;on su9h ;oli9y, 9ertifi9ate or 9ontra9t unless the
for< of su9h a;;li9ation, rider, 9lause, warranty or
endorse<ent has :een a;;roved :y the o<<issioner.
3*E. 0GG. In the 9ase of individual life or endow<ent
insuran9e, the ;oli9y shall 9ontain in su:stan9e the following
9onditions=
3DaE ! ;rovision that the ;oli9yholder is entitled to a gra9e
;eriod either of thirty DG&E days or of one D%E <onth within
whi9h the ;ay<ent of any ;re<iu< after the first <ay :e
<ade, su:Ie9t at the o;tion of the insurer to an interest
9harge not in eB9ess of siB ;er9ent D'LE ;er annu< for the
nu<:er of days of gra9e ela;sing :efore the ;ay<ent of the
;re<iu<, during whi9h ;eriod of gra9e the ;oli9y shall
9ontinue in full for9e, :ut in 9ase the ;oli9y :e9o<es a 9lai<
during the said ;eriod of gra9e :efore the overdue ;re<iu<
is ;aid, the a<ount of su9h ;re<iu< with interest <ay :e
dedu9ted fro< the a<ount ;aya:le under the ;oli9y in
settle<entF
3D:E ! ;rovision that the ;oli9y shall :e in9ontesta:le after it
shall have :een in for9e during the lifeti<e of the insured for
a ;eriod of two D0E years fro< its date of issue as shown in
the ;oli9y, or date of a;;roval of last reinstate<ent, eB9e;t
for non;ay<ent of ;re<iu< and eB9e;t for violation of the
9onditions of the ;oli9y relating to <ilitary or naval servi9e in
ti<e of warF
3D9E ! ;rovision that the ;oli9y shall 9onstitute the entire
9ontra9t :etween the ;arties, :ut if the 9o<;any desires to
<a?e the a;;li9ation a ;art of the 9ontra9t it <ay do so
;rovided a 9o;y of su9h a;;li9ation shall :e indorsed u;on
or atta9hed to the ;oli9y when issued, and in su9h 9ase the
;oli9y shall 9ontain a ;rovision that the ;oli9y and the
a;;li9ation therefor shall 9onstitute the entire 9ontra9t
:etween the ;artiesF
3DdE ! ;rovision that if the age of the insured is 9onsidered in
deter<ining the ;re<iu< and the :enefits a99ruing under the
;oli9y, and the age of the insured has :een <isstated, the
a<ount ;aya:le under the ;oli9y shall :e su9h as the
;re<iu< would have ;ur9hased at the 9orre9t ageF
3DeE If the ;oli9y is ;arti9i;ating, a ;rovision that the 9o<;any
shall ;eriodi9ally as9ertain and a;;ortion any divisi:le
sur;lus a99ruing on the ;oli9y under 9onditions s;e9ified
thereinF
3DfE ! ;rovision s;e9ifying the o;tions to whi9h the
;oli9yholder is entitled to in the event of default in a ;re<iu<
;ay<ent after three DGE full annual ;re<iu<s shall have :een
;aid. *u9h o;tion shall 9onsist of=
3D%E ! 9ash surrender value ;aya:le u;on surrender of the
;oli9y whi9h shall not :e less than the reserve on the ;oli9y,
the :asis of whi9h shall :e indi9ated, for the then 9urrent
;oli9y year and any dividend additions thereto, redu9ed :y a
surrender 9harge whi9h shall not :e <ore than one-fifth D%K7E
of the entire reserve or two and one-half ;er9ent D0PLE of
the a<ount insured and any dividend additions theretoF and
3D0E $ne or <ore ;aid-u; :enefits on a ;lan or ;lans
s;e9ified in the ;oli9y of su9h value as <ay :e ;ur9hased :y
the 9ash surrender value.
3DgE ! ;rovision that at any ti<e after a 9ash surrender value
is availa:le under the ;oli9y and while the ;oli9y is in for9e,
the 9o<;any will advan9e, on ;ro;er assign<ent or ;ledge
of the ;oli9y and on sole se9urity thereof, a su< eCual to, or
at the o;tion of the owner of the ;oli9y, less than the 9ash
surrender value on the ;oli9y, at a s;e9ified rate of interest,
not <ore than the <aBi<u< allowed :y law, to :e
deter<ined :y the 9o<;any fro< ti<e to ti<e, :ut not <ore
often than on9e a year, su:Ie9t to the a;;roval of the
o<<issionerF and that the 9o<;any will dedu9t fro< su9h
loan value any eBisting inde:tedness on the ;oli9y and any
un;aid :alan9e of the ;re<iu< for the 9urrent ;oli9y year,
and <ay 9olle9t interest in advan9e on the loan to the end of
the 9urrent ;oli9y year, whi9h ;rovision <ay further ;rovide
that su9h loan <ay :e deferred for not eB9eeding siB D'E
<onths after the a;;li9ation therefor is <adeF
3DhE ! ta:le showing in figures 9ash surrender values and
;aid-u; o;tions availa:le under the ;oli9y ea9h year u;on
default in ;re<iu< ;ay<ents, during at least twenty D0&E
years of the ;oli9y :eginning with the year in whi9h the
values and o;tions first :e9o<e availa:le, together with a
;rovision that in the event of the failure of the ;oli9yholder to
ele9t one of the said o;tions within the ti<e s;e9ified in the
;oli9y, one of said o;tions shall auto<ati9ally ta?e effe9t and
no ;oli9yholder shall ever forfeit his right to sa<e :y reason
of his failure to so ele9tF
3DiE In 9ase the ;ro9eeds of a ;oli9y are ;aya:le in
install<ents or as an annuity, a ta:le showing the <ini<u<
a<ounts of the install<ents or annuity ;ay<entsF
3DIE ! ;rovision that the ;oli9yholder shall :e entitled to have
the ;oli9y reinstated at any ti<e within three DGE years fro<
the date of default of ;re<iu< ;ay<ent unless the 9ash
surrender value has :een duly ;aid, or the eBtension ;eriod
has eB;ired, u;on ;rodu9tion of eviden9e of insura:ility
satisfa9tory to the 9o<;any and u;on ;ay<ent of all overdue
;re<iu<s and any inde:tedness to the 9o<;any u;on said
;oli9y, with interest rate not eB9eeding that whi9h would have
25 | P a g e
R.A. 10607 The nsurance Code
:een a;;li9a:le to said ;re<iu<s and inde:tedness in the
;oli9y years ;rior to reinstate<ent.
3!ny of the foregoing ;rovisions or ;ortions thereof not
a;;li9a:le to single ;re<iu< or ter< ;oli9ies shall to that
eBtent not :e in9or;orated thereinF and any su9h ;oli9y <ay
:e issued and delivered in the Phili;;ines whi9h in the
o;inion of the o<<issioner 9ontains ;rovisions on any one
or <ore of the foregoing reCuire<ents <ore favora:le to the
;oli9yholder than herein:efore reCuired.
3"his se9tion shall not a;;ly to ;oli9ies of grou; life or
industrial life insuran9e.
3*E. 0G5. #o ;oli9y of grou; life insuran9e shall :e issued
and delivered in the Phili;;ines unless it 9ontains in
su:stan9e the following ;rovisions, or ;rovisions whi9h in the
o;inion of the o<<issioner are <ore favora:le to the
;ersons insured, or at least as favora:le to the ;ersons
insured and <ore favora:le to the ;oli9yholders=
3DaE ! ;rovision that the ;oli9yholder is entitled to a gra9e
;eriod of either thirty DG&E days or of one D%E <onth for the
;ay<ent of any ;re<iu< due after the first, during whi9h
gra9e ;eriod the death :enefit 9overage shall 9ontinue in
for9e, unless the ;oli9yholder shall have given the insurer
written noti9e of dis9ontinuan9e in advan9e of the date of
dis9ontinuan9e and in a99ordan9e with the ter<s of the
;oli9y. "he ;oli9y <ay ;rovide that the ;oli9yholder shall :e
lia:le for the ;ay<ent of a ;ro rata ;re<iu< for the ti<e the
;oli9y is in for9e during su9h gra9e ;eriodF
3D:E ! ;rovision that the validity of the ;oli9y shall not :e
9ontested, eB9e;t for non;ay<ent of ;re<iu<s after it has
:een in for9e for two D0E years fro< its date of issueF and that
no state<ent <ade :y any insured under the ;oli9y relating
to his insura:ility shall :e used in 9ontesting the validity of
the insuran9e with res;e9t to whi9h su9h state<ent was
<ade after su9h insuran9e has :een in for9e ;rior to the
9ontest for a ;eriod of two D0E years during su9h ;ersonAs
lifeti<e nor unless 9ontained in a written instru<ent signed
:y hi<F
3D9E ! ;rovision that a 9o;y of the a;;li9ation, if any, of the
;oli9yholder shall :e atta9hed to the ;oli9y when issued, that
all state<ents <ade :y the ;oli9yholder or :y ;ersons
insured shall :e dee<ed re;resentations and not warranties,
and that no state<ent <ade :y any insured shall :e used in
any 9ontest unless a 9o;y of the instru<ent 9ontaining the
state<ent is or has :een furnished to su9h ;erson or to his
:enefi9iaryF
3DdE ! ;rovision setting forth the 9onditions, if any, under
whi9h the insurer reserves the right to reCuire a ;erson
eligi:le for insuran9e to furnish eviden9e of individual
insura:ility satisfa9tory to the insurer as a 9ondition to ;art or
all of his 9overageF
3DeE ! ;rovision s;e9ifying an eCuita:le adIust<ent of
;re<iu<s or of :enefits or of :oth to :e <ade in the event
that the age of a ;erson insured has :een <isstated, su9h
;rovision to 9ontain a 9lear state<ent of the <ethod of
adIust<ent to :e usedF
3DfE ! ;rovision that any su< :e9o<ing due :y reason of
death of the ;erson insured shall :e ;aya:le to the
:enefi9iary designated :y the insured, su:Ie9t to the
;rovisions of the ;oli9y in the event that there is no
designated :enefi9iary, as to all or any ;art of su9h su<,
living at the death of the insured, and su:Ie9t to any right
reserved :y the insurer in the ;oli9y and set forth in the
9ertifi9ate to ;ay at its o;tion a ;art of su9h su< not
eB9eeding /ive hundred ;esos DP7&&.&&E to any ;erson
a;;earing to the insurer to :e eCuita:ly entitled thereto :y
reason of having in9urred funeral or other eB;enses in9ident
to the last illness or, death of the ;erson insuredF
3DgE ! ;rovision that the insurer will issue to the ;oli9yholder
for delivery to ea9h ;erson insured a state<ent as to the
insuran9e ;rote9tion to whi9h he is entitled, to who< the
insuran9e :enefits are ;aya:le, and the rights set forth in
;aragra;hs DhE, DiE and DIE followingF
3DhE ! ;rovision that if the insuran9e, or any ;ortion of it, on a
;erson 9overed under the ;oli9y 9eases :e9ause of
ter<ination of e<;loy<ent or of <e<:ershi; in the 9lass or
9lasses eligi:le for 9overage under the ;oli9y, su9h ;erson
shall :e entitled to have issued to hi< :y the insurer, without
eviden9e of insura:ility, an individual ;oli9y of life insuran9e
without disa:ility or other su;;le<entary :enefits, ;rovided
a;;li9ation for the individual ;oli9y and ;ay<ent of the first
;re<iu< to the insurer shall :e <ade within thirty DG&E days
after su9h ter<ination, and ;rovided further that=
3D%E "he individual ;oli9y shall :e on any one of the for<s,
eB9e;t ter< insuran9e, then 9usto<arily issued :y the
insurer at the age and for an a<ount not in eB9ess of the
9overage under the grou; ;oli9yF and
3D0E "he ;re<iu< on the individual ;oli9y shall :e at the
insurerAs then 9usto<ary rate a;;li9a:le to the for< and
a<ount of the individual ;oli9y, to the 9lass of ris? to whi9h
su9h ;erson then :elongs, and to his age attained on the
effe9tive date of the individual ;oli9y.
3DiE ! ;rovision that if the grou; ;oli9y ter<inates or is
a<ended so as to ter<inate the insuran9e of any 9lass of
insured ;ersons, every ;erson insured thereunder at the
date of su9h ter<ination whose insuran9e ter<inates and
who has :een so insured for five D7E years ;rior to su9h
ter<ination date shall :e entitled to have issued to hi< :y
the insurer an individual ;oli9y of life insuran9e su:Ie9t to the
sa<e li<itations as set forth in ;aragra;h DhE, eB9e;t that the
grou; ;oli9y <ay ;rovide that the a<ount of su9h individual
;oli9y shall not eB9eed the a<ount of the ;ersonAs life
insuran9e ;rote9tion 9easingF
3DIE ! ;rovision that if a ;erson insured under the grou; ;oli9y
dies during the thirty DG&E-day ;eriod within whi9h he would
have :een entitled to an individual ;oli9y issued to hi< in
a99ordan9e with ;aragra;hs DhE and DiE a:ove and :efore
su9h individual ;oli9y shall have :e9o<e effe9tive, the
a<ount of life insuran9e whi9h he would have :een entitled
to have issued to hi< as an individual ;oli9y shall :e ;aya:le
as a 9lai< under the grou; ;oli9y whether or not a;;li9ation
26 | P a g e
R.A. 10607 The nsurance Code
for the individual ;oli9y or the ;ay<ent of the first ;re<iu<
has :een <adeF
3D?E In the 9ase of a ;oli9y issued to a 9reditor to insure
de:tors of su9h 9reditor, a ;rovision that the insurer will
furnish to the ;oli9yholder for delivery to ea9h de:tor insured
under the ;oli9y a for< whi9h will 9ontain a state<ent that
the life of the de:tor is insured under the ;oli9y and that any
death :enefit ;aid thereunder :y reason of his death shall :e
a;;lied to redu9e or eBtinguish inde:tedness.
3"he ;rovisions of ;aragra;hs DfE to DIE shall not a;;ly to
;oli9ies issued to a 9reditor to insure his de:tors. If a grou;
life ;oli9y is on a ;lan of insuran9e other than ter<, it shall
9ontain a non-forfeiture ;rovision or ;rovisions whi9h in the
o;inion of the o<<issioner is or are eCuita:le to the
insured or the ;oli9yholder= Provided, "hat nothing herein
9ontained shall :e so 9onstrued as to reCuire grou; life
;oli9ies to 9ontain the sa<e non-forfeiture ;rovisions as are
reCuired of individual life ;oli9ies.
3*E. 0G7. "he ter< industrial life insuran9e as used in this
ode shall <ean that for< of life insuran9e under whi9h the
;re<iu<s are ;aya:le either <onthly or oftener, if the fa9e
a<ount of insuran9e ;rovided in any ;oli9y is not <ore than
five hundred ti<es that of the 9urrent statutory <ini<u<
daily wage in the ity of Manila, and if the words industrial
;oli9y are ;rinted u;on the ;oli9y as ;art of the des9ri;tive
<atter.
3!n industrial life ;oli9y shall not la;se for non;ay<ent of
;re<iu< if su9h non;ay<ent was due to the failure of the
9o<;any to send its re;resentative or agent to the insured at
the residen9e of the insured or at so<e other ;la9e indi9ated
:y hi< for the ;ur;ose of 9olle9ting su9h ;re<iu<= Provided,
"hat the ;rovisions of this ;aragra;h shall not a;;ly when
the ;re<iu< on the ;oli9y re<ains un;aid for a ;eriod of
three DGE <onths or twelve D%0E wee?s after the gra9e ;eriod
has eB;ired.
3*E. 0G'. In the 9ase of industrial life insuran9e, the ;oli9y
shall 9ontain in su:stan9e the following ;rovisions=
3DaE ! ;rovision that the insured is entitled to a gra9e ;eriod
of four D5E wee?s within whi9h the ;ay<ent of any ;re<iu<
after the first <ay :e <ade, eB9e;t that where ;re<iu<s are
;aya:le <onthly, the ;eriod of gra9e shall :e either one D%E
<onth or thirty DG&E daysF and that during the ;eriod of gra9e,
the ;oli9y shall 9ontinue in full for9e, :ut if during su9h gra9e
;eriod the ;oli9y :e9o<es a 9lai<, then any overdue and
un;aid ;re<iu<s <ay :e dedu9ted fro< any a<ount
;aya:le under the ;oli9y in settle<entF
3D:E ! ;rovision that the ;oli9y shall :e in9ontesta:le after it
has :een in for9e during the lifeti<e of the insured for a
s;e9ified ;eriod, not <ore than two D0E years fro< its date of
issue, eB9e;t for non;ay<ent of ;re<iu<s and eB9e;t for
violation of the 9onditions of the ;oli9y relating to naval or
<ilitary servi9e, or servi9es auBiliary thereto, and eB9e;t as
to ;rovisions relating to :enefits in the event of disa:ility as
defined in the ;oli9y, and those granting additional insuran9e
s;e9ifi9ally against death :y a99ident or :y a99idental
<eans, or to additional insuran9e against loss of, or loss of
use of, s;e9ifi9 <e<:ers of the :odyF
3D9E ! ;rovision that the ;oli9y shall 9onstitute the entire
9ontra9t :etween the ;arties, or if a 9o;y of the a;;li9ation is
endorsed u;on and atta9hed to the ;oli9y when issued, a
;rovision that the ;oli9y and the a;;li9ation therefor shall
9onstitute the entire 9ontra9t :etween the ;arties, and in the
latter 9ase, a ;rovision that all state<ents <ade :y the
insured shall, in the a:sen9e of fraud, :e dee<ed
re;resentations and not warrantiesF
3DdE ! ;rovision that if the age of the ;erson insured, or the
age of any ;erson, 9onsidered in deter<ining the ;re<iu<,
or the :enefits a99ruing under the ;oli9y, has :een
<isstated, any a<ount ;aya:le or :enefit a99ruing under the
;oli9y shall :e su9h as the ;re<iu< ;aid would have
;ur9hased at the 9orre9t ageF
3DeE ! ;rovision that if the ;oli9y is a ;arti9i;ating ;oli9y, the
9o<;any shall ;eriodi9ally as9ertain and a;;ortion any
divisi:le sur;lus a99ruing on the ;oli9y under the 9onditions
s;e9ified thereinF
3DfE ! ;rovision that in the event of default in ;re<iu<
;ay<ents after three DGE full yearsA ;re<iu<s have :een
;aid, the ;oli9y shall :e 9onverted into a sti;ulated for< of
insuran9e, and that in the event of default in ;re<iu<
;ay<ents after five D7E full yearsA ;re<iu<s have :een ;aid,
a s;e9ified 9ash surrender value shall :e availa:le, in lieu of
the sti;ulated for< of insuran9e, at the o;tion of the
;oli9yholder. "he net value of su9h sti;ulated for< of
insuran9e and the a<ount of su9h 9ash value shall not :e
less than the reserve on the ;oli9y and dividend additions
thereto, if any, at the end of the last 9o<;leted ;oli9y year for
whi9h ;re<iu<s shall have :een ;aid Dthe ;oli9y to s;e9ify
the <ortality ta:le, rate of interest and <ethod of valuation
ado;ted to 9o<;ute su9h reserveE, eB9lusive of any reserve
on disa:ility :enefits and a99idental death :enefits, less an
a<ount not to eB9eed two and one-half ;er9ent D0PLE of the
<aBi<u< a<ount insured :y the ;oli9y and dividend
additions thereto, if any, when the issue age is under ten D%&E
years, and less an a<ount not to eB9eed two and one-half
;er9ent D0PLE of the 9urrent a<ount insured :y the ;oli9y
and dividend additions thereto, if any, if the issue age is ten
D%&E years or older, and less any eBisting inde:tedness to the
9o<;any on or se9ured :y the ;oli9yF
3DgE ! ;rovision that the ;oli9y <ay :e surrendered to the
9o<;any at its ho<e offi9e within a ;eriod of not less than
siBty D'&E days after the due date of a ;re<iu< in default for
the s;e9ified 9ash value= Provided, "hat the insurer <ay
defer ;ay<ent for not <ore than siB D'E <onths after the
a;;li9ation therefor is <adeF
3DhE ! ta:le that shows in figures the nonforfeiture :enefits
availa:le under the ;oli9y every year u;on default in
;ay<ent of ;re<iu<s during at least the first twenty D0&E
years of the ;oli9y, su9h ta:le to :egin with the year in whi9h
su9h values :e9o<e availa:le, and a ;rovision that the
9o<;any will furnish u;on reCuest an eBtension of su9h ta:le
:eyond the year shown in the ;oli9yF
27 | P a g e
R.A. 10607 The nsurance Code
3DiE ! ;rovision that s;e9ifies whi9h one of the sti;ulated
for<s of insuran9e ;rovided for under the ;rovision of
;aragra;h DfE of this se9tion shall ta?e effe9t in the event of
the insuredAs failure, within siBty D'&E days fro< the due date
of the ;re<iu< in default, to notify the insurer in writing as to
whi9h one of su9h for<s he has sele9tedF
3DIE ! ;rovision that the ;oli9y <ay :e reinstated at any ti<e
within two D0E years fro< the due date of the ;re<iu< in
default unless the 9ash surrender value has :een ;aid or the
;eriod of eBtended ter< insuran9e eB;ired, u;on ;rodu9tion
of eviden9e of insura:ility satisfa9tory to the 9o<;any and
;ay<ent of arrears of ;re<iu<s with interest at a rate not
eB9eeding siB ;er9ent D'LE ;er annu< ;aya:le annuallyF
3D?E ! ;rovision that when a ;oli9y shall :e9o<e a 9lai< :y
death of the insured, settle<ent shall :e <ade u;on re9ei;t
of due ;roof of death, or not later than two D0E <onths after
re9ei;t of su9h ;roofF
3DlE ! title on the fa9e and on the :a9? of the ;oli9y 9orre9tly
des9ri:ing its for<F
3D<E ! s;a9e on the front or the :a9? of the ;oli9y for the
na<e of the :enefi9iary designated :y the insured with a
reservation of the insuredAs right to designate or 9hange the
:enefi9iary after the issuan9e of the ;oli9y. "he ;oli9y <ay
also ;rovide that no designation or 9hange of :enefi9iary
shall :e :inding on the insurer until endorsed on the ;oli9y
:y the insurer, and that the insurer <ay refuse to endorse
the na<e of any ;ro;osed :enefi9iary who does not a;;ear
to the insurer to have an insura:le interest in the life of the
insured. *u9h ;oli9y <ay also 9ontain a ;rovision that if the
:enefi9iary designated in the ;oli9y does not surrender the
;oli9y with due ;roof of death within the ;eriod stated in the
;oli9y, whi9h shall not :e less than thirty DG&E days after the
death of the insured, or if the :enefi9iary is the estate of the
insured, or is a <inor, or dies :efore the insured, or is not
legally 9o<;etent to give valid release, then the insurer <ay
<a?e any ;ay<ent thereunder to the eBe9utor or
ad<inistrator of the insured, or to any of the insuredAs
relatives :y :lood or legal ado;tion or 9onne9tions :y
<arriage or to any ;erson a;;earing to the insurer to :e
eCuita:ly entitled thereto :y reason of having in9urred
eB;ense for the <aintenan9e, <edi9al attention or :urial of
the insuredF and
3DnE ! ;rovision that when an industrial life insuran9e ;oli9y is
issued ;roviding for a99idental or health :enefits, or :oth, in
addition to life insuran9e, the foregoing ;rovisions shall a;;ly
only to the life insuran9e ;ortion of the ;oli9y.
3!ny of the foregoing ;rovisions or ;ortions thereof not
a;;li9a:le to non;arti9i;ating or ter< ;oli9ies shall to that
eBtent not :e in9or;orated therein. "he foregoing ;rovisions
shall not a;;ly to ;oli9ies issued or granted ;ursuant to the
nonforfeiture ;rovisions ;res9ri:ed in ;rovisions of
;aragra;hs DfE and DiE of this se9tion, nor shall ;rovisions of
;aragra;hs DfE, DgE, DhE, and DiE hereof :e reCuired in ter<
insuran9e of twenty D0&E years or less :ut su9h ter< ;oli9ies
shall s;e9ify the <ortality ta:le, rate of interest, and <ethod
of 9o<;uting reserves.
3*E. 0G(. #o ;oli9y of industrial life insuran9e shall :e
issued or delivered in the Phili;;ines if it 9ontains any of the
following ;rovisions=
3DaE ! ;rovision that gives the insurer the right to de9lare the
;oli9y void :e9ause the insured has had any disease or
ail<ent, whether s;e9ified or not, or :e9ause the insured has
re9eived institutional, hos;ital, <edi9al or surgi9al treat<ent
or attention, eB9e;t a ;rovision whi9h gives the insurer the
right to de9lare the ;oli9y void if the insured has, within two
D0E years ;rior to the issuan9e of the ;oli9y, re9eived
institutional, hos;ital, <edi9al or surgi9al treat<ent or
attention and if the insured or the 9lai<ant under the ;oli9y
fails to show that the 9ondition o99asioning su9h treat<ent or
attention was not of a serious nature or was not <aterial to
the ris?F
3D:E ! ;rovision that gives the insurer the right to de9lare the
;oli9y void :e9ause the insured has :een reIe9ted for
insuran9e, unless su9h right :e 9onditioned u;on a showing
:y the insurer that ?nowledge of su9h reIe9tion would have
led to a refusal :y the insurer to <a?e su9h 9ontra9tF
3D9E ! ;rovision that allows the 9o<;any to ;ay the ;ro9eeds
of the ;oli9y at the death of the insured to any ;erson other
than the na<ed :enefi9iary, eB9e;t in a99ordan9e with a
standard ;rovision as s;e9ified under the ;rovisions of
;aragra;h D<E of the ;re9eding se9tionF
3DdE ! ;rovision that li<its the ti<e within whi9h any a9tion at
law or in eCuity <ay :e 9o<<en9ed to less than siB D'E
years after the 9ause of a9tion shall a99rueF and
3DeE ! ;rovision that s;e9ifies any <ode of settle<ent at
<aturity of less value than the a<ount insured :y the ;oli9y
;lus dividend additions, if any, less any inde:tedness to the
9o<;any on the ;oli9y and less any ;re<iu< that <ay :y
the ter<s of the ;oli9y :e dedu9ted, ;ay<ents to :e <ade in
a99ordan9e with the ter<s of the ;oli9y.
3#othing 9ontained in this se9tion nor in the ;rovision of
;aragra;h D:E of the ;re9eding se9tion, relating to
in9ontesta:ility, shall :e 9onstrued as ;rohi:iting the life
insuran9e 9o<;any fro< ;la9ing in its industrial life ;oli9ies
;rovisions li<iting its lia:ility with res;e9t to=
3D%E -eath resulting fro< aviation other than as a fare-;aying
;assenger on a regularly s9heduled route :etween definitely
esta:lished air;ortsF and
3D0E Military or naval servi9e= Provided, "hat if the lia:ility of
the 9o<;any is li<ited as herein ;rovided, su9h lia:ility shall
in no event :e fiBed at an a<ount less than the reserve on
the ;oli9y DeB9luding the reserve for any additional :enefits
in the event of death :y a99ident or a99idental <eans or for
:enefits in the event of any ty;e of disa:ilityE, less any
inde:tedness on or se9ured :y su9h ;oli9yF nor shall any
;rovision of this se9tion a;;ly to any ;rovision in an
industrial life insuran9e ;oli9y for additional :enefits in the
event of death :y a99ident or a99idental <eans.
28 | P a g e
R.A. 10607 The nsurance Code
3"I"LE %&
3>!RI!BLE $#"R!"*
3*E. 0G6. DaE #o insuran9e 9o<;any authoriHed to transa9t
:usiness in the Phili;;ines shall issue, deliver, sell or use
any varia:le 9ontra9t in the Phili;;ines, unless and until su9h
9o<;any shall have satisfied the o<<issioner that its
finan9ial and general 9ondition and its <ethods of
o;erations, in9luding the issue and sale of varia:le 9ontra9ts,
are not and will not :e haHardous to the ;u:li9 or to its ;oli9y
and 9ontra9t owners. #o foreign insuran9e 9o<;any shall :e
authoriHed to issue, deliver or sell any varia:le 9ontra9t in
the Phili;;ines, unless it is li?ewise authoriHed to do so :y
the laws of its do<i9ile.
3D:E "he ter< varia:le 9ontra9t shall <ean any ;oli9y or
9ontra9t on either a grou; or on an individual :asis issued :y
an insuran9e 9o<;any ;roviding for :enefits or other
9ontra9tual ;ay<ents or values thereunder to vary so as to
refle9t invest<ent results of any segregated ;ortfolio of
invest<ents or of a designated se;arate a99ount in whi9h
a<ounts re9eived in 9onne9tion with su9h 9ontra9ts shall
have :een ;la9ed and a99ounted for se;arately and a;art
fro< other invest<ents and a99ounts. "his 9ontra9t <ay also
;rovide :enefits or values in9idental thereto ;aya:le in fiBed
or varia:le a<ounts, or :oth. It shall not :e dee<ed to :e a
se9urity or se9urities as defined in "he *e9urities !9t, as
a<ended, or in the Invest<ent o<;any !9t, as a<ended,
nor su:Ie9t to regulations under said !9ts.
3D9E In deter<ining the Cualifi9ations of a 9o<;any
reCuesting authority to issue, deliver, sell or use varia:le
9ontra9ts, the o<<issioner shall always 9onsider the
following=
3D%E "he history, finan9ial and general 9ondition of the
9o<;any= Provided, "hat su9h 9o<;any, if a foreign
9o<;any, <ust have de;osited with the o<<issioner for
the :enefit and se9urity of its varia:le 9ontra9t owners in the
Phili;;ines, se9urities satisfa9tory to the o<<issioner
9onsisting of :onds of the +overn<ent of the Phili;;ines or
its instru<entalities with an a9tual <ar?et value of "wo
<illion ;esos DP0,&&&,&&&.&&EF
3D0E "he 9hara9ter, res;onsi:ility and fitness of the offi9ers
and dire9tors of the 9o<;anyF and
3DGE "he law and regulation under whi9h the 9o<;any is
authoriHed in the state of do<i9ile to issue su9h 9ontra9ts.
3DdE If after noti9e and hearing, the o<<issioner shall find
that the 9o<;any is Cualified to issue, deliver, sell or use
varia:le 9ontra9ts in a99ordan9e with this ode and the
regulations and rules issued thereunder, the 9orres;onding
order of authoriHation shall :e issued. !ny de9ision or order
denying authority to issue, deliver, sell or use varia:le
9ontra9ts shall 9learly and distin9tly state the reasons and
grounds on whi9h it is :ased.
3*E. 0G8. !ny insuran9e 9o<;any issuing varia:le
9ontra9ts ;ursuant to this ode <ay in its dis9retion issue
9ontra9ts ;roviding a 9o<:ination of fiBed a<ount and
varia:le a<ount of :enefits and for o;tion lu<;-su<
;ay<ent of :enefits.
3*E. 05&. Every varia:le 9ontra9t for< delivered or issued
for delivery in the Phili;;ines, and every 9ertified for<
eviden9ing varia:le :enefits issued ;ursuant to any su9h
9ontra9t on a grou; :asis, and the a;;li9ation, rider and
endorse<ent for<s a;;li9a:le thereto and used in
9onne9tion therewith, shall :e su:Ie9t to the ;rior a;;roval of
the o<<issioner.
3*E. 05%. Illustration of :enefits ;aya:le under any varia:le
9ontra9t shall not in9lude or involve ;roIe9tions of ;ast
invest<ent eB;erien9e into the future and shall 9onfor< with
the rules and regulations ;ro<ulgated :y the o<<issioner.
3*E. 050. >aria:le 9ontra9ts <ay :e issued on the
industrial life :asis, ;rovided that the ;ertinent ;rovisions of
this ode and of the rules and regulations of the
o<<issioner governing varia:le 9ontra9ts are 9o<;lied
with in 9onne9tion with su9h 9ontra9ts.
3*E. 05G. Every life insuran9e 9o<;any authoriHed under
the ;rovisions of this ode to issue, deliver, sell or use
varia:le 9ontra9ts shall, in 9onne9tion with the sa<e,
esta:lish one or <ore se;arate a99ounts to :e ?nown as
se;arate varia:le a99ounts. !ll a<ounts re9eived :y the
9o<;any in 9onne9tion with any su9h 9ontra9ts whi9h are
reCuired :y the ter<s thereof, to :e allo9ated or a;;lied to
one or <ore designated se;arate varia:le a99ounts shall :e
;la9ed in su9h designated a99ount or a99ounts. "he assets
and lia:ilities of ea9h su9h se;arate varia:le a99ount shall at
all ti<es :e 9learly identifia:le and distinguisha:le fro< the
assets and lia:ilities in all other a99ounts of the 9o<;any.
#otwithstanding any ;rovision of law to the 9ontrary, the
assets held in any su9h se;arate varia:le a99ount shall not
:e 9hargea:le with lia:ilities arising out of any other
:usiness the 9o<;any <ay 9ondu9t :ut shall :e held and
a;;lied eB9lusively for the :enefit of the owners or
:enefi9iaries of the varia:le 9ontra9ts a;;li9a:le thereto. In
the event of the insolven9y of the 9o<;any, the assets of
ea9h su9h se;arate varia:le a99ount shall :e a;;lied to the
9ontra9tual 9lai<s of the owners or :enefi9iaries of the
varia:le 9ontra9ts a;;li9a:le thereto. EB9e;t as otherwise
s;e9ifi9ally ;rovided :y the 9ontra9t, no sale, eB9hange or
other transfer of assets <ay :e <ade :y a 9o<;any,
:etween any of its se;arate a99ounts or :etween any other
invest<ent a99ount and one or <ore of its se;arate
a99ounts, unless in the 9ase of a transfer into a se;arate
a99ount, su9h transfer is <ade solely to esta:lish the
a99ount or to su;;ort the o;eration of the 9ontra9ts with
res;e9t to the se;arate a99ount to whi9h the transfer is
<ade, or in 9ase of a transfer fro< a se;arate a99ount, su9h
transfer would not 9ause the re<aining assets of the a99ount
to :e9o<e less than the reserves and other 9ontra9t
lia:ilities with res;e9t to su9h se;arate a99ount. *u9h
transfer, whether into or fro< a se;arate a99ount, shall :e
<ade :y a transfer of 9ash, or :y a transfer of se9urities
having a valuation whi9h 9ould :e readily deter<ined in the
<ar?et ;la9e= Provided, "hat su9h transfer of se9urities is
a;;roved :y the o<<issioner. "he o<<issioner <ay
authoriHe other transfers a<ong su9h a99ounts, if, in his
29 | P a g e
R.A. 10607 The nsurance Code
o;inion, su9h transfers would not :e ineCuita:le. !ll a<ounts
and assets allo9ated to any su9h se;arate varia:le a99ount
shall :e owned :y the 9o<;any and with res;e9t to the
sa<e the 9o<;any shall not :e nor hold itself out to :e a
trustee.
3*E. 055. !ny insuran9e 9o<;any whi9h has esta:lished
one or <ore se;arate varia:le a99ounts ;ursuant to the
;re9eding se9tion <ay invest and reinvest all or any ;art of
the assets allo9ated to any su9h a99ount in the se9urities
and invest<ents authoriHed :y *e9tions 0&5, 0&', 0&( and
0&6 for any of the funds of an insuran9e 9o<;any in su9h
a<ount or a<ounts as <ay :e a;;roved :y the
o<<issioner. In addition thereto, su9h 9o<;any <ay also
invest in 9o<<on sto9?s or other eCuities whi9h are listed on
or ad<itted to trading in a se9urities eB9hange lo9ated in the
Phili;;ines, or whi9h are ;u:li9ly held and traded in the over-
the-9ounter <ar?et as defined :y the o<<issioner and as
to whi9h <ar?et Cuotations have :een availa:le= Provided,
however, "hat no su9h 9o<;any shall invest in eB9ess of ten
;er9ent D%&LE of the assets of any su9h se;arate varia:le
a99ounts in any one 9or;oration issuing su9h 9o<<on sto9?.
"he assets and invest<ents of su9h se;arate varia:le
a99ounts shall not :e ta?en into a99ount in a;;lying the
Cuantitative invest<ent li<itations a;;li9a:le to other
invest<ents of the 9o<;any. In the ;ur9hase of 9o<<on
9a;ital sto9? or other eCuities, the insurer shall designate to
the :ro?er, or to the seller if the ;ur9hase is not <ade
through a :ro?er, the s;e9ifi9 varia:le a99ount for whi9h the
invest<ent is <ade.
3*E. 057. !ssets allo9ated to any se;arate varia:le
a99ount shall :e valued at their <ar?et value on the date of
any valuation, or if there is no readily availa:le <ar?et value
then in a99ordan9e with the ter<s of the varia:le 9ontra9t
a;;li9a:le to su9h assets, or if there are no su9h 9ontra9t
ter<s then in su9h <anner as <ay :e ;res9ri:ed :y the
rules and regulations of the o<<issioner.
3*E. 05'. "he reserve lia:ility for varia:le 9ontra9ts shall :e
esta:lished in a99ordan9e with a9tuarial ;ro9edures that
re9ogniHe the varia:le nature of the :enefits ;rovided, and
shall :e a;;roved :y the o<<issioner.
3"I"LE %%
3L!IM* *E""LEME#"
3*E. 05(. DaE #o insuran9e 9o<;any doing :usiness in the
Phili;;ines shall refuse, without Iust 9ause, to ;ay or settle
9lai<s arising under 9overages ;rovided :y its ;oli9ies, nor
shall any su9h 9o<;any engage in unfair 9lai< settle<ent
;ra9ti9es. !ny of the following a9ts :y an insuran9e
9o<;any, if 9o<<itted without Iust 9ause and ;erfor<ed with
su9h freCuen9y as to indi9ate a general :usiness ;ra9ti9e,
shall 9onstitute unfair 9lai< settle<ent ;ra9ti9es=
3D%E 2nowingly <isre;resenting to 9lai<ants ;ertinent fa9ts
or ;oli9y ;rovisions relating to 9overage at issueF
3D0E /ailing to a9?nowledge with reasona:le ;ro<;tness
;ertinent 9o<<uni9ations with res;e9t to 9lai<s arising
under its ;oli9iesF
3DGE /ailing to ado;t and i<;le<ent reasona:le standards for
the ;ro<;t investigation of 9lai<s arising under its ;oli9iesF
3D5E #ot atte<;ting in good faith to effe9tuate ;ro<;t, fair
and eCuita:le settle<ent of 9lai<s su:<itted in whi9h lia:ility
has :e9o<e reasona:ly 9learF or
3D7E o<;elling ;oli9yholders to institute suits to re9over
a<ounts due under its ;oli9ies :y offering without Iustifia:le
reason su:stantially less than the a<ounts ulti<ately
re9overed in suits :rought :y the<.
3D:E Eviden9e as to nu<:ers and ty;es of valid and Iustifia:le
9o<;laints to the o<<issioner against an insuran9e
9o<;any, and the o<<issionerAs 9o<;laint eB;erien9e
with other insuran9e 9o<;anies writing si<ilar lines of
insuran9e shall :e ad<issi:le in eviden9e in an
ad<inistrative or Iudi9ial ;ro9eeding :rought under this
se9tion.
3D9E If it is found, after noti9e and an o;;ortunity to :e heard,
that an insuran9e 9o<;any has violated this se9tion, ea9h
instan9e of non9o<;lian9e with ;aragra;h DaE <ay :e
treated as a se;arate violation of this se9tion and shall :e
9onsidered suffi9ient 9ause for the sus;ension or revo9ation
of the 9o<;anyAs 9ertifi9ate of authority.
3*E. 056. "he ;ro9eeds of a life insuran9e ;oli9y shall :e
;aid i<<ediately u;on <aturity of the ;oli9y, unless su9h
;ro9eeds are <ade ;aya:le in install<ents or as an annuity,
in whi9h 9ase the install<ents, or annuities shall :e ;aid as
they :e9o<e due= Provided, however, "hat in the 9ase of a
;oli9y <aturing :y the death of the insured, the ;ro9eeds
thereof shall :e ;aid within siBty D'&E days after ;resentation
of the 9lai< and filing of the ;roof of death of the insured.
Refusal or failure to ;ay the 9lai< within the ti<e ;res9ri:ed
herein will entitle the :enefi9iary to 9olle9t interest on the
;ro9eeds of the ;oli9y for the duration of the delay at the rate
of twi9e the 9eiling ;res9ri:ed :y the Monetary Board, unless
su9h failure or refusal to ;ay is :ased on the ground that the
9lai< is fraudulent.
3"he ;ro9eeds of the ;oli9y <aturing :y the death of the
insured ;aya:le to the :enefi9iary shall in9lude the
dis9ounted value of all ;re<iu<s ;aid in advan9e of their
due dates, :ut are not due and ;aya:le at <aturity.
3*E. 058. "he a<ount of any loss or da<age for whi9h an
insurer <ay :e lia:le, under any ;oli9y other than life
insuran9e ;oli9y, shall :e ;aid within thirty DG&E days after
;roof of loss is re9eived :y the insurer and as9ertain<ent of
the loss or da<age is <ade either :y agree<ent :etween
the insured and the insurer or :y ar:itrationF :ut if su9h
as9ertain<ent is not had or <ade within siBty D'&E days after
su9h re9ei;t :y the insurer of the ;roof of loss, then the loss
or da<age shall :e ;aid within ninety D8&E days after su9h
re9ei;t. Refusal or failure to ;ay the loss or da<age within
the ti<e ;res9ri:ed herein will entitle the assured to 9olle9t
interest on the ;ro9eeds of the ;oli9y for the duration of the
30 | P a g e
R.A. 10607 The nsurance Code
delay at the rate of twi9e the 9eiling ;res9ri:ed :y the
Monetary Board, unless su9h failure or refusal to ;ay is
:ased on the ground that the 9lai< is fraudulent.
3*E. 07&. In 9ase of any litigation for the enfor9e<ent of
any ;oli9y or 9ontra9t of insuran9e, it shall :e the duty of the
o<<issioner or the ourt, as the 9ase <ay :e, to <a?e a
finding as to whether the ;ay<ent of the 9lai< of the insured
has :een unreasona:ly denied or withheldF and in the
affir<ative 9ase, the insuran9e 9o<;any shall :e adIudged
to ;ay da<ages whi9h shall 9onsist of attorneyAs fees and
other eB;enses in9urred :y the insured ;erson :y reason of
su9h unreasona:le denial or withholding of ;ay<ent ;lus
interest of twi9e the 9eiling ;res9ri:ed :y the Monetary
Board of the a<ount of the 9lai< due the insured, fro< the
date following the ti<e ;res9ri:ed in *e9tion 056 or in
*e9tion 058, as the 9ase <ay :e, until the 9lai< is fully
satisfied= Provided, "hat failure to ;ay any su9h 9lai< within
the ti<e ;res9ri:ed in said se9tions shall :e 9onsidered
;ri<a fa9ie eviden9e of unreasona:le delay in ;ay<ent.
3*E. 07%. It is unlawful to=
3DaE Present or 9ause to :e ;resented any fraudulent 9lai<
for the ;ay<ent of a loss under a 9ontra9t of insuran9eF and
3D:E /raudulently ;re;are, <a?e or su:s9ri:e any writing with
intent to ;resent or use the sa<e, or to allow it to :e
;resented in su;;ort of any su9h 9lai<. !ny ;erson who
violates this se9tion shall :e ;unished :y a fine not
eB9eeding twi9e the a<ount 9lai<ed or i<;rison<ent of two
D0E years, or :oth, at the dis9retion of the 9ourt.
3"I"LE %0
3ER!MI#!"I$# $/ $MP!#IE*
3*E. 070. "he o<<issioner shall reCuire every insuran9e
9o<;any doing :usiness in the Phili;;ines to ?ee; its :oo?s,
re9ords, a99ounts and vou9hers in su9h <anner that he or
his authoriHed re;resentatives <ay readily verify its annual
state<ents and as9ertain whether the 9o<;any is solvent
and has 9o<;lied with the ;rovisions of this ode or the
9ir9ulars, instru9tions, rulings or de9isions of the
o<<issioner.
3*E. 07G. "he o<<issioner shall at least on9e a year and
whenever he 9onsiders the ;u:li9 interest so de<ands,
9ause an eBa<ination to :e <ade into the affairs, finan9ial
9ondition and <ethod of :usiness of every insuran9e
9o<;any authoriHed to transa9t :usiness in the Phili;;ines
and of any other ;erson, fir< or 9or;oration <anaging the
affairs andKor ;ro;erty of su9h insuran9e 9o<;any. *u9h
9o<;any, as well as su9h <anaging ;erson, fir< or
9or;oration, shall su:<it to the eBa<iner all su9h :oo?s,
;a;ers and se9urities as he <ay reCuire and su9h eBa<iner
shall also have the ;ower to eBa<ine the offi9ers of su9h
9o<;any under oath tou9hing its :usiness and finan9ial
9ondition, and the authority to transa9t :usiness in the
Phili;;ines of any su9h 9o<;any shall :e sus;ended :y the
o<<issioner if su9h eBa<ination is refused and su9h
9o<;any shall not thereafter :e allowed to transa9t further
:usiness in the Phili;;ines until it has fully 9o<;lied with the
;rovisions of this se9tion.
3+overn<ent-owned or -9ontrolled 9or;orations or entities
engaged in so9ial or ;rivate insuran9e shall si<ilarly :e
su:Ie9t to su9h eBa<ination :y the o<<issioner unless
their res;e9tive 9harters otherwise ;rovide.
3"I"LE %G
3*U*PE#*I$# $R RE>$!"I$# $/ !U",$RI".
3*E. 075. If the o<<issioner is of the o;inion u;on
eBa<ination of other eviden9e that any do<esti9 or foreign
insuran9e 9o<;any is in an unsound 9ondition, or that it has
failed to 9o<;ly with the ;rovisions of law or regulations
o:ligatory u;on it, or that its 9ondition or <ethod of :usiness
is su9h as to render its ;ro9eedings haHardous to the ;u:li9
or to its ;oli9yholders, or that its net worth reCuire<ent, in
the 9ase of a do<esti9 sto9? 9o<;any, or its availa:le 9ash
assets, in the 9ase of a do<esti9 <utual 9o<;any, or its
se9urity de;osits, in the 9ase of a foreign 9o<;any, is
i<;aired or defi9ient, or that the <argin of solven9y reCuired
of su9h 9o<;any is defi9ient, the o<<issioner is
authoriHed to sus;end or revo?e all 9ertifi9ates of authority
granted to su9h insuran9e 9o<;any, its offi9ers and agents,
and no new :usiness shall thereafter :e done :y su9h
9o<;any or for su9h 9o<;any :y its agent in the Phili;;ines
while su9h sus;ension, revo9ation or disa:ility 9ontinues or
until its authority to do :usiness is restored :y the
o<<issioner. Before restoring su9h authority, the
o<<issioner shall reCuire the 9o<;any 9on9erned to
su:<it to hi< a :usiness ;lan showing the 9o<;anyAs
esti<ated re9ei;ts and dis:urse<ents, as well as the :asis
therefor, for the neBt su99eeding three DGE years.
3"I"LE %5
3!PP$I#"ME#" $/ $#*ER>!"$R
3*E. 077. If at any ti<e :efore, or after, the sus;ension or
revo9ation of the 9ertifi9ate of authority of an insuran9e
9o<;any as ;rovided in the ;re9eding title, the
o<<issioner finds that su9h 9o<;any is in a state of
9ontinuing ina:ility or unwillingness to <aintain a 9ondition of
solven9y or liCuidity dee<ed adeCuate to ;rote9t the interest
of ;oli9yholders and 9reditors, he <ay a;;oint a 9onservator
to ta?e 9harge of the assets, lia:ilities, and the <anage<ent
of su9h 9o<;any, 9olle9t all <oneys and de:ts due to said
9o<;any and eBer9ise all ;owers ne9essary to ;reserve the
assets of said 9o<;any, reorganiHe the <anage<ent
thereof, and restore its via:ility. "he said 9onservator shall
have the ;ower to overrule or revo?e the a9tions of the
;revious <anage<ent and :oard of dire9tors of the said
9o<;any, any ;rovision of law, or of the arti9les of
in9or;oration or :ylaws of the 9o<;any, to the 9ontrary
notwithstanding, and su9h other ;owers as the
o<<issioner shall dee< ne9essary.
31 | P a g e
R.A. 10607 The nsurance Code
3"he 9onservator <ay :e another insuran9e 9o<;any doing
:usiness in the Phili;;ines, any offi9er or offi9ers of su9h
9o<;any, or any other 9o<;etent and Cualified ;erson, fir<
or 9or;oration. "he re<uneration of the 9onservator and
other eB;enses attendant to the 9onservation shall :e :orne
:y the insuran9e 9o<;any 9on9erned.
3"he 9onservator shall not :e su:Ie9t to any a9tion, 9lai< or
de<and :y, or lia:ility to, any ;erson in res;e9t of anything
done or o<itted to :e done in good faith in the eBer9ise, or in
9onne9tion with the eBer9ise, of the ;owers 9onferred on the
9onservator.
3"he 9onservator a;;ointed shall re;ort and :e res;onsi:le
to the o<<issioner until su9h ti<e as the o<<issioner is
satisfied that the insuran9e 9o<;any 9an 9ontinue to o;erate
on its own and the 9onservatorshi; shall li?ewise :e
ter<inated should the o<<issioner, on the :asis of the
re;ort of the 9onservator or of his own findings, deter<ine
that the 9ontinuan9e in :usiness of the insuran9e 9o<;any
would :e haHardous to ;oli9yholders and 9reditors, in whi9h
9ase the ;rovisions of "itle %7 shall a;;ly.
3#o insuran9e 9o<;any, life or non-life, or any ;rofessional
reinsurer, ordered to :e liCuidated :y the o<<issioner
under the ;rovisions hereunder <ay :e reha:ilitated or
authoriHed to transa9t anew, insuran9e or reinsuran9e
:usiness, as the 9ase <ay :e.
3"I"LE %7
3PR$EE-I#+* UP$# I#*$L>E#.
3*E. 07'. 1henever, u;on eBa<ination or other eviden9e,
it shall :e dis9losed that the 9ondition of any insuran9e
9o<;any doing :usiness in the Phili;;ines is one of
insolven9y, or that its 9ontinuan9e in :usiness would :e
haHardous to its ;oli9yholders and 9reditors, the
o<<issioner shall forthwith order the 9o<;any to 9ease
and desist fro< transa9ting :usiness in the Phili;;ines and
shall designate a re9eiver to i<<ediately ta?e 9harge of its
assets and lia:ilities, as eB;editiously as ;ossi:le 9olle9t and
gather all the assets and ad<inister the sa<e for the :enefit
of its ;oli9yholders and 9reditors, and eBer9ise all the ;owers
ne9essary for these ;ur;oses in9luding, :ut not li<ited to,
:ringing suits and fore9losing <ortgages in the na<e of the
insuran9e 9o<;any.
3"he o<<issioner shall thereu;on deter<ine within ninety
D8&E days whether the insuran9e 9o<;any <ay :e
reorganiHed or otherwise ;la9ed in su9h 9ondition so that it
<ay :e ;er<itted to resu<e :usiness with safety to its
;oli9yholders and 9reditors and shall ;res9ri:e the 9onditions
under whi9h su9h resu<;tion of :usiness shall ta?e ;la9e as
well as the ti<e for fulfill<ent of su9h 9onditions. In su9h
9ase, the eB;enses and fees in the 9olle9tion and
ad<inistration of the insuran9e 9o<;any shall :e deter<ined
:y the o<<issioner and shall :e ;aid out of the assets of
su9h 9o<;any.
3If the o<<issioner shall deter<ine and 9onfir< within the
said ;eriod that the insuran9e 9o<;any is insolvent, as
defined hereunder, or 9annot resu<e :usiness with safety to
its ;oli9yholders and 9reditors, he shall, if the ;u:li9 interest
reCuires, order its liCuidation, indi9ate the <anner of its
liCuidation and a;;rove a liCuidation ;lan and i<;le<ent it
i<<ediately. "he o<<issioner shall designate a 9o<;etent
and Cualified ;erson as liCuidator who shall ta?e over the
fun9tions of the re9eiver ;reviously designated and, with all
9onvenient s;eed, reinsure all its outstanding ;oli9ies,
9onvert the assets of the insuran9e 9o<;any to 9ash, or sell,
assign or otherwise dis;ose of the sa<e to the ;oli9yholders,
9reditors and other ;arties for the ;ur;ose of settling the
lia:ilities or ;aying the de:ts of su9h 9o<;any and he <ay,
in the na<e of the 9o<;any, institute su9h a9tions as <ay :e
ne9essary in the a;;ro;riate 9ourt to 9olle9t and re9over
a99ounts and assets of the insuran9e 9o<;any, and to do
su9h other a9ts as <ay :e ne9essary to 9o<;lete the
liCuidation as ordered :y the o<<issioner.
3"he ;rovisions of any law to the 9ontrary notwithstanding,
the a9tions of the o<<issioner under this se9tion shall :e
final and eBe9utory, and 9an :e set aside :y the 9ourt u;on
;etition :y the 9o<;any and only if there is 9onvin9ing ;roof
that the a9tion is ;lainly ar:itrary and <ade in :ad faith. "he
o<<issioner, through the *oli9itor +eneral, shall then file
the 9orres;onding answer re9iting the ;ro9eeding ta?en and
;raying the assistan9e of the 9ourt in the liCuidation of the
9o<;any. #o restraining order or inIun9tion shall :e issued
:y the 9ourt enIoining the o<<issioner fro< i<;le<enting
his a9tions under this se9tion, unless there is 9onvin9ing
;roof that the a9tion of the o<<issioner is ;lainly ar:itrary
and <ade in :ad faith and the ;etitioner or ;laintiff files with
the ler? or Judge of the ourt in whi9h the a9tion is ;ending
a :ond eBe9uted in favor of the o<<issioner in an a<ount
to :e fiBed :y the 9ourt. "he restraining order or inIun9tion
shall :e refused or, if granted, shall :e dissolved u;on filing
:y the o<<issioner, if he so desires, of a :ond in an
a<ount twi9e the a<ount of the :ond of the ;etitioner or
;laintiff 9onditioned that it will ;ay the da<ages whi9h the
;etition or ;laintiff <ay suffer :y the refusal or the dissolution
of the inIun9tion. "he ;rovisions of Rule 76 of the #ew Rules
of ourt insofar as they are a;;li9a:le shall govern the
issuan9e and dissolution of the restraining order or inIun9tion
9onte<;lated in this se9tion.
3!ll ;ro9eedings under this title shall :e given ;referen9e in
the 9ourts. "he o<<issioner shall not :e reCuired to ;ay
any fee to any ;u:li9 offi9er for filing, re9ording, or in any
<anner authenti9ating any ;a;er or instru<ent relating to
the ;ro9eedings.
3!s used in this title, the ter< Insolven9y shall <ean the
ina:ility of an insuran9e 9o<;any to ;ay its lawful o:ligations
as they fall due in the usual and ordinary 9ourse of :usiness
as <ay :e shown :y its failure to <aintain the solven9y
reCuire<ents under *e9tion 0&& of this ode.
3*E. 07(. "he re9eiver or the liCuidator, as the 9ase <ay
:e, designated under the ;rovisions of this title, shall not :e
su:Ie9t to any a9tion, 9lai< or de<and :y, or lia:ility to, any
;erson in res;e9t of anything done or o<itted to :e done in
32 | P a g e
R.A. 10607 The nsurance Code
good faith in the eBer9ise, or in 9onne9tion with the eBer9ise,
of the ;owers 9onferred on su9h re9eiver or liCuidator.
3"I"LE %'
3$#*$LI-!"I$# !#- MER+ER $/
I#*UR!#E $MP!#IE*
3*E. 076. U;on ;rior noti9e to the o<<issioner, two D0E or
<ore do<esti9 insuran9e 9o<;anies, a9ting through their
res;e9tive :oards of dire9tors, <ay negotiate to <erge into a
single 9or;oration whi9h shall :e one of the 9onstituent
9or;orations, or 9onsolidate into a single 9or;oration whi9h
shall :e a new 9or;oration to :e for<ed :y the 9onsolidation.
! 9o<<on agree<ent of the ;ro;osed <erger or
9onsolidation shall :e drawn u; for su:<ission to the
sto9?holders or <e<:ers of the 9onstituent 9o<;anies for
ado;tion and a;;roval in a99ordan9e with the ;rovisions of
the res;e9tive :ylaws of the 9onstituent 9o<;anies and all
eBisting laws that <ay :e ;ertinent.
3*E. 078. *u9h agree<ent shall in9lude, aside fro< the
;ro;osed <erger or 9onsolidation, ;rovisions relative to the
<anner of transfer of assets to and assu<;tion of lia:ilities
:y the a:sor:ing or a9Cuiring 9o<;any fro< the a:sor:ed or
dissolved 9o<;any or 9o<;aniesF the ;ro;osed arti9les of
<erger or 9onsolidation and :ylaws of the surviving or
a9Cuiring 9o<;anyF the 9or;orate na<e to :e ado;ted whi9h
should not :e that of any other eBisting 9o<;any transa9ting
si<ilar :usiness or one so si<ilar as to :e 9al9ulated to
<islead the ;u:li9F the rights of the sto9?holders or <e<:ers
of the a:sor:ed or dissolved 9o<;aniesF date of effe9tivity of
the <erger or 9onsolidationF and su9h ;arti9ulars as <ay :e
ne9essary to eB;lain and <a?e <anifest the o:Ie9ts and
;ur;oses of the a:sor:ing or a9Cuiring 9o<;any.
3*E. 0'&. U;on eBe9ution of su9h agree<ent to <erge or
9onsolidate :y and :etween or a<ong the :oards of
dire9tors of the 9onstituent 9o<;anies, noti9e thereof shall
:e <ailed i<<ediately to their ;oli9yholders and 9reditors.
"he 9o<;any or 9o<;anies to :e a:sor:ed or dissolved
shall dis9harge all its a99rued lia:ilitiesF otherwise, su9h
lia:ilities shall, with the 9onsent of its 9reditors, :e
transferred to and assu<ed :y the a:sor:ing or a9Cuiring
9o<;any, or su9h lia:ilities :e reinsured :y the latter. In the
9ase of su9h ;oli9ies as are su:Ie9t to 9an9ellation :y the
9o<;any or 9o<;anies to :e a:sor:ed or dissolved, sa<e
<ay :e 9an9elled ;ursuant to the ter<s thereof in lieu of
su9h transfer, assu<;tion, or reinsuran9e.
3*E. 0'%. U;on a;;roval or ado;tion in the <eetings of the
sto9?holders or <e<:ers 9alled for the ;ur;ose in ea9h of
the 9onstituent 9o<;anies of the agree<ent to <erge or
9onsolidate, all sto9?holders or <e<:ers dissenting or
o:Ie9ting to the <erger or 9onsolidation shall :e ;aid the
value of their shares :y the 9o<;any 9on9erned in
a99ordan9e with the :ylaws thereof.
3*E. 0'0. U;on a;;roval or ado;tion of the agree<ent to
<erge or 9onsolidate :y the sto9?holders or <e<:ers of the
9onstituent 9o<;anies, the 9orres;onding arti9les of <erger
or of 9onsolidation shall :e duly eBe9uted :y the ;residents
and attested :y the 9or;orate se9retaries and shall :ear the
9or;orate seals of the <erging or 9onsolidating 9o<;anies
setting forth=
3DaE "he ;lan of <erger or the ;lan of 9onsolidationF
3D:E !s to ea9h 9or;oration, the nu<:er of shares
outstanding, or in 9ase of <utual 9or;orations, the nu<:er of
<e<:ersF and
3D9E !s to ea9h 9or;oration, the nu<:er of shares or
<e<:ers voted for and against su9h ;lan, res;e9tively.
"hereafter, a 9ertified 9o;y of su9h arti9les of <erger or
9onsolidation, together with a 9ertifi9ate of a;;roval or
ado;tion :y the sto9?holders or <e<:ers of su9h arti9les of
<erger or 9onsolidation, verified :y affidavits of su9h offi9ers
and under the seal of the 9onstituent 9o<;anies, shall :e
su:<itted to the o<<issioner, together with su9h other
;a;ers or do9u<ents whi9h the o<<issioner <ay reCuire,
for his 9onsideration.
3*E. 0'G. "he arti9les of <erger or of 9onsolidation, signed
and verified as hereina:ove reCuired, shall :e filed with the
*e9urities and EB9hange o<<ission for its eBa<ination
and a;;roval.
3*E. 0'5. U;on re9ei;t fro< the *e9urities and EB9hange
o<<ission of the 9ertifi9ate of <erger or of 9onsolidation,
the 9onstituent 9o<;anies shall surrender to the
o<<issioner their res;e9tive 9ertifi9ates of authority to
transa9t insuran9e :usiness. "he a:sor:ing or surviving
9o<;any in 9ase of <erger, or the newly for<ed 9o<;any in
9ase of 9onsolidation, shall i<<ediately file with the
o<<issioner the 9orres;onding a;;li9ation for issuan9e of
a new 9ertifi9ate of authority to transa9t insuran9e :usiness,
together with a 9ertified 9o;y of the 9ertifi9ate of <erger or of
9onsolidation, and of the 9ertifi9ate of in9rease of sto9?s, if
there is any, issued :y the *e9urities and EB9hange
o<<ission.
3*E. 0'7. #othing in this title shall :e 9onstrued to enlarge
the ;owers of the a:sor:ing or surviving 9o<;any in 9ase of
<erger, or the newly for<ed 9o<;any in 9ase of
9onsolidation, eB9e;t those 9onferred :y the 9ertifi9ate of
<erger or of 9onsolidation and the arti9les of <erger or of
9onsolidation, or the a<ended arti9les of in9or;oration, as
registered with the *e9urities and EB9hange o<<ission.
3*E. 0''. #o dire9tor, offi9er, or sto9?holder of any su9h
9onstituent 9o<;anies shall re9eive any fee, 9o<<ission,
9o<;ensation, or other valua:le 9onsideration whatsoever,
dire9tly or indire9tly, or in any <anner aiding, ;ro<oting or
assisting in su9h <erger or 9onsolidation.
3*E. 0'(. "he <erger or 9onsolidation of 9o<;anies under
this ode shall :e su:Ie9t to the ;rovisions of the
or;oration ode, and, in those 9ases s;e9ified in Re;u:li9
33 | P a g e
R.A. 10607 The nsurance Code
!9t #o. 7577, as a<ended, :e further su:Ie9t to the
;rovisions of said law.
3"I"LE %(
3MU"U!LIM!"I$# $/ *"$2 LI/E
I#*UR!#E $MP!#IE*
3*E. 0'6. !ny do<esti9 sto9? life insuran9e 9o<;any doing
:usiness in the Phili;;ines <ay 9onvert itself into an
in9or;orated <utual life insurer. "o that end it <ay ;rovide
and 9arry out a ;lan for the a9Cuisition of the outstanding
shares of its 9a;ital sto9? for the :enefit of its ;oli9yholders,
or any 9lass or 9lasses of its ;oli9yholders, :y 9o<;lying
with the reCuire<ents of this 9ha;ter.
3*E 0'8. *u9h ;lan shall in9lude a;;ro;riate ;ro9eedings
for a<ending the insurerAs arti9les of in9or;oration to give
effe9t to the a9Cuisition, :y said insurer, for the :enefit of its
;oli9yholders or any 9lass or 9lasses thereof, of the
outstanding shares of its 9a;ital sto9? and the 9onversion of
the insurer fro< a sto9? 9or;oration into a nonsto9?
9or;oration for the :enefit of its <e<:ers. "he <e<:ers of
su9h nonsto9? 9or;oration shall :e the ;oli9yholders fro<
ti<e to ti<e of the 9lass or 9lasses for whose :enefit the
sto9? of the insurer was a9Cuired, and the ;oli9yholders of
su9h other 9lass or 9lasses as <ay :e s;e9ified in su9h
9or;orationAs arti9les of in9or;oration as they <ay :e
a<ended fro< ti<e to ti<e. *u9h ;lan shall :e=
3DaE !do;ted :y a vote of a <aIority of the dire9torsF
3D:E !;;roved :y the vote of the holders of at least a <aIority
of the outstanding shares at a s;e9ial <eeting of
shareholders 9alled for that ;ur;ose, or :y the written
9onsent of su9h shareholdersF
3D9E *u:<itted to the o<<issioner and a;;roved :y hi< in
writingF
3DdE !;;roved :y a <aIority vote of all the ;oli9yholders of
the 9lass or 9lasses for whose :enefit the sto9? is to :e
a9Cuired voting at an ele9tion :y the ;oli9yholders 9alled for
that ;ur;ose, su:Ie9t to the ;rovisions of *e9tion 0(%. "he
ter<s ;oli9yholder or ;oli9yholders as used in this 9ha;ter
shall :e dee<ed to <ean the ;erson or ;ersons insured
under an individual ;oli9y of life insuran9e, or of health and
a99ident insuran9e, or of any 9o<:ination of life, health and
a99ident insuran9e. "hey shall also in9lude the ;erson or
;ersons to who< any annuity or ;ure endow<ent is
;resently or ;ros;e9tively ;aya:le :y the ter<s of an
individual annuity or ;ure endow<ent 9ontra9t, eB9e;t where
the ;oli9y or 9ontra9t de9lares so<e other ;erson to :e the
owner or holder thereof, in whi9h 9ase su9h other ;erson
shall :e dee<ed ;oli9yholder. In any 9ase where a ;oli9y or
9ontra9t na<es two or <ore ;ersons as Ioint insured,
;ayees, owners or holders thereof, the ;ersons so na<ed
shall :e dee<ed 9olle9tively to :e one D%E ;oli9yholder for
the ;ur;ose of this 9ha;ter. In any 9ase where a ;oli9y or
9ontra9t shall have :een assigned :y assign<ent a:solute
on its fa9e to an assignee other than the insurer, and su9h
assign<ent shall have :een filed at the ;rin9i;al offi9e of the
insurer at least thirty DG&E days ;rior to the date of any
ele9tion or <eeting referred to in this 9ha;ter, then su9h
assignee shall :e dee<ed at su9h ele9tion or <eeting to :e
the ;oli9yholder. /or the ;ur;ose of this 9ha;ter the ter<s
;oli9yholder and ;oli9yholders in9lude the e<;loyer to
who<, or a ;resident, se9retary or other eBe9utive offi9er of
any 9or;oration or asso9iation to whi9h a <aster grou;
;oli9y has :een issued, :ut eB9lude the holders of
9ertifi9ates or ;oli9ies issued under or in 9onne9tion with a
<aster grou; ;oli9y. Benefi9iaries under un<atured
9ontra9ts shall not as su9h :e dee<ed to :e ;oli9yholdersF
and
3DeE /iled with the o<<issioner after having :een a;;roved
as ;rovided in this se9tion.
3*E. 0(&. "he o<<issioner shall eBa<ine the ;lan
su:<itted to hi< under the ;rovisions of su:;aragra;h D9E of
*e9tion 0'8. ,e shall not a;;rove su9h ;lan unless in his
o;inion the rights and interests of the insurer, its
;oli9yholders and shareholders are ;rote9ted nor unless he
is satisfied that the ;lan will :e fair and eCuita:le in its
o;eration.
3*E. 0(%. "he ele9tion ;res9ri:ed :y su:;aragra;h DdE of
*e9tion 0'8 shall :e 9alled :y the :oard of dire9tors or the
;resident, and every ;oli9yholder of the 9lass or 9lasses for
whose :enefit the sto9? is to :e a9Cuired, whose insuran9e
shall have :een in for9e for at least one D%E year ;rior to su9h
ele9tion shall have one vote, regardless of the nu<:er of
;oli9ies or a<ount of insuran9e he holds, and regardless of
whether su9h ;oli9ies are ;oli9ies of life insuran9e or ;oli9ies
of health and a99ident insuran9e or annuity 9ontra9ts. #oti9e
of su9h ele9tion shall :e given to ;oli9yholders entitled to
vote :y <ail fro< the ;rin9i;al offi9e of su9h insurer at least
thirty DG&E days ;rior to the date set for su9h ele9tion, in a
sealed envelo;e, ;ostage ;re;aid, addressed to ea9h su9h
;oli9yholder at his last ?nown address.
3>oting shall :e :y one of the following <ethods=
3DaE !t a <eeting of su9h ;oli9yholders, held ;ursuant to
su9h noti9e, :y :allot in ;erson or :y ;roBy.
3D:E If not :y the <ethod des9ri:ed in the ;re9eding
su:;aragra;h, then :y <ail ;ursuant to a ;ro9edure and on
for<s to :e ;res9ri:ed :y su9h ;lan.
3*u9h ele9tion shall :e 9ondu9ted under the dire9tion and
su;ervision of three DGE i<;artial and disinterested ins;e9tors
a;;ointed :y the insurer and a;;roved :y the o<<issioner.
In 9ase any ;erson a;;ointed as ins;e9tor fails to a;;ear at
su9h <eeting or fails or refuses to a9t at su9h ele9tion, the
va9an9y, if o99urring in advan9e of the 9onvening of the
<eeting or in advan9e of the o;ening of the <ail vote, <ay
:e filled in the <anner ;res9ri:ed for the a;;oint<ent of
ins;e9tors and, if o99urring at the <eeting or during the
9anvass of the <ail vote, <ay :e filled :y the ;erson a9ting
as 9hair<an of said <eeting or designated for that ;ur;ose
34 | P a g e
R.A. 10607 The nsurance Code
in su9h ;lan. "he de9ision, a9t or 9ertifi9ate of a <aIority of
the ins;e9tors shall :e effe9tive in all res;e9ts as the
de9ision, a9t or 9ertifi9ate of all. "he ins;e9tors of ele9tion
shall deter<ine the nu<:er of ;oli9yholders, the voting
;ower of ea9h, the ;oli9yholders re;resented at the <eeting
or voting :y <ail, the eBisten9e of a Cuoru< and the
authenti9ity, validity and effe9t of ;roBies. "hey shall re9eive
votes, hear and deter<ine all 9hallenges and Cuestions in
any way arising in 9onne9tion with the right to vote, 9ount
and ta:ulate all votes, deter<ine the result, and do su9h
other a9ts as are ;ro;er to 9ondu9t the vote with fairness to
all ;oli9yholders. "he ins;e9tors of ele9tion shall, :efore
9o<<en9ing ;erfor<an9e of their duties, su:s9ri:e to and
file with the insurer and with the o<<issioner an oath that
they, and ea9h of the<, will ;erfor< their duties i<;artially, in
good faith, to the :est of their a:ility and as eB;editiously as
is ;ra9ti9a:le. $n the reCuest of the insurer, the
o<<issioner, a ;oli9yholder or his ;roBy, the ins;e9tors
shall <a?e a re;ort in writing of any 9hallenge or Cuestion or
<atter deter<ined :y the< and eBe9ute a 9ertifi9ate of any
fa9t found :y the<. "hey shall also 9ertify the result of su9h
vote to the insurer and to the o<<issioner. !ny re;ort or
9ertifi9ate <ade :y the< shall :e ;ri<a fa9ie eviden9e of
fa9ts stated therein. !ll ne9essary eB;enses in9urred in
9onne9tion with su9h ele9tion shall :e ;aid :y the insurer.
/or the ;ur;ose of this se9tion, a Cuoru< shall 9onsist of five
;er9ent D7LE of the ;oli9yholders of su9h insurer entitled to
vote at su9h ele9tion.
3*E. 0(0. In 9arrying out any su9h ;lan, the insurer <ay
a9Cuire any shares of its own sto9? :y gift, :eCuest or
;ur9hase. !ny shares so a9Cuired shall, unless as a result of
su9h a9Cuisition all of the shares of the insurer shall have
:een a9Cuired, :e a9Cuired in trust for the ;oli9yholders of
the 9lass or 9lasses for whose :enefit the ;lan ;rovides that
the sto9? of the insurer shall :e a9Cuired as hereinafter
;rovided. *u9h shares shall :e assigned and transferred on
the :oo?s of su9h insurer and a;;roved :y the
o<<issioner. *u9h trustees shall hold su9h sto9? in trust
until all of the outstanding shares of 9a;ital sto9? of su9h
insurer have :een a9Cuired, :ut for not longer than thirty DG&E
years with su9h eBtensions of not <ore than five D7E years
ea9h as <ay :e granted :y the o<<issioner. *u9h
eBtensions <ay :e granted :y the o<<issioner if the ;lan
so ;rovides and if in his o;inion the ;lan of a9Cuisition of all
of su9h sto9? 9an :e 9o<;leted within a reasona:le ;eriod.
*u9h trustees shall vote su9h sto9? at all 9or;orate <eetings
at whi9h sto9?holders have the right to vote. 1hen all the
outstanding shares of 9a;ital sto9? of su9h insurer have
:een a9Cuired, all said shares shall :e 9an9elled, the
9ertifi9ate of a<end<ent of the insurerAs arti9les of
in9or;oration giving effe9t thereto shall :e filed in
a99ordan9e with the ;rovisions of the or;oration ode, and
the insurer shall :e9o<e a nonsto9? 9or;oration for the ;rofit
of its <e<:ers and su9h trust shall thereu;on ter<inate.
"hereafter su9h 9or;oration shall :e 9ondu9ted for the
<utual :enefit, rata:ly, of its ;oli9yholders of the 9lass or
9lasses for whose :enefit the sto9? was a9Cuired and shall
have ;ower to issue non-assessa:le ;oli9ies on a reserve
:asis su:Ie9t to all ;rovisions of law a;;li9a:le to
in9or;orated life insurers issuing non-assessa:le ;oli9ies on
a reserve :asis. Poli9ies so issued <ay :e u;on the :asis of
full or ;artial ;arti9i;ation therein as agreed :etween the
insurer and the insured.
3U;on the ter<ination of any su9h voting trust, either in
a99ordan9e with its ter<s or as hereina:ove ;rovided, su9h
;lan of <utualiHation shall ter<inate, unless theretofore
9o<;leted. U;on su9h ter<ination, unless the ;lan of
<utualiHation ;rovides for the dis;osition of the shares
a9Cuired :y the insurer under su9h ;lan or for the dis;osition
of the ;ro9eeds thereof, the shares held :y su9h trustees
shall :e dis;osed of in a99ordan9e with an order of the 9ourt
of 9o<;etent Iurisdi9tion in the Iudi9ial distri9t in whi9h is
lo9ated the ;rin9i;al offi9e of su9h insurer, <ade u;on a
verified ;etition of the o<<issioner.
3*E. 0(G. !ny su9h ;lan of <utualiHation <ay ;rovide for
the 9reation of a voting trust under a trust agree<ent for the
holding and voting :y three DGE or <ore trustees of any
;ortion or all of the shares of the insurer not reCuired u;on
the ado;tion of su9h ;lan. "he voting trustees shall :e
na<ed in a99ordan9e with su9h ;lan or, if no ;rovision is
<ade therein for the na<ing of su9h trustees, then :y the
insurer. "he voting trust agree<ent and voting trustees shall
:e su:Ie9t to the a;;roval of the o<<issioner. !ny or all of
the trustees under su9h voting trust agree<ent <ay :e the
sa<e ;erson or ;ersons as any or all of the trustees referred
to in *e9tion 0(0. *u9h voting trust agree<ent shall ;rovide
that in the event of a9Cuisition :y the insurer of any of the
shares of sto9? held thereunder in a99ordan9e with the
;rovisions of the ;lan, su9h shares so a9Cuired together with
the voting rights thereof shall :e transferred :y the trustees
na<ed under the ;rovisions of this se9tion to the trustees
na<ed under the ;rovisions of *e9tion 0(0. !ny voting trust
agree<ent 9reated ;ursuant to the ;rovisions of this se9tion
<ay :e <ade irrevo9a:le for not longer than thirty DG&E years
and thereafter until the ter<ination of the trust ;rovided for in
*e9tion 0(0. "he trust 9reated ;ursuant to the ;rovisions of
this se9tion shall ter<inate in any event u;on ter<ination of
the trust ;rovided for in *e9tion 0(0. U;on the ter<ination of
the trust 9reated ;ursuant to the ;rovisions of this se9tion,
any shares held in su9h trust shall revert to the ;ersons
entitled thereto :y law.
3*E. 0(5. Every ;ay<ent for the a9Cuisition of any shares
of the 9a;ital sto9? of su9h insurer, the ;ur9hase ;ri9e of
whi9h is not fiBed :y su9h ;lan, shall :e su:Ie9t to the ;rior
a;;roval of the o<<issioner. #either su9h ;lan, nor any
su9h ;ay<ent, <ay :e a;;roved :y the o<<issioner
unless he finds that the rights and interests of the insurer, its
;oli9yholders, and shareholders are ;rote9ted.
3*E. 0(7. "he trustees referred to in *e9tion 0(0 shall file
with su9h insurer and with the o<<issioner a verified
a99e;tan9e of their a;;oint<ents and verified de9larations
that they will faithfully dis9harge their duties as su9h
trustees. !ll dividends and other su<s re9eived :y said
trustees on the shares held :y the<, after ;aying the
ne9essary eB;enses of eBe9uting their trust, shall :e
i<<ediately re;aid to su9h insurer for the :enefit of all who
are, or <ay :e9o<e, ;oli9yholders of su9h insuran9e of the
9lass or 9lasses for whose :enefit the sto9? of su9h insurer
35 | P a g e
R.A. 10607 The nsurance Code
was a9Cuired and entitled to ;arti9i;ate in the ;rofits thereof
and shall :e added to and :e9o<e ;art of the assets of su9h
insurer.
3*E. 0('. If, at any ti<e within the ;eriod ;rovided in the
;lan for the a9Cuisition of the outstanding shares of sto9? of
the insurer, ninety ;er9ent D8&LE thereof has already :een
a9Cuired and transferred to the trustees under the ;lan, the
insurer :y a vote of a <aIority of the dire9tors <ay deter<ine
to <a?e an offer, with the ;er<ission of the o<<issioner
and su:Ie9t to su9h reCuire<ent as he <ay s;e9ify, to
a9Cuire :y ;ur9hase all of the shares not theretofore
a9Cuired under the ;lan, at a s;e9ified ;ri9e whi9h the
insurer 9onsiders to :e their fair value as of the date of
<a?ing su9h offer.
3If the offer to a9Cuire is ;er<itted :y the o<<issioner, the
insurer shall <a?e a written offer :y registered <ail to ea9h
shareholder whose shares have not theretofore :een
a9Cuired under the ;lan or otherwise, offering to a9Cuire all
his shares at su9h ;ri9e if a99e;ted in writing within thirty
DG&E days after the <ailing of su9h offer. !ny shareholder
a99e;ting su9h offer within the ti<e therefor shall, within siBty
D'&E days after his a99e;tan9e, transfer to the insurer the
9ertifi9ates re;resenting su9h shares and, u;on doing so,
shall :e ;aid :y the insurer the a<ount of su9h offer for his
shares. !ny share so a9Cuired shall :e assigned and
transferred to the trustees under the ;lan and held :y the<
as shares a9Cuired ;ursuant to the ;lan.
3Ea9h shareholder who does not a99e;t su9h offer to a9Cuire
his shares within the ti<e stated in su9h offer for a99e;tan9e
thereof shall within fifteen D%7E days after the eB;iration of
su9h offer a;;ly to the *e9retary of /inan9e for a
deter<ination of the fair value of his shares as of the date of
<a?ing su9h offer. "he *e9retary of /inan9e <ay hi<self,
after due noti9e and hearing, deter<ine u;on the eviden9e
re9eived the fair value of the shares as of the date of <a?ing
su9h offer, or a;;oint three DGE i<;artial and disinterested
;ersons to a;;raise the fair value of su9h shares with su9h
dire9tion as he shall dee< ;ro;er and ne9essary to eB;edite
the ;ro9eedings. U;on 9o<;letion of the a;;raisal
;ro9eedings, the a;;raisers shall file with the *e9retary of
/inan9e their re;ort in writing stating the fair value of su9h
shares as of the date of the <a?ing of su9h offer and setting
forth their findings in su;;ort of su9h state<ent. "he
a;;raisers shall furnish ea9h ;arty to the ;ro9eedings a 9o;y
of their a;;raisal re;ort, and within ten D%&E days after re9ei;t
thereof, any su9h ;arty <ay signify his o:Ie9tion, if any, to
the re;ort or <ove for the a;;roval thereof. U;on the
eB;iration of the ;eriod of ten D%&E days referred to a:ove,
the re;ort shall :e set for hearing, after whi9h the *e9retary
of /inan9e shall issue an order ado;ting, <odifying or
reIe9ting the re;ort, in whole or in ;art, or he <ay re9eive
further eviden9e or <ay re9o<<it it with instru9tions.
1henever the *e9retary of /inan9e shall deter<ine in any
<anner, as aforesaid, the fair value of su9h shares, he <ay
also deter<ine the ter<s of ;ay<ent thereof :y the insurer.
"he eB;enses in9idental to the ;ro9eedings in9luding
9harges of the a;;raisers, if any, shall :e ;aid eCually :y the
insurer and the shareholder.
3"he findings of the *e9retary of /inan9e on all Cuestions of
fa9t raised at the hearing of the a;;li9ation for deter<ination
of the fair value of su9h shares shall :e 9on9lusive u;on all
;arties to the ;ro9eedings. "he order of the *e9retary of
/inan9e deter<ining the fair value of the shares and the
ter<s of ;ay<ent thereof shall have the for9e and effe9t of a
Iudg<ent whi9h shall :e a;;eala:le on any Cuestion of law.
*u9h order shall :e9o<e final and eBe9utory fifteen D%7E
days after re9ei;t thereof :y the ;arties to the ;ro9eedings.
3U;on any su9h order :e9o<ing final and fro< whi9h no
a;;eal is ;ending, or when the ti<e to a;;eal therefro< has
eB;ired, ea9h shareholder ;arty to the ;ro9eedings shall
transfer his shares to the insurer and surrender to the said
insurer the 9ertifi9ates re;resenting su9h shares and the
insurer shall <a?e ;ay<ent therefor as ;rovided in su9h
order. !ny shares so a9Cuired :y the insurer shall :e
assigned and transferred to the trustees and held :y the< as
shares a9Cuired ;ursuant to the ;lan.
3!ny shareholder who does not a;;ly to the *e9retary of
/inan9e in the <anner and within the ti<e herein:efore
;res9ri:ed shall :e dee<ed to have a99e;ted the offer
referred to a:ove, effe9tive, however, u;on the eB;iration of
the ti<e hereina:ove ;res9ri:ed for <a?ing su9h a;;li9ation,
and su9h shareholderAs ti<e for a99e;ting su9h offer shall,
for that ;ur;ose only, :e dee<ed to have :een eBtended
a99ordingly.
3!ny offer to a9Cuire shares <ade ;ursuant to this se9tion
shall, eB9e;t as otherwise ;rovided herein, :e irrevo9a:le
until all ;ro9eedings u;on su9h offer have :een 9o<;leted or
all shares have otherwise :een earlier a9Cuired :y the
insurer.
3!ny shareholder who has eB;ressly or i<;liedly a99e;ted
the ;lan or the offer to a9Cuire his shares not theretofore
a9Cuired under the ;lan, and any shareholder who has
reIe9ted su9h ;lan or su9h offer and has a;;lied, as
aforesaid, to the *e9retary of /inan9e for a deter<ination of
the fair value of his shares su:seCuent to whi9h an
agree<ent has :een rea9hed or a final order issued fiBing
su9h fair value :ut who fails to surrender his 9ertifi9ates for
9an9ellation u;on ;ay<ent of the a<ount to whi9h he is
entitled, <ay :e 9o<;elled to do so :y an order of the
*e9retary of /inan9e for that ;ur;ose and su9h order <ay
;rovide that u;on failure of su9h shareholder to surrender
su9h 9ertifi9ates for 9an9ellation, su9h order shall stand in
lieu of su9h surrender and 9an9ellation.
3*E. 0((. *u9h insurer, after <utualiHation, shall :e a
9ontinuation of the original insurer, and su9h <utualiHation
shall not affe9t su9h insurerAs 9ertifi9ate of authority nor
eBisting suits, rights or 9ontra9ts eB9e;t as ;rovided in said
;lan for the a9Cuisition of the outstanding shares of the
9a;ital sto9? of su9h insurer, a;;roved as ;rovided in this
9ha;ter. *u9h insurer, after <utualiHation, shall eBer9ise all
the rights and ;owers and shall ;erfor< all the duties
9onferred or i<;osed :y law u;on insurers writing the
9lasses of insuran9e written :y it, and to ;rote9t rights and
9ontra9ts eBisting ;rior to <utualiHation, su:Ie9t to the effe9t
of said ;lan. "he :oard of dire9tors of su9h insurer, ;rior to
36 | P a g e
R.A. 10607 The nsurance Code
<utualiHation, <ay ado;t a<end<ents to its :ylaws to ta?e
effe9t u;on <utualiHation.
3*E. 0(6. DaE !n annual <eeting of <e<:ers shall :e held
at ten oA9lo9? in the <orning of the fourth "uesday of Mar9h
of ea9h year at the ;rin9i;al offi9e of the insurer, unless a
different ti<e or ;la9e is ;rovided in the :ylaws.
3D:E *;e9ial <eetings of the <e<:ers, for any ;ur;ose or
;ur;oses whatsoever, <ay :e 9alled at any ti<e :y the
;resident, or :y the :oard of dire9tors, or :y one or <ore
<e<:ers holding not less than one-fifth D%K7E of the voting
;ower of su9h insurer, or :y su9h other offi9ers or ;ersons as
the :ylaws authoriHe.
D9E #oti9e of all <eetings of <e<:ers whether annual or
s;e9ial shall :e given in writing to the <e<:ers entitled to
vote :y the se9retary, or an assistant se9retary, or other
;erson 9harged with that duty, or if there :e no su9h offi9er,
or in 9ase of his negle9t or refusal, :y any dire9tor or
<e<:er. !t the o;tion of the insurer su9h noti9e <ay :e
i<;rinted on ;re<iu< noti9es or re9ei;ts or on :oth.
3! noti9e <ay :e given :y su9h insurer to any <e<:er either
;ersonally, or :y <ail, or other <eans of written
9o<<uni9ation, 9harges ;re;aid, addressed to su9h
<e<:er at his address a;;earing on the :oo?s of the
insurer, or given :y hi< to the insurer for the ;ur;ose of
noti9e. If a <e<:er gives no address, noti9e shall :e
dee<ed to have :een given hi< if sent :y <ail or other
<eans of written 9o<<uni9ation addressed to the ;la9e
where the ;rin9i;al offi9e of the insurer is situated, or if
;u:lished at least on9e in so<e news;a;er of general
9ir9ulation in the ;la9e in whi9h said offi9e is lo9ated.
3#oti9e of any <eeting of <e<:ers shall :e sent to ea9h
<e<:er entitled thereto not less than seven D(E days :efore
su9h <eeting, unless the :ylaws ;rovide otherwise.
3#oti9e of any <eeting of <e<:ers shall s;e9ify the ;la9e,
the day and the hour of the <eeting and the general nature
of the :usiness to :e transa9ted.
3#oti9e of an annual <eeting to :e held at the ti<e and ;la9e
s;e9ified in su:;aragra;h DaE of this se9tion shall :e
suffi9iently given if ;u:lished at least on9e in ea9h of four D5E
su99essive wee?s in a news;a;er of general 9ir9ulation in
the ;la9e in whi9h the ;rin9i;al offi9e of su9h insurer is
lo9ated, and if so ;u:lished no other noti9e of su9h <eeting
shall :e reCuired.
3DdE "he ;resen9e in ;erson or :y ;roBy of five ;er9ent D7LE
of the <e<:ers entitled to vote at any <eeting shall
9onstitute a Cuoru< for the transa9tion of :usiness, in9luding
the a<end<ent of the arti9les of in9or;oration andKor the
:ylaws unless otherwise ;rovided :y the :ylaws.
3DeE Ea9h su9h <e<:er shall have one D%E vote at any
<eeting of <e<:ers regardless of the nu<:er of ;oli9ies or
the a<ount of insuran9e that su9h <e<:er holds and
regardless of whether su9h ;oli9ies are ;oli9ies of life
insuran9e, or of health and a99ident insuran9e, or :oth. !ny
<e<:er entitled to vote shall have the right to do so either in
;erson or :y an agent or agents authoriHed :y a written
;roBy eBe9uted :y su9h ;erson or his duly authoriHed agent
and filed with the se9retary of su9h insurer.
3DfE "he dire9tors of the insurer in offi9e at the ti<e the
insurer is <utualiHed as ;rovided in this 9ha;ter shall
9ontinue in offi9e until the first annual <eeting of <e<:ers.
!t the first annual <eeting of <e<:ers and at ea9h annual
<eeting thereafter, dire9tors shall :e ele9ted :y the
<e<:ers for the ter< or ter<s authoriHed :y this 9ha;ter.
3DgE "he arti9les of in9or;oration or the :ylaws <ay ;rovide
that the dire9tors <ay :e divided into two D0E or <ore 9lasses
whose ter<s of offi9e shall eB;ire at different ti<es, :ut no
ter<s shall 9ontinue longer than siB D'E years. In the a:sen9e
of su9h ;rovisions, ea9h dire9tor, eB9e;t <e<:ers of the
:oard of dire9tors at the ti<e the insurer is <utualiHed, shall
:e ele9ted for a ter< of one D%E year. !ll dire9tors shall hold
offi9e for a ter< for whi9h they are ele9ted and until their
su99essors are ele9ted and Cualified. ! dire9tor <ay, :ut
need not :e a <e<:er or ;oli9yholder of the insurer of whi9h
he is a9ting as dire9tor. >a9an9ies in the :oard of dire9tors
<ay :e filled :y a <aIority of the re<aining dire9tors, though
less than a Cuoru<, and ea9h dire9tor so ele9ted shall hold
offi9e until the neBt annual <eeting.
3DhE !ll insurers <utualiHed under the ;rovisions of this
9ha;ter shall :e su:Ie9t to all other a;;li9a:le ;rovisions of
this ode. "he ;rovisions of the or;oration ode shall
a;;ly in a su;;letory <anner.
3*E. 0(8. "he ;rovisions of o<<onwealth !9t #o. 6G,
otherwise ?nown as the *e9urities !9t, as a<ended, shall
not a;;ly to any of the following=
3DaE *hares of the 9a;ital sto9? of su9h insurer a9Cuired as
;rovided in *e9tion 0(0 and assigned and transferred to the
trustees as is ;rovided in said se9tion, and the assign<ent
and transfer of said shares as so ;rovidedF
3D:E !ny 9ertifi9ate or other instru<ent issued to a
;oli9yholder of su9h <utualiHed insurer 9onferring or
eviden9ing <e<:ershi; in su9h <utualiHed insurer or
9onferring or eviden9ing su9h <e<:erAs right to ;arti9i;ate in
the ;rofits or share in the assets of su9h <utualiHed insurer
:y virtue of his <e<:ershi; therein, and the issuan9e of
su9h 9ertifi9ate or other instru<entF
3D9E "he ;lan for the a9Cuisition of the outstanding shares of
the 9a;ital sto9? of su9h insurer authoriHed :y the ;rovisions
of this 9ha;ter, the su:<ission of said ;lan to the
o<<issioner and to the ;oli9yholders of su9h insurer as
;rovided in this 9ha;ter, and the a;;roval and 9arrying out of
said ;lan or any ;art thereof in a99ordan9e with the
;rovisions of this 9ha;ter.
3*E. 06&. ! do<esti9 <utual life insuran9e 9o<;any doing
:usiness in the Phili;;ines <ay 9onvert itself into an
in9or;orated sto9? life insuran9e 9o<;any :y
de<utualiHation. "o that end, it <ay ;rovide and 9arry out a
;lan for the 9onversion :y 9o<;lying with the reCuire<ents
of this title.
37 | P a g e
R.A. 10607 The nsurance Code
3"he 9onversion of a do<esti9 <utual life insuran9e
9o<;any to an in9or;orated sto9? life insuran9e 9o<;any
shall :e 9arried out ;ursuant to a 9onversion ;lan duly
a;;roved :y the o<<issioner.
3"he o<<issioner shall ;ro<ulgate su9h rules and
regulations as he or she <ay dee< ne9essary to 9arry out
the ;rovisions of this title, after due 9onsultation with
re;resentatives of the insuran9e industry.
3!ll 9onverted insurers under the ;rovisions of this title shall
:e su:Ie9t to all other a;;li9a:le ;rovisions of this ode. "he
;rovisions of the or;oration ode shall a;;ly in a
su;;letory <anner.
3"I"LE %6
31I",-R!1!L $/ /$REI+#
I#*UR!#E $MP!#IE*
3*E. 06%. ! foreign insuran9e 9o<;any doing :usiness in
the Phili;;ines, u;on ;ay<ent of the fee hereinafter
;res9ri:ed and surrender to the o<<issioner of its
9ertifi9ate of authority, <ay a;;ly to withdraw fro< the
Phili;;ines. *u9h a;;li9ation shall :e duly eBe9uted in
writing, a99o<;anied :y eviden9e of due authority for su9h
eBe9ution, ;ro;erly a9?nowledged.
3*E. 060. "he o<<issioner shall ;u:lish the a;;li9ation
for withdrawal on9e a wee? for three DGE 9onse9utive wee?s
in a news;a;er of general 9ir9ulation in the Phili;;ines. "he
eB;enses of su9h ;u:li9ation shall :e ;aid :y the insuran9e
9o<;any filing su9h a;;li9ation.
3*E. 06G. Every foreign insuran9e 9o<;any desiring to
withdraw fro< the Phili;;ines shall, ;rior to su9h withdrawal,
dis9harge its lia:ilities to ;oli9yholders and 9reditors in this
9ountry. In 9ase of its ;oli9ies insuring residents of the
Phili;;ines, it shall 9ause the ;ri<ary lia:ilities under su9h
;oli9ies to :e reinsured and assu<ed :y another insuran9e
9o<;any authoriHed to transa9t :usiness in the Phili;;ines.
In the 9ase of su9h ;oli9ies as are su:Ie9t to 9an9ellation :y
the withdrawing 9o<;any, it <ay 9an9el su9h ;oli9ies
;ursuant to the ter<s thereof in lieu of su9h reinsuran9e and
assu<;tion of lia:ilities.
3*E. 065. "he o<<issioner shall 9ause an eBa<ination of
the :oo?s and re9ords of the withdrawing 9o<;any, and if,
u;on su9h eBa<ination, the o<<issioner finds that the
insurer has no outstanding lia:ilities to ;oli9yholders and
9reditors in the Phili;;ines, and no ;oli9ies un9an9elledF or
its ;ri<ary lia:ilities have :een reinsured or assu<ed :y
another insuran9e 9o<;any authoriHed to transa9t :usiness
in the Phili;;ines, as reCuired in the ;re9eding se9tion, it
shall 9an9el the withdrawing 9o<;anyAs 9ertifi9ate of
authority, if uneB;ired, and shall ;er<it the insurer to
withdraw. "he 9ost and eB;enses of all su9h eBa<ination
shall :e ;aid as ;res9ri:ed in *e9tion 55&.
3*E. 067. U;on the failure of su9h withdrawing insuran9e
9o<;any or its agents in the Phili;;ines to ;ay the eB;enses
of su9h ;u:li9ation within thirty DG&E days after the
;resentation of the :ill therefor, the o<<issioner shall
9olle9t su9h fee fro< the de;osit furnished in a99ordan9e
with the ;rovisions of *e9tion %8(.
3*E. 06'. ! foreign life insuran9e 9o<;any that withdraws
fro< the Phili;;ines shall :e 9onsidered a servi9ing
insuran9e 9o<;any if its :usiness transa9tions are 9onfined
to a99e;ting ;eriodi9 ;re<iu< ;ay<ents fro<, or granting
;oli9y loans and ;aying 9ash surrender values of
outstanding ;oli9ies to, or reviving la;sed ;oli9ies of,
Phili;;ine ;oli9yholders, and su9h other related servi9es.
3*E. 06(. #o 9o<;any shall a9t as a servi9ing insuran9e
9o<;any until after it shall have o:tained a s;e9ial 9ertifi9ate
of authority to a9t as su9h fro< the o<<issioner u;on
a;;li9ation therefor and ;ay<ent :y the 9o<;any of the fees
hereinafter ;res9ri:ed. *u9h 9ertifi9ate shall eB;ire on the
last day of -e9e<:er of the third year and shall :e renewed,
while the 9o<;any 9ontinues to servi9e its ;oli9yholders, and
to 9o<;ly with all the a;;li9a:le ;rovisions of law and
regulations.
3"I"LE %8
3PR$/E**I$#!L REI#*URER*
3*E. 066. EB9e;t as otherwise ;rovided in this ode, no
;artnershi;, asso9iation or 9or;oration shall transa9t any
:usiness in the Phili;;ines as a ;rofessional reinsurer until it
shall have o:tained a 9ertifi9ate of authority for that ;ur;ose
fro< the o<<issioner u;on a;;li9ation therefor and
;ay<ent :y su9h entity of the fees hereinafter ;res9ri:ed. !s
used in this ode, the ter< @;rofessional reinsurerA shall
<ean any entity that transa9ts solely and eB9lusively
reinsuran9e :usiness in the Phili;;ines.
3"he o<<issioner <ay refuse to issue a 9ertifi9ate of
authority to any su9h entity when su9h refusal will :est
;ro<ote ;u:li9 interest. #o su9h 9ertifi9ate of authority shall
:e granted to any su9h entity unless and until the
o<<issioner is satisfied :y su9h eBa<ination and su9h
eviden9e as <ay :e reCuired that su9h entity is Cualified :y
the laws of the Phili;;ines to transa9t :usiness therein as a
;rofessional reinsurer.
3Before issuing su9h 9ertifi9ate of authority, the
o<<issioner <ust :e satisfied that the na<e of the
a;;li9ant is not that of any other ?nown 9o<;any transa9ting
insuran9e or reinsuran9e :usiness in the Phili;;ines, or a
na<e so si<ilar as to :e 9al9ulated to <islead the ;u:li9.
3*u9h 9ertifi9ate of authority shall eB;ire on the last day of
-e9e<:er the third year following its issuan9e unless it is
renewed.
38 | P a g e
R.A. 10607 The nsurance Code
3Every su9h ;artnershi;, asso9iation, or 9or;oration
re9eiving su9h 9ertifi9ate of authority shall :e su:Ie9t to the
;rovisions of this ode and other related laws, and to the
Iurisdi9tion and su;ervision of the o<<issioner.
3*E. 068. !ny ;artnershi;, asso9iation, or 9or;oration
authoriHed to transa9t solely reinsuran9e :usiness <ust
have a 9a;italiHation of at least "hree :illion ;esos
DPG,&&&,&&&,&&&.&&E ;aid in 9ash of whi9h at least fifty
;er9ent D7&LE is ;aid-u; and the re<aining ;ortion thereof is
9ontri:uted sur;lus, whi9h in no 9ase shall :e less than /our
hundred <illion ;esos DP5&&,&&&,&&&.&&E or su9h
9a;italiHation as <ay :e deter<ined :y the *e9retary of
/inan9e, u;on the re9o<<endation of the o<<issioner=
Provided, "hat twenty-five ;er9ent D07LE of the ;aid-u;
9a;ital <ust :e invested in se9urities satisfa9tory to the
o<<issioner 9onsisting of :onds or other instru<ents of
de:t of the +overn<ent of the Phili;;ines or its ;oliti9al
su:divisions or instru<entalities, or of govern<ent-owned or
-9ontrolled 9or;orations and entities, in9luding the Bang?o
*entral ng Pili;inas, and de;osited with the o<<issioner,
and the re<aining seventy-five ;er9ent D(7LE in su9h other
se9urities as <ay :e allowed and ;er<itted :y the
o<<issioner, whi9h se9urities shall at all ti<es :e
<aintained free fro< any lien or en9u<:ran9e= Provided,
further, "hat the aforesaid 9a;ital reCuire<ent is without
;reIudi9e to other reCuire<ents to :e i<;osed under any
ris?-:ased 9a;ital <ethod that <ay :e ado;ted :y the
o<<issioner= Provided, finally, "hat the ;rovisions of this
9ha;ter a;;li9a:le to insuran9e 9o<;anies shall as far as
;ra9ti9a:le :e li?ewise a;;li9a:le to ;rofessional reinsurers.
3"I"LE 0&
3,$L-I#+ $MP!#IE*
3*E. 08&. !s used in this title, the following ter<s shall
have the res;e9tive <eanings hereinafter set forth unless
the 9onteBt shall otherwise reCuire=
3DaE Person <eans an individual, ;artnershi;, fir<,
asso9iation, 9or;oration, trust, any si<ilar entity or any
9o<:ination of the foregoing a9ting in 9on9ert.
3D:E ontrol, in9luding the ter<s 9ontrolling, 9ontrolled :y and
under 9o<<on 9ontrol with, <eans the ;ossession dire9tly
or indire9tly of the ;ower to dire9t or 9ause the dire9tion of
the <anage<ent and ;oli9ies of a ;erson, whether through
the ownershi; of voting se9urities :y a 9ontra9t other than a
9o<<er9ial 9ontra9t for goods or non-<anage<ent servi9es
or otherwise. *u:Ie9t to *e9tion 080, 9ontrol shall :e
;resu<ed to eBist if any ;erson dire9tly or indire9tly owns,
9ontrols or holds with the ;ower to vote forty ;er9ent D5&LE
or <ore of the voting se9urities of any other ;erson=
Provided, "hat no ;erson shall :e dee<ed to 9ontrol another
;erson solely :y reason of his :eing an offi9er or dire9tor of
su9h other ;erson.
3D9E ,olding 9o<;any <eans any ;erson who dire9tly or
indire9tly 9ontrols any authoriHed insurer.
3DdE ontrolled insurer <eans an authoriHed insurer
9ontrolled dire9tly or indire9tly :y a holding 9o<;any.
3DeE ontrolled ;erson <eans any ;erson, other than a
9ontrolled insurer, who is 9ontrolled dire9tly or indire9tly :y a
holding 9o<;any.
3DfE ,olding 9o<;any syste< <eans a holding 9o<;any
together with its 9ontrolled insurers and 9ontrolled ;ersons.
3*E. 08%. #otwithstanding ;aragra;h D:E of *e9tion 08&,
the o<<issioner <ay deter<ine after noti9e and
o;;ortunity to :e heard, that a ;erson eBer9ises dire9tly or
indire9tly either alone or ;ursuant to an agree<ent with one
or <ore other ;ersons su9h a 9ontrolling influen9e over the
<anage<ent or ;oli9ies of an authoriHed insurer as to <a?e
it ne9essary or a;;ro;riate in the ;u:li9 interest or for the
;rote9tion of ;oli9yholders or sto9?holders of the insurer that
the ;erson :e dee<ed to 9ontrol the insurer.
3*E. 080. "he o<<issioner <ay deter<ine u;on
a;;li9ation that any ;erson, either alone or ;ursuant to
agree<ent with one or <ore other ;ersons, does not or will
not u;on the ta?ing of so<e ;ro;osed a9tion 9ontrol another
;erson. "he filing of an a;;li9ation hereunder in good faith
:y any ;erson shall relieve the a;;li9ant fro< any o:ligation
or lia:ility i<;osed :y this title with res;e9t to the su:Ie9t of
the a;;li9ation, eB9e;t as 9ontained in *e9tion G&0, until the
o<<issioner has a9ted u;on the a;;li9ation. 1ithin thirty
DG&E days or su9h further ;eriod as he <ay ;res9ri:e, the
o<<issioner <ay ;ros;e9tively revo?e or <odify his
deter<ination, after noti9e and o;;ortunity to :e heard,
whenever in his Iudg<ent, revo9ation or <odifi9ation is
9onsistent with this title.
3*E. 08G. #otwithstanding any other ;rovisions of this title,
the following shall not :e dee<ed holding 9o<;anies=
3DaE !uthoriHed insurers or reinsurers or their su:sidiariesF
and
3D:E "he +overn<ent of the Phili;;ines, or any ;oliti9al
su:division, agen9y or instru<entality thereof, or any
9or;oration whi9h is wholly owned dire9tly or indire9tly :y
one or <ore of the foregoing.
3"he o<<issioner <ay 9onditionally or un9onditionally
eBe<;t any s;e9ified ;erson or 9lass of ;ersons fro< any of
the o:ligations or lia:ilities i<;osed under this title, if and to
the eBtent he finds the eBe<;tion ne9essary or a;;ro;riate
in the ;u:li9 interest or not adverse to the interests of
;oli9yholders or sto9?holders and 9onsistent with the
;ur;oses of this title.
3*E. 085. DaE Every ;erson who on the date this ode
ta?es effe9t is a 9ontrolled insurer and every ;erson who
thereafter :e9o<es a 9ontrolled insurer, shall, within siBty
D'&E days thereafter, or within thirty DG&E days after :e9o<ing
a 9ontrolled insurer, whi9hever is later, register with the
o<<issioner. *u9h registration shall :e a<ended within
39 | P a g e
R.A. 10607 The nsurance Code
thirty DG&E days following any 9hange in the identity of its
holding 9o<;any. "he o<<issioner <ay grant one or <ore
reasona:le eBtensions of the ti<e to register.
3D:E Every registrant shall furnish the o<<issioner with the
following infor<ation 9on9erning its holding 9o<;any=
3D%E ! 9o;y of its 9harter or arti9les of in9or;oration and its
:ylawsF
3D0E "he identities of its ;rin9i;al shareholders, offi9ers,
dire9tors and 9ontrolled ;ersonsF and
3DGE Infor<ation as to its 9a;ital stru9ture and finan9ial
9ondition, and a des9ri;tion of its ;rin9i;al :usiness
a9tivities.
3*E. 087. Every 9ontrolled insurer shall file with the
o<<issioner su9h re;orts or <aterial as he <ay dire9t for
the ;ur;ose of dis9losing infor<ation 9on9erning the
o;erations of ;ersons within the holding 9o<;any syste<
whi9h <ay <aterially affe9t the o;erations, <anage<ent or
finan9ial 9ondition of the insurer.
3*E. 08'. Every holding 9o<;any and every 9ontrolled
;erson within a holding 9o<;any syste< shall :e su:Ie9t to
eBa<ination :y order of the o<<issioner if he has 9ause to
:elieve that the o;erations of su9h ;ersons <ay <aterially
affe9t the o;erations, <anage<ent or finan9ial 9ondition of
any 9ontrolled insurer with the syste< and that he is una:le
to o:tain relevant infor<ation fro< su9h 9ontrolled insurer.
"he grounds relied u;on :y the o<<issioner for su9h
eBa<ination shall :e stated in his order, whi9h order shall :e
su:Ie9t to Iudi9ial review only at the instan9e of the ;erson
sought to :e eBa<ined. *u9h eBa<ination shall :e 9onfined
to <atters s;e9ified in the order. "he 9ost of su9h
eBa<ination shall :e assessed against the ;erson eBa<ined
and no ;ortion thereof shall thereafter :e rei<:ursed to it
dire9tly or indire9tly :y the 9ontrolled insurer.
3*E. 08(. "he o<<issioner shall ?ee; the 9ontents of
ea9h re;ort <ade ;ursuant to this title and any infor<ation
o:tained :y hi< in 9onne9tion therewith 9onfidential and
shall not <a?e the sa<e ;u:li9 without the ;rior written
9onsent of the 9ontrolled insurer to whi9h it ;ertains unless
the o<<issioner after noti9e and an o;;ortunity to :e
heard shall deter<ine that the interests of ;oli9yholders,
sto9?holders or the ;u:li9 will :e served :y the ;u:li9ation
thereof. In any a9tion or ;ro9eeding :y the o<<issioner
against the ;erson eBa<ined or any other ;erson within the
sa<e holding 9o<;any syste< a re;ort of su9h eBa<ination
;u:lished :y hi< shall :e ad<issi:le as eviden9e of the fa9ts
stated therein.
3*E. 086. "ransa9tions within a holding 9o<;any syste< to
whi9h a 9ontrolled insurer is a ;arty shall :e su:Ie9t to the
following=
3DaE "he ter<s shall :e fair and eCuita:leF
3D:E harges or fees for servi9es ;erfor<ed shall :e
reasona:leF
3D9E EB;enses in9urred and ;ay<ents re9eived shall :e
allo9ated to the insurer on an eCuita:le :asis in 9onfor<ity
with 9usto<ary insuran9e a99ounting ;ra9ti9es 9onsistently
a;;lied.
3"he :oo?s, a99ounts and re9ords of ea9h ;arty to all su9h
transa9tions shall :e <aintained as to 9learly and a99urately
dis9lose the nature and details of the transa9tions in9luding
su9h a99ounting infor<ation as is ne9essary to su;;ort the
reasona:leness of the 9harges or fees to the res;e9tive
;arties.
3*E. 088. "he ;rior written a;;roval of the o<<issioner
shall :e reCuired for the following transa9tions :etween a
9ontrolled insurer and any ;erson in its holding 9o<;any
syste<= sales, ;ur9hases, eB9hanges, loans or eBtensions of
9redit, or invest<ents, involving five ;er9ent D7LE or <ore of
the insurerAs ad<itted assets as of the thirty-first day of
-e9e<:er neBt ;re9eding.
3*E. G&&. "he following transa9tions :etween a 9ontrolled
insurer and any ;erson in its holding 9o<;any syste< <ay
not :e entered into unless the insurer has notified the
o<<issioner in writing of its intention to enter into any su9h
transa9tion at least thirty DG&E days ;rior thereto, or su9h
shorter ;eriod as he <ay ;er<it, and he has not disa;;roved
it within su9h ;eriod=
3DaE *ales, ;ur9hases, eB9hanges, loans or eBtensions of
9redit, or invest<ents, involving <ore than one-half of one
;er9ent DPLE :ut less than five ;er9ent D7LE of the insurerAs
ad<itted assets as of the thirty-first day of -e9e<:er neBt
;re9edingF
3D:E Reinsuran9e treaties or agree<entsF
3D9E Rendering of servi9es on a regular or syste<ati9 :asisF
or
3DdE !ny <aterial transa9tion, s;e9ified :y regulation, whi9h
the o<<issioner deter<ines <ay adversely affe9t the
interest of the insurerAs ;oli9yholders or sto9?holders or of
the ;u:li9.
3#othing herein 9ontained shall :e dee<ed to authoriHe or
;er<it any transa9tion whi9h, in the 9ase of a non-9ontrolled
insurer, would :e otherwise 9ontrary to law.
3*E. G&%. "he o<<issioner, in reviewing transa9tions
;ursuant to *e9tions 088 and G&&, shall 9onsider whether
the transa9tions 9o<;ly with the standard set forth in *e9tion
086 and whether they <ay adversely affe9t the interests of
;oli9yholders. "his se9tion shall not a;;ly to transa9tions
su:Ie9t to other se9tions of this ode whi9h i<;ose noti9e or
a;;roval reCuire<ents greater than those ;res9ri:ed :y this
title.
3*E. G&0. DaE #o ;erson, other than an authoriHed insurer,
shall a9Cuire 9ontrol of any do<esti9 insurer, whether :y
;ur9hase of its se9urities or otherwise, eB9e;t=
40 | P a g e
R.A. 10607 The nsurance Code
3D%E !fter twenty D0&E days written noti9e to its insurer or su9h
shorter ;eriod as the o<<issioner <ay ;er<it, of its
intention to a9Cuire 9ontrolF and
3D0E 1ith the ;rior written a;;roval of the o<<issioner.
3D:E "he o<<issioner shall disa;;rove the a9Cuisition of
9ontrol of a do<esti9 insurer if he deter<ines, after noti9e
and an o;;ortunity to :e heard, that su9h a9tion is
reasona:ly ne9essary to ;rote9t the interest of the ;eo;le of
this 9ountry. "he following shall :e the only fa9tors to :e
9onsidered :y hi< in rea9hing the foregoing deter<ination=
3D%E "he finan9ial 9ondition of the a9Cuiring ;erson and the
insurerF
3D0E "he trustworthiness of the a9Cuiring ;erson or any of its
offi9ers or dire9torsF
3DGE ! ;lan for the ;ro;er and effe9tive 9ondu9t of the
insurerAs o;erationsF
3D5E "he sour9e of the funds or assets for the a9CuisitionF
3D7E "he fairness of any eB9hange of sto9?, assets, 9ash or
other 9onsideration for the sto9? or assets to :e re9eivedF
3D'E 1hether the effe9t of the a9Cuisition <ay :e
su:stantially to lessen 9o<;etition in any line of 9o<<er9e
in insuran9e or to tend to 9reate a <ono;oly thereinF and
3D(E 1hether the a9Cuisition is li?ely to :e haHardous or
;reIudi9ial to the insurerAs ;oli9yholders or sto9?holders.
3D9E "he following 9onditions affe9ting any 9ontrolled insurer,
regardless of when su9h 9ontrol has :een a9Cuired, are
violations of this title=
3D%E "he 9ontrolling ;erson or any of its offi9ers or dire9tors
have de<onstrated untrustworthinessF and
3D0E "he effe9t of retention of 9ontrol <ay :e su:stantially to
lessen 9o<;etition in any line of 9o<<er9e in insuran9e in
this 9ountry or to tend to 9reate a <ono;oly therein. If, after
noti9e and an o;;ortunity to :e heard, the o<<issioner
deter<ines that any of the foregoing violations eBists, he
shall redu9e his findings to writing and shall issue an order
:ased thereon and 9ause the sa<e to :e served u;on the
insurer and u;on all ;ersons affe9ted there:y dire9ting any
;erson found to :e in violation thereof to ta?e a;;ro;riate
a9tion to 9ure su9h violation. U;on the failure of any su9h
;erson to 9o<;ly with su9h order, *e9tion G&' shall :e9o<e
a;;li9a:le.
3DdE "he o<<issioner <ay reCuire the su:<ission of su9h
infor<ation as he dee<s ne9essary to deter<ine whether
any a9Cuisition or retention of 9ontrol 9o<;lies with this title
and <ay reCuire, as a 9ondition of a;;roval of su9h
a9Cuisition or retention of 9ontrol, that all or any ;ortion of
su9h infor<ation :e dis9losed to the insurerAs sto9?holders.
3DeE Unless su:Ie9t to registration under *e9tion 085 or
unless a9Cuisition of its 9ontrol is su:Ie9t to ;aragra;hs DaE
and D:E hereof, every authoriHed insurer shall notify the
o<<issioner in writing of the identity of any ;erson who<
the insurer then ?nows or has reason to :elieve 9ontrols or
has ta?en any a9tion, other than ;reli<inary negotiations or
dis9ussion, to a9Cuire 9ontrol of the insurer.
3*E. G&G. DaE #otwithstanding the 9ontrol of an authoriHed
insurer :y any ;erson, the offi9ers and dire9tors of the
insurer shall not there:y :e relieved of any o:ligation or
lia:ility to whi9h they would otherwise :e su:Ie9t :y law, and
the insurer shall :e <anaged so as to assure its se;arate
o;erating identity 9onsistent with this title.
3D:E #othing herein shall ;re9lude an authoriHed insurer fro<
having or sharing a 9o<<on <anage<ent or 9oo;erative or
Ioint use of ;ersonnel, ;ro;erty or servi9es with one or <ore
other ;ersons under arrange<ents <eeting the standards of
*e9tion 086.
3*E. G&5. "o the eBtent that any infor<ation or <aterial is
set forth in for<s or other <atter on file with any govern<ent
agen9y or in a registration for< filed with the o<<issioner
:y another ;erson within the sa<e holding 9o<;any syste<,
the 9ontrolled insurer <ay 9o<;ly with the registration or
re;orting reCuire<ents of this title :y referring in its
registration for< or re;ort to su9h other filed <atter and
atta9hing a 9o;y thereof 9ertified :y the insurer as a true and
9o<;lete 9o;y, to su9h registration for< or re;ort or, if su9h
other filed <atter is on file with the o<<issioner,
in9or;orating su9h <atter :y referen9e.
3*E. G&7. #o holding 9o<;any or 9ontrolled ;erson shall
dire9tly or indire9tly or through another ;erson do or 9ause to
:e done for or in :ehalf of the 9ontrolled insurer any a9t
intended to affe9t the insuran9e o;erations of the insurer
whi9h, if done :y the insurer, would violate any ;rovision of
this ode.
3*E. G&'. In addition to any other ;enalty ;rovided :y law,
the o<<issioner <ay, u;on the willful failure of any ;erson
within a holding 9o<;any syste< to 9o<;ly with this title or
any regulation or order ;ro<ulgated hereunder=
3DaE Pro9eed under "itle %5 or "itle %7, ha;ter III of this
ode with res;e9t to insurer within the holding 9o<;any
syste<F or
3D:E Revo?e or refuse to renew the authority to do :usiness
in this 9ountry of an insurer within the holding 9o<;any
syste< or refuse to issue su9h authority to any other insurer
in the syste<F or
3D9E -ire9t that, in addition to any other ;enalty ;rovided :y
law, su9h ;erson forfeit to the ;eo;le of this 9ountry a su<
not less than /ive thousand ;esos DP7,&&&.&&E for a first
violation and "wenty-five thousand ;esos DP07,&&&.&&E for
any su:seCuent violation. !n additional su< not less than
"wenty-five thousand ;esos DP07,&&&.&&E shall :e i<;osed
for ea9h <onth during whi9h any su9h violation shall
9ontinue.
41 | P a g e
R.A. 10607 The nsurance Code
3,!P"ER I>
3*!LE* !+E#IE* !#- "E,#I!L *ER>IE*
3"I"LE l
3I#*UR!#E !+E#"* !#- I#*UR!#E BR$2ER*
3*E. G&(. #o insuran9e 9o<;any doing :usiness in the
Phili;;ines, nor any agent thereof, shall ;ay any 9o<<ission
or other 9o<;ensation to any ;erson for servi9es in
o:taining insuran9e, unless su9h ;erson shall have first
;ro9ured fro< the o<<issioner a li9ense to a9t as an
insuran9e agent of su9h 9o<;any or as an insuran9e :ro?er
as hereinafter ;rovided.
3#o ;erson shall a9t as an insuran9e agent or as an
insuran9e :ro?er in the soli9itation or ;ro9ure<ent of
a;;li9ations for insuran9e, or re9eive for servi9es in
o:taining insuran9e, any 9o<<ission or other 9o<;ensation
fro< any insuran9e 9o<;any doing :usiness in the
Phili;;ines, or any agent thereof, without first ;ro9uring a
li9ense so to a9t fro< the o<<issioner, whi9h <ust :e
renewed every three DGE years thereafter. *u9h li9ense shall
:e issued :y the o<<issioner only u;on the written
a;;li9ation of the ;erson desiring it, su9h a;;li9ation if for a
li9ense to a9t as insuran9e agent, :eing a;;roved or
endorsed :y the 9o<;any su9h ;erson desires to re;resent,
and shall :e u;on a for< ;res9ri:ed :y the o<<issioner
giving su9h infor<ation as he <ay reCuire, and u;on
;ay<ent of the 9orres;onding fee hereinafter ;res9ri:ed.
"he o<<issioner shall satisfy hi<self as to the
9o<;eten9e and trustworthiness of the a;;li9ant and shall
have the right to refuse to issue or renew and to sus;end or
revo?e any su9h li9ense in his dis9retion. "he li9ense shall
eB;ire after the thirty-first day of -e9e<:er of the third year
following the date of issuan9e unless it is renewed.
3Li9enses <ay :e renewed in the 9ase of the 9o<;any
re;resented :y su9h agents, and in the 9ase of insuran9e
:ro?ers, u;on the a;;li9ation of the said :ro?ers,
the<selves.
3*E. G&6. "he ;rovisions of *e9tions G&( and G&8 shall
a;;ly to an e<;loyee who shall :e engaged to sell insuran9e
;rodu9ts :y an insuran9e 9o<;any.
3*E. G&8. !ny ;erson who for 9o<;ensation soli9its or
o:tains insuran9e on :ehalf of any insuran9e 9o<;any or
trans<its for a ;erson other than hi<self an a;;li9ation for a
;oli9y or 9ontra9t of insuran9e to or fro< su9h 9o<;any or
offers or assu<es to a9t in the negotiating of su9h insuran9e
shall :e an insuran9e agent within the intent of this se9tion
and shall there:y :e9o<e lia:le to all the duties,
reCuire<ents, lia:ilities and ;enalties to whi9h an insuran9e
agent is su:Ie9t.
3!n insuran9e agent is an inde;endent 9ontra9tor and not an
e<;loyee of the 9o<;any re;resented. @Insuran9e agentA
in9ludes an agen9y leader, agen9y <anager, or their
eCuivalent.
3*in9e the insuran9e industry is i<:ued with ;u:li9 interest,
the insuran9e 9o<;anies u;on a;;roval of the
o<<issioner <ay eBer9ise wide latitude in su;ervising the
a9tivities of their insuran9e agents to ensure the ;rote9tion of
the insuring ;u:li9.
3*E. G%&. !ny ;erson who for any 9o<;ensation,
9o<<ission or other thing of value a9ts or aids in any
<anner in soli9iting, negotiating or ;ro9uring the <a?ing of
any insuran9e 9ontra9t or in ;la9ing ris? or ta?ing out
insuran9e, on :ehalf of an insured other than hi<self, shall
:e an insuran9e :ro?er within the intent of this ode, and
shall there:y :e9o<e lia:le to all the duties, reCuire<ents,
lia:ilities and ;enalties to whi9h an insuran9e :ro?er is
su:Ie9t.
3*E. G%%. Every a;;li9ant for an insuran9e :ro?erAs li9ense
shall file with the a;;li9ation and shall thereafter <aintain in
for9e while so li9ensed, a :ond in favor of the ;eo;le of the
Re;u:li9 of the Phili;;ines eBe9uted :y a 9o<;any
authoriHed to :e9o<e surety u;on offi9ial re9ogniHan9es,
sti;ulations, :onds and underta?ings. "he :ond shall :e in
su9h a<ount as <ay :e fiBed :y the o<<issioner, :ut in no
9ase less than /ive hundred thousand ;esos DP7&&,&&&.&&E,
and shall :e 9onditioned u;on full a99ounting and due
;ay<ent to the ;erson entitled thereto of funds 9o<ing into
the :ro?erAs ;ossession through insuran9e transa9tions
under li9ense. "he :ond shall re<ain in for9e until released
:y the o<<issioner, or until 9an9elled :y the surety.
1ithout ;reIudi9e to any lia:ility ;reviously in9urred
thereunder, the surety <ay 9an9el the :ond on thirty DG&E
days advan9e written noti9e to :oth the :ro?er and the
o<<issioner.
3U;on a;;roval of the a;;li9ation, the a;;li9ant <ust also file
two D0E errors and o<issions D;rofessional lia:ility or
;rofessional inde<nityE ;oli9ies issued se;arately :y two D0E
insuran9e 9o<;anies authoriHed to do :usiness in the
Phili;;ines, satisfa9tory to the o<<issioner to inde<nify
the a;;li9ant against any 9lai< or 9lai<s for :rea9h of duty
as insuran9e :ro?er whi9h <ay :e <ade against hi< :y
reason of any negligent a9t, error or o<ission, whenever or
wherever 9o<<itted or alleged to have :een 9o<<itted, on
the ;art of the a;;li9ant or any ;erson who has :een, is now,
or <ay hereafter during the su:sisten9e of the ;oli9ies :e
e<;loyed :y the said a;;li9ant in his 9a;a9ity as insuran9e
:ro?er= Provided, "hat the filing of any 9lai< or 9lai<s under
one of su9h ;oli9ies shall ;re9lude the filing of the said 9lai<
or 9lai<s under the other ;oli9y. "he said ;oli9ies shall :e in
su9h a<ounts as <ay :e ;res9ri:ed :y the o<<issioner,
de;ending u;on the siHe or a<ount of the :ro?ing :usiness
of the a;;li9ant, :ut in no 9ase shall the a<ount of ea9h of
su9h ;oli9ies :e less than /ive hundred thousand ;esos
DP7&&,&&&.&&E.
3*E. G%0. "he o<<issioner shall, in order to deter<ine
the 9o<;eten9e of every a;;li9ant to have the ?ind of
li9ense a;;lied for, reCuire su9h a;;li9ant to su:<it to a
written eBa<ination and to ;ass the sa<e to the satisfa9tion
of the o<<issioner. "he o<<issioner <ay delegate or
authoriHe the ad<inistration of the eBa<ination to an
42 | P a g e
R.A. 10607 The nsurance Code
inde;endent organiHation, su:Ie9t to su9h 9onditions that the
o<<issioner <ay ;rovide.
3*E. G%G. !n a;;li9ant for the written eBa<ination
<entioned in the ;re9eding se9tion <ust :e of good <oral
9hara9ter and <ust not have :een 9onvi9ted of any 9ri<e
involving <oral tur;itude. ,e <ust satisfa9torily show to the
o<<issioner that he has :een trained in the ?ind of
insuran9e 9onte<;lated in the li9ense a;;lied for. *u9h
eBa<ination <ay :e waived if it is shown to the satisfa9tion
of the o<<issioner that the a;;li9ant has undergone
eBtensive edu9ation andKor training in insuran9e.
3*E. G%5. !n a;;li9ation for the issuan9e or renewal of a
li9ense to a9t as an insuran9e agent or insuran9e :ro?er <ay
:e refused, or su9h li9ense, if already issued or renewed,
shall :e sus;ended or revo?ed if the o<<issioner finds
that the a;;li9ant for, or holder of, su9h li9ense=
3DaE ,as willfully violated any ;rovision of this odeF or
3D:E ,as intentionally <ade a <aterial <isstate<ent in the
a;;li9ation to Cualify for su9h li9enseF or
3D9E ,as o:tained or atte<;ted to o:tain a li9ense :y fraud or
<isre;resentationF or
3DdE ,as :een guilty of fraudulent or dishonest ;ra9ti9esF or
3DeE ,as <isa;;ro;riated or 9onverted to his own use or
illegally withheld <oneys reCuired to :e held in a fidu9iary
9a;a9ityF or
3DfE ,as not de<onstrated trustworthiness and 9o<;eten9e
to transa9t :usiness as an insuran9e agent or insuran9e
:ro?er in su9h <anner as to safeguard the ;u:li9F or
3DgE ,as <aterially <isre;resented the ter<s and 9onditions
of ;oli9ies or 9ontra9ts of insuran9e whi9h he see?s to sell or
has soldF or
3DhE ,as failed to ;ass the written eBa<ination ;res9ri:ed, if
not otherwise eBe<;t fro< ta?ing the sa<e.
3In addition to the foregoing 9auses, no li9ense to a9t as
insuran9e agent or insuran9e :ro?er shall :e renewed if the
holder thereof has not :een a9tively engaged as su9h agent
or :ro?er in a99ordan9e with su9h rules as the
o<<issioner <ay ;res9ri:e.
3*E. G%7. "he ;re<iu<, or any ;ortion thereof, whi9h an
insuran9e agent or insuran9e :ro?er 9olle9ts fro< an insured
and whi9h is to :e ;aid to an insuran9e 9o<;any :e9ause of
the assu<;tion of lia:ility through the issuan9e of ;oli9ies or
9ontra9ts of insuran9e, shall :e held :y the agent or :ro?er
in a fidu9iary 9a;a9ity and shall not :e <isa;;ro;riated or
9onverted to his own use or illegally withheld :y the agent or
:ro?er.
3!ny insuran9e 9o<;any whi9h delivers to an insuran9e
agent or insuran9e :ro?er a ;oli9y or 9ontra9t of insuran9e
shall :e dee<ed to have authoriHed su9h agent or :ro?er to
re9eive on its :ehalf ;ay<ent of any ;re<iu< whi9h is due
on su9h ;oli9y or 9ontra9t of insuran9e at the ti<e of its
issuan9e or delivery or whi9h :e9o<es due thereon.
3In order to ensure faithful ;erfor<an9e :y the insuran9e
agent or insuran9e :ro?er of these fidu9iary res;onsi:ilities,
the Insuran9e o<<issioner shall ;res9ri:e the <ini<u<
ter<s and 9onditions on su9h <atters in the standard agen9y
or :ro?ers agree<ent :etween the agents andKor the :ro?er
with the insuran9e 9o<;anies.
3*E. G%'. !ny ;rovision of eBisting laws to the 9ontrary
notwithstanding, no ;erson shall, within the Phili;;ines, sell
or offer for sale a varia:le 9ontra9t or do or ;erfor< any a9t
or thing in the sale, negotiation, <a?ing or 9onsu<<ating of
any varia:le 9ontra9t other than for hi<self unless su9h
;erson shall have a valid and 9urrent li9ense fro< the
o<<issioner authoriHing su9h ;erson to a9t as a varia:le
9ontra9t agent. #o su9h li9ense shall :e issued unless and
until the o<<issioner is satisfied, after eBa<ination that
su9h ;erson is :y training, ?nowledge, a:ility and 9hara9ter
Cualified to a9t as su9h agent. !ny su9h li9ense <ay :e
withdrawn and 9an9elled :y the o<<issioner after noti9e
and hearing, if he shall find that the holder thereof does not
then have the Cualifi9ations reCuired for the issuan9e of su9h
li9ense.
3*E. G%(. It shall :e unlawful for any ;erson, 9o<;any or
9or;oration in the Phili;;ines to a9t as general agent of any
insuran9e 9o<;any unless he is e<;owered :y a written
;ower of attorney duly eBe9uted :y su9h insuran9e 9o<;any,
and registered with the o<<issioner to re9eive noti9es,
su<<ons and legal ;ro9esses for and in :ehalf of the
insuran9e 9o<;any 9on9erned in 9onne9tion with a9tions or
other legal ;ro9eedings against said insuran9e 9o<;any. It
shall :e the duty of said general agent to notify the
o<<issioner of his ;ost offi9e address in the Phili;;ines, or
any 9hange thereof. #oti9es, su<<ons, or ;ro9esses of any
?ind sent :y registered <ail to the last registered address of
su9h general agent of the 9o<;any 9on9erned or to the
o<<issioner shall :e suffi9ient servi9e and dee<ed as if
served on the insuran9e 9o<;any itself.
3*E. G%6. EB9e;t as otherwise ;rovided :y law or treaty, it
shall :e unlawful for any ;erson, ;artnershi;, asso9iation or
9or;oration in the Phili;;ines, for hi<self or itself, or for
so<e other ;erson, ;artnershi;, asso9iation or 9or;oration,
either to ;ro9ure, re9eive or forward a;;li9ations of
insuran9e in, or to issue or to deliver or a99e;t ;oli9ies or
9ontra9ts of insuran9e of or for, any insuran9e 9o<;any or
9o<;anies not authoriHed to transa9t :usiness in the
Phili;;ines, 9overing ris?s, life or non-life, situated in the
Phili;;inesF and any su9h ;erson, ;artnershi;, asso9iation or
9or;oration violating the ;rovisions of this se9tion shall :e
dee<ed guilty of a ;enal offense, and u;on 9onvi9tion
thereof, shall for ea9h su9h offense :e ;unished :y a fine of
"wo hundred fifty thousand ;esos DP07&,&&&.&&E, or
i<;rison<ent of siB D'E <onths, or :oth, at the dis9retion of
the 9ourt= Provided, "hat the ;rovisions of this se9tion shall
not a;;ly to reinsuran9e.
43 | P a g e
R.A. 10607 The nsurance Code
3"I"LE 0
3REI#*UR!#E BR$2ER*
3*E. G%8. EB9e;t as ;rovided in the neBt su99eeding title,
no ;erson shall a9t as reinsuran9e :ro?er in the Phili;;ines
unless he is authoriHed as su9h :y the o<<issioner.
3! reinsuran9e :ro?er is one who, for 9o<;ensation, not
:eing a duly authoriHed agent, e<;loyee or offi9er of an
insurer in whi9h any reinsuran9e is effe9ted, a9ts or aids in
any <anner in negotiating 9ontra9ts of reinsuran9e, or
;la9ing ris?s of effe9ting reinsuran9e, for any insuran9e
9o<;any authoriHed to do :usiness in the Phili;;ines.
3*E. G0&. U;on a;;li9ation and ;ay<ent of the
9orres;onding fee hereinafter ;res9ri:ed, and the filing of
two D0E errors and o<issions D;rofessional lia:ility or
;rofessional inde<nityE ;oli9ies hereinafter des9ri:ed, a
;erson <ay, if found Cualified, :e issued a li9ense to a9t as
reinsuran9e :ro?er :y the o<<issioner. #o su9h li9ense
shall :e valid after -e9e<:er G% of the third year following its
issuan9e unless it is renewed.
3"he errors and o<issions D;rofessional lia:ility or
;rofessional inde<nityE ;oli9ies <entioned a:ove shall
inde<nify the a;;li9ant against any 9lai< or 9lai<s for
:rea9h of duty as reinsuran9e :ro?er whi9h <ay :e <ade
against hi< :y reason of any negligent a9t, error or
o<ission, whenever or wherever 9o<<itted or alleged to
have :een 9o<<itted, on the ;art of the a;;li9ant or any
;erson who has :een, is now, or <ay hereafter during the
su:sisten9e of the ;oli9ies :e e<;loyed :y the said
a;;li9ant in his 9a;a9ity as reinsuran9e :ro?er= Provided,
"hat the filing of any 9lai< or 9lai<s under one of su9h
;oli9ies shall ;re9lude the filing of the said 9lai< or 9lai<s
under the other ;oli9y. "he said ;oli9ies shall :e issued
se;arately :y two D0E insuran9e 9o<;anies authoriHed to do
:usiness in the Phili;;ines and shall :e in su9h a<ounts as
<ay :e ;res9ri:ed :y the Insuran9e o<<issioner,
de;ending u;on the siHe or a<ount of the :ro?ing :usiness
of the a;;li9ant, :ut in no 9ase shall the a<ount of ea9h of
su9h ;oli9ies :e less than /ive hundred thousand ;esos
DP7&&,&&&.&&E.
3*E. G0%. "he o<<issioner <ay re9all, sus;end or
revo?e the li9ense granted to a reinsuran9e :ro?er for
violation of any eBisting law, rule and regulation, or any
;rovision of this ode after due noti9e and hearing.
3"I"LE G
3RE*I-E#" !+E#"*
3*E. G00. #o ;erson shall a9t as resident agent, as
hereinafter defined, unless he is registered as su9h with the
o<<issioner.
3*E. G0G. "he ter< resident agent, as used in this title, is
one duly a;;ointed :y a foreign insurer or :ro?er not
authoriHed to do :usiness in the Phili;;ines to re9eive in its
:ehalf noti9es, su<<ons and legal ;ro9esses in 9onne9tion
with a9tions or other legal ;ro9eedings against su9h foreign
insurer or :ro?er.
3*E. G05. "he a;;li9ation for a 9ertifi9ate of registration as
resident agent filed with the o<<issioner <ust :e
a99o<;anied with a 9o;y of the ;ower of attorney, duly
notariHed and authenti9ated :y the Phili;;ine onsul in the
;la9e where su9h foreign insurer or :ro?er is do<i9iled,
e<;owering the a;;li9ant to a9t as resident agent and to
re9eive noti9es, su<<ons and legal ;ro9esses for and in
:ehalf of su9h foreign insurer or :ro?er in 9onne9tion with
any a9tion or legal ;ro9eeding against su9h foreign insurer
or :ro?er.
3*E. G07. It shall :e the duty of su9h resident agent to
notify i<<ediately the o<<issioner of any 9hange of his
offi9e address.
3*E. G0'. ! 9ertifi9ate of registration issued to a resident
agent shall eB;ire on the thirty-first day of -e9e<:er of the
third year following its issuan9e unless it is renewed.
3"he o<<issioner <ay, after due noti9e and hearing, re9all
or 9an9el the 9ertifi9ate of registration issued to a resident
agent for violation of any eBisting law, rule or regulation, or
any ;rovision of this ode.
3"I"LE 5
3#$#-LI/E $MP!#. U#-ER1RI"ER
3*E. G0(. #o ;erson shall a9t, and no 9o<;any shall
e<;loy any ;erson, as non-life 9o<;any underwriter, whose
duty and res;onsi:ility it shall :e to sele9t, evaluate and
a99e;t ris?s for, and to deter<ine the ter<s and 9onditions,
in9luding those ;ertaining to a<ounts of retentions, under
whi9h su9h ris?s are to :e a99e;ted :y the 9o<;any, unless
su9h underwriter is registered as su9h with the
o<<issioner.
3*E. G06. Every non-life insuran9e 9o<;any doing
:usiness in the Phili;;ines <ust <aintain at all ti<es a
register of ris?s a99e;ted and a 9lai<s register for ea9h line
of ris?s engaged in :y su9h non-life insuran9e 9o<;any with
su9h entries therein as are now or as <ay hereafter :e
reCuired :y the o<<issioner, and it shall :e the
res;onsi:ility of the underwriter on the ;arti9ular line of ris?
involved to see to it that the said registers are well
<aintained and ?e;t, and that all entries therein are ;ro;erly
and 9orre9tly re9orded. *u9h registers shall :e o;en to
ins;e9tion and eBa<ination of duly authoriHed
re;resentatives of the o<<issioner at all ti<es during
:usiness hours.
3*E. G08. #o ;erson shall :e registered with the
o<<issioner, unless su9h ;erson shall :e at least twenty-
one D0%E years of age on the date of su9h registrationF a
resident of the Phili;;inesF of good <oral 9hara9ter and with
no 9onvi9tion of any 9ri<e involving <oral tur;itudeF has had
at the ti<e su9h registration is <ade at least two D0E years of
44 | P a g e
R.A. 10607 The nsurance Code
underwriting wor? in the ;arti9ular line of ris? involvedF and
has ;assed su9h Cualifying written eBa<ination that the
o<<issioner shall 9ondu9t at su9h ti<e and in su9h ;la9e
as he <ay de9ide to hold for a;;li9ants desiring to a9t as
underwriters.
3*u9h eBa<ination shall not :e reCuired of any ;erson who
has served as non-life 9o<;any underwriter for a ;eriod of at
least five D7E years, if the o<<issioner is satisfied of the
a;;li9antAs 9o<;eten9e as shown :y the results of his
underwriting wor? in the non-life insuran9e 9o<;any or
9o<;anies that e<;loyed hi< in that 9a;a9ity. "he <ini<u<
underwriting eB;erien9e herein reCuired <ay :e redu9ed or
waived if it is shown to the satisfa9tion of the o<<issioner
that the non-life 9o<;any underwriter has undergone
eBtensive edu9ation andKor training in insuran9e.
3*E. GG&. !ny a;;li9ant who <isre;resents or o<its any
<aterial fa9t in his a;;li9ation for registration as a non-life
9o<;any underwriter, or 9o<<its any dishonest a9t in ta?ing
or in 9onne9tion with the Cualifying written eBa<ination for
underwriters, shall :e :arred fro< :eing registered as su9h
non-life 9o<;any underwriter and, if already registered, his
registration shall :e 9an9elled and the 9ertifi9ate of
registration issued in his favor shall :e re9alled i<<ediately
:y the o<<issioner.
3In the event that the 9ertifi9ate of authority of a non-life
insuran9e 9o<;any to transa9t :usiness is sus;ended or
revo?ed due to :usiness failure arising largely fro< the
i<;rudent and inIudi9ious a99e;tan9e of ris?s :y the
underwriter 9on9erned, the registration of su9h underwriter
shall li?ewise :e 9an9elled and his 9ertifi9ate of registration
shall :e re9alled :y the o<<issioner, and no si<ilar
9ertifi9ate shall thereafter :e issued in his favor.
3*E. GG%. #o 9ertifi9ate of registration issued to an
underwriter shall :e valid after -e9e<:er G% of the third year
following its issuan9e unless it is renewed.
3"he o<<issioner <ay, after due noti9e and hearing, also
sus;end or 9an9el su9h 9ertifi9ate for violation of eBisting
laws, rules and regulations or of any ;rovisions of this ode.
3"I"LE 7
3!-JU*"ER*
3*E. GG0. #o ;erson, ;artnershi;, asso9iation, or
9or;oration shall a9t as an adIuster, as hereinafter defined,
unless authoriHed so to a9t :y virtue of a li9ense issued or
renewed :y the o<<issioner ;ursuant to the ;rovisions of
this ode= Provided, "hat in the 9ase of a natural ;erson, he
<ust :e a /ili;ino 9itiHen and in the 9ase of a ;artnershi;,
asso9iation or 9or;oration, at least siBty ;er9ent D'&LE of its
9a;ital <ust :e owned :y 9itiHens of the Phili;;ines.
3*E. GGG. !n adIuster <ay :e an inde;endent adIuster or a
;u:li9 adIuster.
3"he ter< inde;endent adIuster <eans any ;erson,
;artnershi;, asso9iation or 9or;oration whi9h, for <oney,
9o<<ission or any other thing of value, a9ts for or on :ehalf
of an insurer in the adIusting of 9lai<s arising under
insuran9e 9ontra9ts or ;oli9ies issued :y su9h insurer.
3"he ter< ;u:li9 adIuster <eans any ;erson, ;artnershi;,
asso9iation or 9or;oration whi9h, for <oney, 9o<<ission or
any other thing of value, a9ts on :ehalf of an insured in
negotiating for, or effe9ting, the settle<ent of a 9lai< or
9lai<s of the said insured arising under insuran9e 9ontra9ts
or ;oli9ies, or whi9h advertises for or soli9its e<;loy<ent as
an adIuster of su9h 9lai<s.
3*E. GG5. /or every line of insuran9e 9lai< adIust<ent,
adIusters shall :e li9ensed either as inde;endent adIusters
or as ;u:li9 adIusters. #o adIuster shall a9t on :ehalf of an
insurer unless said adIuster is li9ensed as an inde;endent
adIusterF and no adIuster shall a9t on :ehalf of an insured
unless said adIuster is li9ensed as a ;u:li9 adIuster=
Provided, however, "hat when a fir< or ;erson has :een
li9ensed as a ;u:li9 adIuster, he shall not :e granted another
li9ense as inde;endent adIuster and vi9e versa.
3#o li9ense, however, shall :e reCuired of any 9o<;any
adIuster who is a salaried e<;loyee of an insuran9e
9o<;any for the adIust<ent of 9lai<s filed under ;oli9ies
issued :y su9h insuran9e 9o<;any.
3*E. GG7. *u9h li9ense or any renewal thereof <ay :e
issued :y the o<<issioner u;on written a;;li9ation filed :y
the ;erson interested on the for< or for<s ;res9ri:ed :y the
o<<issioner, whi9h shall 9ontain su9h infor<ation as he
<ay reCuire, and u;on ;ay<ent of the 9orres;onding fee
hereinafter ;res9ri:ed.
3*E. GG'. "he o<<issioner shall 9ondu9t, at su9h ti<es,
and in su9h ;la9es as he <ay de9ide to hold, written
eBa<inations to deter<ine the 9o<;eten9e and a:ility of
a;;li9ants desiring to a9t as adIuster of insuran9e 9lai<s.
3*E. GG(. #o adIusterAs li9ense issued hereunder shall :e
valid after -e9e<:er G% of the third year following the
issuan9e of su9h li9ense unless it is renewed.
3*E. GG6. #othing 9ontained in this title shall a;;ly to any
duly li9ensed attorney-at-law who a9ts or aids in adIusting
insuran9e 9lai<s as an in9ident to the ;ra9ti9e of his
;rofession and who does not advertise hi<self as an
adIuster.
3*E. GG8. "he o<<issioner <ay sus;end or revo?e any
adIusterAs li9ense if, after giving noti9e and hearing to the
adIuster 9on9erned, the o<<issioner finds that the said
adIuster=
3DaE ,as violated any ;rovision of this ode and of the
9ir9ulars, rulings and instru9tions of the o<<issioner or has
violated any law in the 9ourse of his dealings as an adIusterF
or
3D:E ,as <ade a <aterial <isstate<ent in the a;;li9ation for
su9h li9enseF or
45 | P a g e
R.A. 10607 The nsurance Code
3D9E ,as :een guilty of fraudulent or dishonest ;ra9ti9esF or
3DdE ,as de<onstrated his in9o<;eten9e or
untrustworthiness to a9t as adIusterF or
3DeE ,as <ade ;atently unIust valuation of lossF or
3DfE ,as failed to <a?e a re;ort of the adIust<ent he
;ro;osed within siBty D'&E days fro< the date of the filing of
the 9lai< :y the insured with the insurer, unless ;revented
so to do :y reasons :eyond his 9ontrolF or
3DgE ,as refused to allow an eBa<ination into his affairs or
<ethod of doing :usiness as hereinafter ;rovided.
3*E. G5&. Every adIuster shall su:<it to the o<<issioner
a Cuarterly re;ort of all losses whi9h are the su:Ie9t of
adIust<ent effe9ted :y hi< during ea9h <onth in the for<
;res9ri:ed :y the o<<issioner. "he re;ort shall :e filed
within one D%E <onth after the end of ea9h Cuarter.
3*E. G5%. Every adIuster shall ?ee; his or its :oo?s,
re9ords, re;orts, a99ounts, and vou9hers in su9h <anner
that the o<<issioner or his duly authoriHed re;resentatives
<ay readily verify the Cuarterly re;orts of the said adIuster
and as9ertain whether the said adIuster has 9o<;lied with
the ;rovisions of law or regulations o:ligatory u;on hi< or
whether the <ethod of doing :usiness of the said adIuster
has :een fair, Iust and honest.
3*E. G50. "he o<<issioner shall, at least on9e a year
and whenever he 9onsiders the ;u:li9 interest so de<ands,
9ause an eBa<ination to :e <ade into the affairs and
<ethod of doing :usiness of every adIuster.
3*E. G5G. !ny violation of any ;rovision of this title shall :e
;unished :y a fine of not less than "en thousand ;esos
DP%&,&&&.&&E, or :y i<;rison<ent at the dis9retion of the
9ourt= Provided, "hat, in 9ase of a ;artnershi;, asso9iation or
9or;oration, the said ;enalty shall :e i<;osed u;on the
;artner, ;resident, <anager, <anaging dire9tor, dire9tor or
;erson in 9harge of its :usiness or res;onsi:le for the
violation.
3"I"LE '
3!"U!RIE*
3*E. G55. #o life insuran9e 9o<;any shall :e li9ensed to
do :usiness in the Phili;;ines nor shall any life insuran9e
9o<;any doing :usiness in the Phili;;ines :e allowed to
9ontinue doing su9h :usiness unless they shall engage the
servi9es of an a9tuary duly a99redited with the
o<<issioner who shall, during his tenure of offi9e, :e
dire9tly res;onsi:le for the dire9tion and su;ervision of all
a9tuarial wor? 9onne9ted with or that <ay :e involved in the
:usiness of the insuran9e 9o<;any. "he o<<issioner <ay
also reCuire non-life insuran9e 9o<;anies to engage the
servi9es of an a99redited a9tuary, in a99ordan9e with the
rules and regulations that the o<<issioner will for<ulate.
3*E. G57. !ny ;erson <ay :e offi9ially a99redited :y the
o<<issioner to a9t as an a9tuary in any life insuran9e
9o<;any or in any <utual :enefit asso9iation authoriHed to
do :usiness in the Phili;;ines u;on a;;li9ation therefor and
the ;ay<ent of the 9orres;onding fee hereinafter ;res9ri:ed=
Provided, "hat=
3DaE ,e is a fellow of good standing of the !9tuarial *o9iety of
the Phili;;ines at the ti<e of his a;;oint<ent and re<ains in
su9h good standing during the tenure of his engage<entF or
3D:E In the 9ase of one who is not a fellow of the !9tuarial
*o9iety of the Phili;;ines, he <eets all the reCuire<ents of
the said *o9iety for a99reditation as a fellow of the *o9iety,
and has :een given ;er<ission :y the ;ertinent govern<ent
authorities in the Phili;;ines to render servi9es in the
Phili;;ines, in the event that he is not a 9itiHen of the
Phili;;ines.
3"he registration of the a9tuary shall :e sus;ended or
revo?ed :y the o<<issioner on the following grounds=
3D%E /ailure to adeCuately ;erfor< reCuired fun9tions and
duties under this odeF
3D0E /ailure to dis9lose 9onfli9t of interestF
3DGE /ailure to 9o<;ly with the ode of ondu9t of the
!9tuarial *o9iety of the Phili;;inesF or
3D5E *u9h other grounds that <ay :e deter<ined :y the
o<<issioner.
3#o a9tuary engaged :y a life insuran9e 9o<;any shall :e at
the sa<e ti<e a sto9?holder or a dire9tor of the :oard, 9hief
eBe9utive offi9er or 9hief finan9ial offi9er of the 9o<;any or
hold any ;osition that the o<<issioner <ay deter<ine to
have an inherent 9onfli9t of interest to the ;osition of an
a9tuary.
3#o 9ertifi9ate of registration issued under this title shall :e
valid after -e9e<:er G% of the third year following its
issuan9e unless it is renewed.
3*E. G5'. "he following do9u<ents, whi9h are fro< ti<e to
ti<e su:<itted to the o<<issioner :y a life insuran9e
9o<;any authoriHed to do :usiness in the Phili;;ines, shall
:e duly 9ertified :y an a99redited a9tuary e<;loyed :y su9h
9o<;any=
3DaE Poli9y reserves, 9lai<s or loss reserves and net due and
deferred ;re<iu<s.
3D:E *tate<ents of :ases and net ;re<iu<s, loading for
gross ;re<iu<s, and on non-forfeiture values and reserves,
when a;;lying for a;;roval of gross ;re<iu<s, reserves and
non-forfeiture values.
3D9E Poli9ies of insuran9e under any ;lan su:<itted to the
o<<issioner as reCuired :y law.
46 | P a g e
R.A. 10607 The nsurance Code
3DdE !nnual state<ents and valuation re;orts su:<itted to
the o<<issioner as reCuired :y law.
3DeE /inan9ial ;roIe9tion showing the ;ro:a:le in9o<e and
outgo and reserve reCuire<ents, enu<erating the a9tuarial
assu<;tions and :ases of ;roIe9tions.
3DfE >aluation of annuity funds or retire<ent ;lans.
3"he o<<issioner <ay also reCuire non-life insuran9e
9o<;anies to su:<it, fro< ti<e to ti<e, si<ilar do9u<ents
whi9h shall :e duly 9ertified :y an a99redited a9tuary
e<;loyed :y su9h 9o<;any.
3!ny life insuran9e 9o<;any authoriHed to do :usiness in the
Phili;;ines <ay e<;loy any ;erson who is not offi9ially
a99redited under either of the Cualifi9ations for any ?ind of
a9tuarial wor?= Provided, "hat he shall not, at any ti<e, have
the authority to 9ertify to the 9orre9tness of the foregoing
do9u<ents.
3*E. G5(. #o a99redited a9tuary shall serve <ore than one
9lient or e<;loyer at the sa<e ti<e. ,owever, one already in
the e<;loy of an insuran9e 9o<;any <ay :e allowed :y the
o<<issioner to serve a <utual :enefit asso9iation or any
other insuran9e 9o<;any, ;rovided the following 9onditions
are first 9o<;lied with=
3DaE "hat the reCuest to engage his servi9es :y the other
e<;loyer is in writingF
3D:E "hat his ;resent e<;loyer a9Cuies9ed to it in writingF and
3D9E "hat he furnishes the o<<issioner with 9o;ies of said
reCuest and a9Cuies9en9e.
3#o eBternal auditor shall :e engaged :y su;ervised ;ersons
or entities unless it has :een issued an a99reditation
9ertifi9ate :y the o<<issioner. "he a99reditation 9ertifi9ate
shall :e valid until -e9e<:er G% of the third year fro<
issuan9e unless it is revo?ed or sus;ended. "he
o<<issioner shall issue rules and regulations to govern the
a99reditation of the eBternal auditor and the revo9ation or
sus;ension of the a99reditation.
3"I"LE (
3R!"I#+ $R+!#IM!"I$# !#- R!"E M!2I#+
3*E. G56. Every organiHation whi9h now eBists or whi9h
<ay hereafter :e for<ed for the ;ur;ose of <a?ing rates to
:e used :y <ore than one insuran9e 9o<;any authoriHed to
do :usiness in the Phili;;ines shall :e ?nown as a rating
organiHation. "he ter< rate as used in this title shall
generally <ean the ratio of the ;re<iu< to the a<ount
insured and shall in9lude, as the 9onteBt <ay reCuire, either
the 9onsideration to :e ;aid or 9harged for insuran9e
9ontra9ts, in9luding surety :onds, or the ele<ents and
fa9tors for<ing the :asis for the deter<ination or a;;li9ation
of the sa<e, or :oth.
3*E. G58. Every rating organiHation whi9h now eBists or
whi9h <ay hereafter :e for<ed shall :e su:Ie9t to the
;rovisions of this title.
3*E. G7&. #o rating organiHation hereafter for<ed shall
9o<<en9e rate-<a?ing o;erations until it shall have
o:tained a li9ense fro< the o<<issioner. Before o:taining
su9h li9ense, su9h rating organiHation shall file with the
o<<issioner a noti9e of its intention to 9o<<en9e rate-
<a?ing o;erations, a 9o;y of its 9onstitution, arti9les of
agree<ent or asso9iation, or of in9or;oration, and its :ylaws,
a list of insuran9e 9o<;anies that have agreed to :e9o<e
<e<:ers or su:s9ri:ers, and su9h other infor<ation
9on9erning su9h rating organiHation and its o;erations as
<ay :e reCuired :y the o<<issioner. If the o<<issioner
finds that the organiHation has 9o<;lied with the ;rovisions
of law and that it has a suffi9ient nu<:er of <e<:ers or
su:s9ri:ers and is otherwise Cualified to fun9tion as a rating
organiHation, the o<<issioner <ay issue a li9ense to su9h
rating organiHation authoriHing it to <a?e rates for the ?inds
of insuran9e or su:divisions thereof as <ay :e s;e9ified in
su9h li9ense. #o li9ense issued to a rating organiHation shall
:e valid after -e9e<:er G% of the third year following its
issuan9e unless it is renewed. #o rating organiHation whi9h
now eBists and is not li9ensed ;ursuant to this se9tion shall
9ontinue rate-<a?ing o;erations until it shall have o:tained
fro< the o<<issioner a li9ense whi9h he <ay issue if
satisfied that su9h organiHation is 9o<;lying with the
;rovisions of this title. Every rating organiHation shall notify
the o<<issioner ;ro<;tly of every 9hange in=
3DaE Its 9onstitution, its arti9les of agree<ent or asso9iation or
its 9ertifi9ate of in9or;oration, and its :ylaws, rules and
regulations governing the 9ondu9t of its :usinessF and
3D:E Its list of <e<:ers and su:s9ri:ers.
3! <e<:er <eans an insurer who ;arti9i;ates in or is
entitled to ;arti9i;ate in the <anage<ent of a rating
organiHation.
3! su:s9ri:er <eans an insurer whi9h is furnished at its
reCuest with rates and rating <anuals :y a rating
organiHation of whi9h it is not a <e<:er.
3*E. G7%. Ea9h rating organiHation shall furnish its rating
servi9e without dis9ri<ination to all of its <e<:ers and
su:s9ri:ers, and shall, su:Ie9t to reasona:le rules and
regulations, ;er<it any insuran9e 9o<;any doing :usiness
in the Phili;;ines, not ad<itted to <e<:ershi;, to :e9o<e a
su:s9ri:er to its rating servi9es for any ?ind of insuran9e or
su:divisions thereof. #oti9e of ;ro;osed 9hanges in su9h
rules and regulations shall :e given to su:s9ri:ers. "he
reasona:leness of any rule or regulation in its a;;li9ation to
su:s9ri:ers, or the refusal of any rating organiHation to ad<it
an insuran9e 9o<;any as a su:s9ri:er, shall, at the reCuest
of any su:s9ri:er or any su9h insuran9e 9o<;any, :e
reviewed :y the o<<issioner at a hearing held u;on at
least ten D%&E daysA written noti9e to su9h rating organiHation
47 | P a g e
R.A. 10607 The nsurance Code
and to su9h su:s9ri:er or insuran9e 9o<;any. "he
o<<issioner <ay, after su9h hearing, issue an a;;ro;riate
order.
3*E. G70. #o rating organiHation or any other asso9iation
shall refuse to do :usiness with, or ;rohi:it or ;revent the
;ay<ent of 9o<<issions to, any ;erson li9ensed as an
insuran9e :ro?er ;ursuant to the ;rovisions of "itle % of this
9ha;ter.
3*E. G7G. Rating organiHations shall :e su:Ie9t to
eBa<ination :y the o<<issioner, as often as he <ay dee<
su9h eBa<ination eB;edient, ;ursuant to the ;rovisions of
this ode a;;li9a:le to the eBa<ination of insuran9e
9o<;anies. ,e shall 9ause su9h an eBa<ination of ea9h
rating organiHation to :e <ade at least on9e in every five D7E
years.
3*E. G75. "he o<<issioner <ay sus;end or revo?e the
li9ense of any rating organiHation whi9h fails to 9o<;ly with
his order within the ti<e li<ited :y su9h order, or any
eBtension thereof whi9h he <ay grant. "he o<<issioner
<ay deter<ine when a sus;ension of li9ense shall :e9o<e
effe9tive and it shall re<ain in effe9t for the ;eriod fiBed :y
hi<, unless he <odifies or res9inds su9h sus;ension.
3*E. G77. !ny rating organiHation <ay su:s9ri:e for or
;ur9hase a9tuarial, te9hni9al or other servi9es, and su9h
servi9es shall :e availa:le to all <e<:ers and su:s9ri:ers
without dis9ri<ination.
3*E. G7'. !ny rating organiHation <ay ;rovide for the
eBa<ination of ;oli9ies, daily re;orts, :inders, renewal
9ertifi9ates, endorse<ents or other instru<ents of insuran9e,
or the 9an9ellation thereof, and <ay <a?e reasona:le rules
governing their su:<ission. *u9h rules shall 9ontain a
;rovision that in the event an insuran9e 9o<;any does not
within siBty D'&E days furnish satisfa9tory eviden9e to the
rating organiHation of the 9orre9tion of any error or o<ission
;reviously 9alled to its attention :y the rating organiHation, it
shall :e the duty of the rating organiHation to notify the
o<<issioner thereof. !ll infor<ation so su:<itted for
eBa<ination shall :e 9onfidential.
3*E. G7(. oo;eration a<ong rating organiHations or
a<ong rating organiHations and insurers in rate <a?ing or in
other <atters within the s9o;e of this title is here:y
authoriHed, ;rovided the filings resulting fro< su9h
9oo;eration are su:Ie9t to all ;rovisions of this title whi9h are
a;;li9a:le to filings generally. "he o<<issioner <ay review
su9h 9oo;erative a9tivities and ;ra9ti9es and if he finds that
any su9h a9tivity or ;ra9ti9e is unfair or unreasona:le or
otherwise in9onsistent with the ;rovisions of this title, he <ay
issue a written order s;e9ifying in what res;e9ts su9h a9tivity
or ;ra9ti9e is unfair or unreasona:le or otherwise
in9onsistent with the ;rovisions of this title, and reCuiring the
dis9ontinuan9e of su9h a9tivity or ;ra9ti9e.
3*E. G76. Every rating organiHation and every insuran9e
9o<;any whi9h <a?es and files its own rates, shall <a?e
rates for all ris?s rated :y su9h organiHation or insuran9e
9o<;any in a99ordan9e with the following ;rovisions=
3DaE Basi9 9lassifi9ation, <anual, <ini<u<, 9lass, or
s9hedule rates or rating ;lans, shall :e <ade and ado;ted
for all su9h ris?s. !ny de;arture fro< su9h rates shall :e in
a99ordan9e with s9hedules, rating ;lans and rules filed with
the o<<issionerF
3D:E Rates shall :e reasona:le and adeCuate for the 9lass of
ris?s to whi9h they a;;lyF
3D9E #o rate shall dis9ri<inate unfairly :etween ris?s
involving essentially the sa<e haHards and eB;ense
ele<ents or :etween ris?s in the a;;li9ation of li?e 9harges
and 9reditsF
3DdE onsideration shall :e given to the ;ast and ;ros;e9tive
loss eB;erien9e, in9luding the 9onflagration and 9atastro;he
haHards, if any, to all fa9tors reasona:ly attri:uta:le to the
9lass of ris?s, to a reasona:le ;rofit, to 9o<<issions ;aid
during the <ost re9ent annual ;eriod and to ;ast and
;ros;e9tive other eB;enses. In 9ase of fire insuran9e rates,
9onsideration shall :e given to the eB;erien9e of the fire
insuran9e :usiness during a ;eriod of not less than five D7E
years neBt ;re9eding the year in whi9h the review is <adeF
3DeE Ris? <ay :e grou;ed :y 9lassifi9ations for the
esta:lish<ent of rates and <ini<u< ;re<iu<s.
lassifi9ation rates <ay :e <odified to ;rodu9e rates for
individual ris?s in a99ordan9e with rating ;lans whi9h
esta:lish standards for <easuring variations in haHards or
eB;ense ;rovisions, or :oth. *u9h standards <ay <easure
any differen9e a<ong ris?s that 9an :e de<onstrated to
have a ;ro:a:le effe9t u;on losses or eB;enses.
3*E. G78. #o rating organiHation and no insuran9e
9o<;any whi9h <a?es and files its own rates shall <a?e or
;ro<ulgate any rate or s9hedule of rates whi9h is to :e
a;;lied to any fire ris? on the 9ondition that the whole
a<ount of insuran9e on any ris? or any s;e9ified ;art thereof
shall :e ;la9ed with the <e<:ers of or su:s9ri:ers to su9h
rating organiHation or with su9h insurer.
3*E. G'&. Every insuran9e 9o<;any doing :usiness in the
Phili;;ines shall annually file with the rating organiHation of
whi9h it is a <e<:er or su:s9ri:er, or with su9h other
agen9y as the o<<issioner <ay designate, a statisti9al
re;ort showing a 9lassifi9ation s9hedule of its ;re<iu<s and
losses on all ?inds or ty;es of insuran9e :usiness to whi9h
*e9tion G76 is a;;li9a:le, and su9h other infor<ation as the
o<<issioner <ay dee< ne9essary or eB;edient for the
ad<inistration of the ;rovisions of this title.
3*E. G'%. Every non-life rating organiHation and every non-
life insuran9e 9o<;any doing :usiness in the Phili;;ines
shall file with the o<<issioner, eB9e;t as to ris?s whi9h :y
general 9usto< of the :usiness are not written a99ording to
<anual rates or rating ;lans, every rate <anual, s9hedule of
rates, 9lassifi9ation of ris?s, rating ;lan, and every other
rating rule and every <odifi9ation of any of the foregoing
whi9h it ;ro;oses to use. !n insuran9e 9o<;any <ay satisfy
its o:ligation to <a?e su9h filings for any ?ind or ty;e of
insuran9e :y :e9o<ing a <e<:er of or su:s9ri:er to a rating
organiHation whi9h <a?es su9h filings for su9h ?ind or ty;e
48 | P a g e
R.A. 10607 The nsurance Code
of insuran9e, and :y authoriHing the o<<issioner to a99e;t
su9h filings of the rating organiHation on :ehalf of su9h
insuran9e 9o<;any.
3*E. G'0. Every <anual or s9hedule of rates and every
rating ;lan filed as ;rovided in the ;re9eding se9tion shall
state or 9learly indi9ate the 9hara9ter and eBtent of the
9overage to whi9h any su9h rate or any <odifi9ation thereof
will :e a;;lied.
3*E. G'G. "he o<<issioner shall review filings as soon as
reasona:ly ;ossi:le after they have :een <ade in order to
deter<ine whether they <eet the reCuire<ents of this title.
1hen a filing is not a99o<;anied :y the infor<ation u;on
whi9h the insuran9e 9o<;any su;;orts su9h filing, and the
o<<issioner does not have suffi9ient infor<ation to
deter<ine whether su9h filing <eets the reCuire<ents of this
title, he shall reCuire su9h insuran9e 9o<;any to furnish the
infor<ation u;on whi9h it su;;orts su9h filing. "he
infor<ation furnished in su;;ort of a filing <ay in9lude=
3DaE "he eB;erien9e or Iudg<ent of the insuran9e 9o<;any
or rating organiHation <a?ing the filingF
3D:E Its inter;retation of any statisti9al data it relies u;onF
3D9E "he eB;erien9e of other insuran9e 9o<;anies or rating
organiHationF or
3DdE !ny other relevant fa9tors.
3*E. G'5. If the o<<issioner finds that any rate filings
theretofore filed with hi< do not 9o<;ly with the ;rovisions of
this title or that they ;rovide rates or rules whi9h are
inadeCuate, eB9essive, unfairly dis9ri<inatory or otherwise
unreasona:le, he <ay order the sa<e withdrawn and at the
eB;iration of siBty D'&E days thereafter the sa<e shall :e
dee<ed no longer on file. Before <a?ing any su9h finding
and order, the o<<issioner shall give noti9e, not less than
ten D%&E days in advan9e, and a hearing, to the rating
organiHation, or to the insurer, whi9h filed the sa<e. *u9h
order shall not affe9t any 9ontra9t or ;oli9y <ade or issued
;rior to the eB;iration of su9h siBty D'&E-day ;eriod.
3*E. G'7. #o <e<:er or su:s9ri:er of a rating
organiHation, and no insuran9e 9o<;any doing :usiness in
the Phili;;ines, or agent, e<;loyee or other re;resentative
of su9h 9o<;any, and no insuran9e :ro?er shall 9harge or
de<and a rate or re9eive a ;re<iu< whi9h deviates fro< the
rates, rating ;lans, 9lassifi9ations, s9hedules, rules and
standards, <ade and last filed :y a rating organiHation or :y
or on :ehalf of the insuran9e 9o<;any, or shall issue or
<a?e any ;oli9y or 9ontra9t involving a violation of su9h rate
filings.
3*E. G''. #otwithstanding any other ;rovisions of this title,
u;on the written a;;li9ation of the insurer, stating his
reasons therefor, filed with and a;;roved :y the
o<<issioner, a rate in eB9ess of that ;rovided :y a filing
otherwise a;;li9a:le <ay :e used on any s;e9ifi9 ris?.
3*E. G'(. 1henever the o<<issioner shall deter<ine,
after noti9e and a hearing, that the rates 9harged or filed on
any 9lass of ris?s are eB9essive, dis9ri<inatory, inadeCuate
or unreasona:le, he shall order that su9h rates :e
a;;ro;riately adIusted. /or the ;ur;ose of a;;lying the
;rovisions of this se9tion, the o<<issioner <ay fro< ti<e
to ti<e a;;rove reasona:le 9lassifi9ations of ris?s for any or
all su9h 9lasses, having due regard to the ;ast and
;ros;e9tive loss eB;erien9e, in9luding 9onflagration or
9atastro;he haHards, if any, to all other relevant fa9tors and
to a reasona:le ;rofit.
3*E. G'6. #othing 9ontained in this title shall :e 9onstrued
as reCuiring any insurer to :e9o<e a <e<:er of or
su:s9ri:er to any rating organiHation.
3*E. G'8. !gree<ents <ay :e <ade a<ong insuran9e
9o<;anies with res;e9t to the eCuita:le a;;ortion<ent
a<ong the< of insuran9e whi9h <ay :e afforded a;;li9ants
who are in good faith entitled to :ut are una:le to ;ro9ure
su9h insuran9e through ordinary <ethods and su9h
insuran9e 9o<;anies <ay agree a<ong the<selves on the
use of reasona:le rates and <odifi9ations for su9h
insuran9e, su9h agree<ents and rate <odifi9ations to :e
su:Ie9t to the a;;roval of the o<<issioner= Provided,
however, "hat the ;rovisions of this se9tion shall not :e
dee<ed to a;;ly to wor?<enAs 9o<;ensation insuran9e.
3*E. G(&. #o insuran9e 9o<;any doing :usiness in the
Phili;;ines or any agent thereof, no insuran9e :ro?er, and no
e<;loyee or other re;resentative of any su9h insuran9e
9o<;any, agent, or :ro?er, shall <a?e, ;ro9ure or negotiate
any 9ontra9t of insuran9e or agree<ent as to ;oli9y 9ontra9t,
other than is ;lainly eB;ressed in the ;oli9y or other written
9ontra9t issued or to :e issued as eviden9e thereof, or shall
dire9tly or indire9tly, :y giving or sharing a 9o<<ission or in
any <anner whatsoever, ;ay or allow or offer to ;ay or allow
to the insured or to any e<;loyee of su9h insured, either as
an indu9e<ent to the <a?ing of su9h insuran9e or after su9h
insuran9e has :een effe9ted, any re:ate fro< the ;re<iu<
whi9h is s;e9ified in the ;oli9y, or any s;e9ial favor or
advantage in the dividends or other :enefits to a99rue
thereon, or shall give or offer to give any valua:le
9onsideration or indu9e<ent of any ?ind, dire9tly or indire9tly,
whi9h is not s;e9ified in su9h ;oli9y or 9ontra9t of insuran9eF
nor shall any su9h 9o<;any, or any agent thereof, as to any
;oli9y or 9ontra9t of insuran9e issued, <a?e any
dis9ri<ination against any /ili;ino in the sense that he is
given less advantageous rates, dividends or other ;oli9y
9onditions or ;rivileges than are a99orded to other nationals
:e9ause of his ra9e.
3*E. G(%. #o insuran9e 9o<;any doing :usiness in the
Phili;;ines, and no offi9er, dire9tor, or agent thereof, and no
insuran9e :ro?er or any other ;erson, ;artnershi; or
9or;oration shall issue or 9ir9ulate or 9ause or ;er<it to :e
issued or 9ir9ulated any literature, illustration, 9ir9ular or
state<ent of any sort <isre;resenting the ter<s of any ;oli9y
issued :y any insuran9e 9o<;any of the :enefits or
advantages ;ro<ised there:y, or any <isleading esti<ate of
the dividends or share of sur;lus to :e re9eived thereon, or
shall use any na<e or title of any ;oli9y or 9lass of ;oli9ies
49 | P a g e
R.A. 10607 The nsurance Code
<isre;resenting the true nature thereofF nor shall any su9h
9o<;any or agent thereof, or any other ;erson, ;artnershi;
or 9or;oration <a?e any <isleading re;resentation or
in9o<;lete 9o<;arison of ;oli9ies to any ;erson insured in
su9h 9o<;any for the ;ur;ose of indu9ing or tending to
indu9e su9h ;erson to la;se, forfeit, or surrender his said
insuran9e.
3*E. G(0. If the o<<issioner, after noti9e and hearing,
finds that any insuran9e 9o<;any, rating organiHation, agent,
:ro?er or other ;erson has violated any of the ;rovisions of
this title, it shall order the ;ay<ent of a fine not to eB9eed
"wenty-five thousand ;esos DP07,&&&.&&E for ea9h su9h
offense, and shall i<<ediately sus;end or revo?e the li9ense
issued to su9h insuran9e 9o<;any, rating organiHation,
agent, or :ro?er. "he issuan9e, ;ro9ure<ent or negotiation
of a single ;oli9y or 9ontra9t of insuran9e shall :e dee<ed a
se;arate offense.
3"I"LE 6
3PR$>I*I$# $MM$# "$ !+E#"*,
BR$2ER* !#- !-JU*"ER*
3*E. G(G. ! li9ense issued to a ;artnershi;, asso9iation or
9or;oration to a9t as an insuran9e agent, general agent,
insuran9e :ro?er, reinsuran9e :ro?er, or adIuster shall
authoriHe only the individual na<ed in the li9ense who shall
Cualify therefor as though an individual li9ensee. "he
o<<issioner shall 9harge, and the li9ensee shall ;ay, a full
additional li9ense fee as to ea9h res;e9tive individual so
na<ed in su9h li9ense in eB9ess of one.
3Li9enses and 9ertifi9ates of registration issued under the
;rovisions of this 9ha;ter <ay :e renewed :y the filing of
noti9es of intention on for<s to :e ;res9ri:ed :y the
o<<issioner and ;ay<ent of the fees therefor.
3*E. G(5. "he o<<issioner, in 9onsultation with the duly
a99redited asso9iations re;resenting the insuran9e industry,
shall ado;t and ;ro<ulgate a 9ode of 9ondu9t to ;ro<ote
integrity, honesty and ethi9al :usiness ;ra9ti9es a<ong
insuran9e agents, distri:utors and other inter<ediaries.
3"I"LE 8
3B!#!**UR!#E
3*E. G(7. "he ter< :an9assuran9e shall <ean the
;resentation and sale to :an? 9usto<ers :y an insuran9e
9o<;any of its insuran9e ;rodu9ts within the ;re<ises of the
head offi9e of su9h :an? duly li9ensed :y the Bang?o *entral
ng Pili;inas or any of its :ran9hes under su9h rules and
regulations whi9h the o<<issioner and the Bang?o *entral
ng Pili;inas <ay ;ro<ulgate. "o engage in :an9assuran9e
arrange<ent, a :an? is not reCuired to have eCuity
ownershi; of the insuran9e 9o<;any. #o insuran9e 9o<;any
shall enter into a :an9assuran9e arrange<ent unless it
;ossesses all the reCuire<ents as <ay :e ;res9ri:ed :y the
o<<issioner and the Bang?o *entral ng Pili;inas.
3#o insuran9e ;rodu9t under this se9tion, whether life or
non-life, shall :e issued or delivered unless in the for<
;reviously a;;roved :y the o<<issioner.
3*E. G('. Personnel tas?ed to ;resent and sell insuran9e
;rodu9ts within the :an? ;re<ises shall :e duly li9ensed :y
the o<<issioner and shall :e su:Ie9t to the rules and
regulations of this !9t.
3*E. G((. "he o<<issioner and the Bang?o *entral ng
Pili;inas shall ;ro<ulgate rules and regulations to effe9tively
su;ervise the :usiness of :an9assuran9e.
3,!P"ER >
3*EURI". /U#-
3*E. G(6. "here is here:y 9reated a fund to :e ?nown as
the *e9urity /und whi9h shall :e used in the ;ay<ent of
allowed 9lai<s against an insuran9e 9o<;any authoriHed to
transa9t :usiness in the Phili;;ines re<aining un;aid :y
reason of the insolven9y of su9h 9o<;any. "he said /und
<ay also :e used to reinsure the ;oli9y of the insolvent
insurer in any solvent insurer authoriHed to do :usiness in
the Phili;;ines as ;rovided in *e9tion 07'. "he /und <ay
li?ewise :e used to ;ay insured 9lai<s whi9h otherwise
would not :e 9o<;ensa:le under the ;rovisions of the ;oli9y.
#o ;ay<ent fro< the *e9urity /und shall, however, :e <ade
to any ;erson who owns or 9ontrols ten ;er9ent D%&LE or
<ore of the voting shares of sto9? of the insolvent insurer
and no ;ay<ent on any one 9lai< shall eB9eed "wenty
thousand ;esos DP0&,&&&.&&E.
3*E. G(8. *u9h /und shall 9onsist of all ;ay<ents <ade to
the /und :y insuran9e 9o<;anies authoriHed to do :usiness
in the Phili;;ines. Pay<ents <ade :y life insuran9e
9o<;anies shall :e treated se;arately fro< those <ade :y
non-life insuran9e 9o<;anies and the 9orres;onding fund
shall :e 9alled Life !99ount and #on-Life !99ount,
res;e9tively, and shall :e held and ad<inistered as su9h :y
the o<<issioner in a99ordan9e with the ;rovisions of this
title. "he Life !99ount shall :e utiliHed eB9lusively for
dis:urse<ents that refer to life insuran9e 9o<;anies, while
the #on-Life !99ount shall :e utiliHed eB9lusively for
dis:urse<ents that refer to non-life insuran9e 9o<;anies.
3*E. G6&. !ll insuran9e 9o<;anies doing :usiness in the
Phili;;ines shall 9ontri:ute to the *e9urity /und, Life or #on-
Life !99ount, as the 9ase <ay :e, the aggregate a<ount of
/ive <illion ;esos DP7,&&&,&&&.&&E for ea9h !99ount. "he
9ontri:utions of the life insuran9e 9o<;anies and of the non-
life insuran9e 9o<;anies shall :e in dire9t ;ro;ortion to the
ratio :etween a ;arti9ular life insuran9e 9o<;any or a
;arti9ular non-life insuran9e 9o<;anyAs net worth and the
aggregate net worth of all life insuran9e 9o<;anies or all
non-life insuran9e 9o<;anies, as the 9ase <ay :e, as shown
in their latest finan9ial state<ents a;;roved :y the
o<<issioner. "his ;ro;ortion a;;lied to the /ive <illion
50 | P a g e
R.A. 10607 The nsurance Code
;esos DP7,&&&,&&&.&&E shall :e the 9ontri:ution of a
;arti9ular 9o<;any to the 9orres;onding !99ount of the
*e9urity /und.
3"he a<ount of /ive <illion ;esos DP7,&&&,&&&.&&E in ea9h
!99ount shall :e in the for< of a revolving trust fund. "he
res;e9tive 9ontri:utions of the 9o<;anies shall re<ain as
ad<itted assets in their :oo?s and any dis:urse<ent
therefro< shall :e dedu9ted ;ro;ortionately fro< the
9ontri:utions of ea9h 9o<;any whi9h will :e allowed as
dedu9tions for in9o<e taB ;ur;oses. !ny earnings of the
/und shall :e turned over to the 9ontri:uting 9o<;anies in
;ro;ortion to their 9ontri:utions.
3In the 9ase of dis:urse<ents of funds fro< the /und as
;rovided in the foregoing ;aragra;h, the life and non-life
9o<;anies, as the 9ase <ay :e, shall re;lenish the a<ount
dis:ursed in dire9t ;ro;ortion to the individual 9o<;anyAs net
worth and the aggregate net worth of the life or non-life
9o<;anies, as the 9ase <ay :e. ,owever, in no 9ase shall
the /und eB9eed the aggregate a<ount of "en <illion ;esos
DP%&,&&&,&&&.&&E, or /ive <illion ;esos DP7,&&&,&&&.&&E for
ea9h !99ount.
3*hould the /und, Life or #on-Life !99ount, as the 9ase <ay
:e, :e inadeCuate for a dis:urse<ent as ;rovided for, then
the Life or #on-Life 9o<;anies, as the 9ase <ay :e, shall
9ontri:ute to the /und their res;e9tive shares in the
;ro;ortion ;reviously <entioned.
3*E. G6%. "he o<<issioner <ay ado;t, a<end, and
enfor9e all reasona:le rules and regulations ne9essary for
the ;ro;er ad<inistration of the /und and of the !99ounts. In
the event any insurer shall fail to <a?e any ;ay<ent reCuired
:y this title, or that any ;ay<ent <ade is in9orre9t, he shall
have full authority to eBa<ine all the :oo?s and re9ords of
the insurer for the ;ur;ose of as9ertaining the fa9ts and shall
deter<ine the 9orre9t a<ount to :e ;aid and <ay ;ro9eed in
any 9ourt of 9o<;etent Iurisdi9tion to re9over for the :enefit
of the /und or of the !99ount 9on9erned any su< shown to
:e due u;on su9h eBa<ination and deter<ination. !ny
insurer whi9h fails to <a?e any ;ay<ent to the /und or to
the !99ount 9on9erned when due, shall there:y forfeit to said
/und or !99ount 9on9erned a ;enalty of five ;er9ent D7LE of
the a<ount deter<ined to :e due as ;rovided :y this title,
;lus one ;er9ent D%LE of su9h a<ount for ea9h <onth of
delay or fra9tion thereof, after the eB;iration of the first
<onth of su9h delay, :ut the o<<issioner, if satisfied that
the delay was eB9usa:le, <ay re<it all or any ;art of su9h
;enalty. "he o<<issioner, in his dis9retion, <ay sus;end
or revo?e the 9ertifi9ate of authority to do :usiness in the
Phili;;ines of any insuran9e 9o<;any whi9h shall fail to
9o<;ly with this title or to ;ay any ;enalty i<;osed in
a99ordan9e therewith.
3*E. G60. "he !99ounts 9reated :y this title shall :e
se;arate and a;art fro< ea9h other and fro< any other fund.
"he "reasurer of the Phili;;ines shall :e the 9ustodian of the
Life !99ount and #on-Life !99ount of the *e9urity /undF and
all dis:urse<ents fro< any !99ount shall :e <ade :y the
"reasurer of the Phili;;ines u;on vou9hers signed :y the
o<<issioner or his de;uty, as hereinafter ;rovided. "he
<oneys of said !99ount <ay :e invested :y the
o<<issioner only in :onds or other instru<ents of de:t of
the +overn<ent of the Phili;;ines or its ;oliti9al su:divisions
or instru<entalities. "he o<<issioner <ay sell any of the
se9urities in whi9h an !99ount is invested, if advisa:le, for its
;ro;er ad<inistration or in the :est interest of su9h !99ount.
3*E. G6G. Pay<ents fro< either the Life Insuran9e !99ount
or #on-Life !99ount, as the 9ase <ay :e, shall :e <ade :y
the "reasurer of the Phili;;ines to the o<<issioner, u;on
the authority of a;;ro;riate 9ertifi9ate filed with hi< :y the
o<<issioner a9ting in su9h 9a;a9ity.
3*E. G65. "he o<<issioner <ay, in his dis9retion,
designate or a;;oint a duly authoriHed re;resentative or
re;resentatives to a;;ear and defend :efore any 9ourt or
other :ody or offi9ial having Iurisdi9tion any or all a9tions or
;ro9eedings against ;rin9i;als or assureds on insuran9e
;oli9ies or 9ontra9ts issued to the< where the insurer has
:e9o<e insolvent or una:le to <eet its insuran9e
o:ligations. "he o<<issioner shall have, as of the date of
insolven9y of su9h insurer or as of the date of its ina:ility to
<eet its insuran9e o:ligations, only the rights whi9h su9h
insurer would have had if it had not :e9o<e insolvent or
una:le to <eet its insuran9e o:ligations. /or the ;ur;ose of
this title, the o<<issioner shall have ;ower to e<;loy su9h
9ounsel, 9ler?s and assistants as he <ay dee< ne9essary.
3*E. G67. "he eB;ense of ad<inistering an !99ount shall
:e ;aid out of the !99ount 9on9erned. "he o<<issioner
shall serve as ad<inistrator of the /und and of the !99ounts
without additional 9o<;ensation, :ut <ay :e allowed and
;aid fro< the !99ount 9on9erned eB;enses in9urred in the
;erfor<an9e of his duties in 9onne9tion with said !99ount.
"he 9o<;ensation of those ;ersons e<;loyed :y the
o<<issioner shall :e dee<ed ad<inistration eB;ense
;aya:le fro< the !99ount 9on9erned. "he o<<issioner
shall in9lude in his annual re;ort to the *e9retary of /inan9e
a state<ent of the eB;enses of ad<inistration of the /und
and of the Life !99ount and #on-Life !99ount for the
;re9eding year.
3,!P"ER >I
3$MPUL*$R. M$"$R >E,ILE
LI!BILI". I#*UR!#E
3*E. G6'. /or ;ur;oses of this 9ha;ter=
3DaE Motor >ehi9le is any vehi9le as defined in *e9tion G,
;aragra;h DaE of Re;u:li9 !9t #o. 5%G', otherwise ?nown as
the @Land "rans;ortation and "raffi9 odeA.
3D:E Passenger is any fare ;aying ;erson :eing trans;orted
and 9onveyed in and :y a <otor vehi9le for trans;ortation of
;assengers for 9o<;ensation, in9luding ;ersons eB;ressly
authoriHed :y law or :y the vehi9leAs o;erator or his agents
to ride without fare.
51 | P a g e
R.A. 10607 The nsurance Code
3D9E "hird ;arty is any ;erson other than a ;assenger as
defined in this se9tion and shall also eB9lude a <e<:er of
the household, or a <e<:er of the fa<ily within the se9ond
degree of 9onsanguinity or affinity, of a <otor vehi9le owner
or land trans;ortation o;erator, as li?ewise defined herein, or
his e<;loyee in res;e9t of death, :odily inIury, or da<age to
;ro;erty arising out of and in the 9ourse of e<;loy<ent.
3DdE $wner or <otor vehi9le owner <eans the a9tual legal
owner of a <otor vehi9le, in whose na<e su9h vehi9le is
duly registered with the Land "rans;ortation $ffi9eF
3DeE Land trans;ortation o;erator <eans the owner or
owners of <otor vehi9les for trans;ortation of ;assengers for
9o<;ensation, in9luding s9hool :uses.
3DfE Insuran9e ;oli9y or Poli9y refers to a 9ontra9t of
insuran9e against ;assenger and third-;arty lia:ility for death
or :odily inIuries and da<age to ;ro;erty arising fro< <otor
vehi9le a99idents.
3*E. G6(. It shall :e unlawful for any land trans;ortation
o;erator or owner of a <otor vehi9le to o;erate the sa<e in
the ;u:li9 highways unless there is in for9e in relation thereto
a ;oli9y of insuran9e or guaranty in 9ash or surety :ond
issued in a99ordan9e with the ;rovisions of this 9ha;ter to
inde<nify the death, :odily inIury, andKor da<age to ;ro;erty
of a third-;arty or ;assenger, as the 9ase <ay :e, arising
fro< the use thereof.
3*E. G66. "he o<<issioner shall furnish the Land
"rans;ortation $ffi9e with a list of insuran9e 9o<;anies
authoriHed to issue the ;oli9y of insuran9e or surety :ond
reCuired :y this 9ha;ter.
3*E. G68. "he Land "rans;ortation $ffi9e shall not allow
the registration or renewal of registration of any <otor
vehi9le without first reCuiring fro< the land trans;ortation
o;erator or <otor vehi9le owner 9on9erned the ;resentation
and filing of a su:stantiating do9u<entation in a for<
a;;roved :y the o<<issioner eviden9ing that the ;oli9y of
insuran9e or guaranty in 9ash or surety :ond reCuired :y this
9ha;ter is in effe9t.
3*E. G8&. Every land trans;ortation o;erator and every
owner of a <otor vehi9le shall, :efore a;;lying for the
registration or renewal of registration of any <otor vehi9le, at
his o;tion, either se9ure an insuran9e ;oli9y or surety :ond
issued :y any insuran9e 9o<;any authoriHed :y the
o<<issioner or <a?e a 9ash de;osit in su9h a<ount as
herein reCuired as li<it of lia:ility for ;ur;oses s;e9ified in
*e9tion G6(.
3DaE In the 9ase of a land trans;ortation o;erator, the
insuran9e guaranty in 9ash or surety :ond shall 9over lia:ility
for death or :odily inIuries of third-;arties andKor ;assengers
arising out of the use of su9h vehi9le in the a<ount not less
than "welve thousand ;esos DP%0,&&&.&&E ;er ;assenger or
third-;arty and an a<ount, for ea9h of su9h 9ategories, in
any one a99ident of not less than that set forth in the
following s9ale=
3D%E Motor vehi9les with an authoriHed 9a;a9ity of twenty-siB
D0'E or <ore ;assengers= /ifty thousand ;esos
DP7&,&&&.&&EF
3D0E Motor vehi9les with an authoriHed 9a;a9ity of fro<
twelve D%0E to twenty-five D07E ;assengers= /orty thousand
;esos DP5&,&&&.&&EF
3DGE Motor vehi9les with an authoriHed 9a;a9ity of fro< siB D'E
to eleven D%%E ;assengers= "hirty thousand ;esos
DPG&,&&&.&&EF
3D5E Motor vehi9les with an authoriHed 9a;a9ity of five D7E or
less ;assengers= /ive thousand ;esos DP7,&&&.&&E <ulti;lied
:y the authoriHed 9a;a9ity.
3Provided, however, "hat su9h 9ash de;osit <ade to, or
surety :ond ;osted with, the o<<issioner shall :e resorted
to :y hi< in 9ases of a99idents the inde<nities for whi9h to
third-;arties andKor ;assengers are not settled a99ordingly
:y the land trans;ortation o;erator and, in that event, the
said 9ash de;osit shall :e re;lenished or su9h surety :ond
shall :e restored within siBty D'&E days after i<;air<ent or
eB;iry, as the 9ase <ay :e, :y su9h land trans;ortation
o;erator, otherwise, he shall se9ure the insuran9e ;oli9y
reCuired :y this 9ha;ter. "he aforesaid 9ash de;osit <ay :e
invested :y the o<<issioner in readily <ar?eta:le
govern<ent :onds, andKor se9urities.
3D:E In the 9ase of an owner of a <otor vehi9le, the insuran9e
or guaranty in 9ash or surety :ond shall 9over lia:ility for
death or inIury to third-;arties in an a<ount not less than that
set forth in the following s9ale in any one a99ident=
3D%E Private ars
3DiE Banta<= "wenty thousand ;esos DP0&,&&&.&&EF
3DiiE Light= "wenty thousand ;esos DP0&,&&&.&&EF and
3DiiiE ,eavy= "hirty thousand ;esos DPG&,&&&.&&E.
3D0E $ther Private >ehi9les
3DiE "ri9y9les, <otor9y9les and s9ooters= "welve thousand
;esos DP%0,&&&.&&EF
3DiiE >ehi9les with an unladen weight of 0,'&& ?ilos or less=
"wenty thousand ;esos DP0&,&&&.&&EF
3DiiiE >ehi9les with an unladen weight of :etween 0,'&% ?ilos
and G,8G& ?ilos= "hirty thousand ;esos DPG&,&&&.&&EF and
3DivE >ehi9les with an unladen weight over G,8G& ?ilos= /ifty
thousand ;esos DP7&,&&&.&&E.
3"he o<<issioner <ay, if warranted, set forth s9hedule of
inde<nities for the ;ay<ent of 9lai<s for death or :odily
inIuries with the 9overages set forth herein.
3*E. G8%. !ny 9lai< for death or inIury to any ;assenger or
third-;arty ;ursuant to the ;rovisions of this 9ha;ter shall :e
;aid without the ne9essity of ;roving fault or negligen9e of
any ?ind= Provided, "hat for ;ur;oses of this se9tion=
52 | P a g e
R.A. 10607 The nsurance Code
3DaE "he total inde<nity in res;e9t of any ;erson shall not :e
less than /ifteen thousand ;esos DP%7,&&&.&&EF
3D:E "he following ;roofs of loss, when su:<itted under oath,
shall :e suffi9ient eviden9e to su:stantiate the 9lai<=
3D%E Poli9e re;ort of a99identF and
3D0E -eath 9ertifi9ate and eviden9e suffi9ient to esta:lish the
;ro;er ;ayeeF or
3DGE Medi9al re;ort and eviden9e of <edi9al or hos;ital
dis:urse<ent in res;e9t of whi9h refund is 9lai<edF
3D9E lai< <ay :e <ade against one <otor vehi9le only. In
the 9ase of an o99u;ant of a vehi9le, 9lai<, shall lie against
the insurer of the vehi9le in whi9h the o99u;ant is riding,
<ounting or dis<ounting fro<. In any other 9ase, 9lai< shall
lie against the insurer of the dire9tly offending vehi9le. In all
9ases, the right of the ;arty ;aying the 9lai< to re9over
against the owner of the vehi9le res;onsi:le for the a99ident
shall :e <aintained.
3*E. G80. #o land trans;ortation o;erator or owner of
<otor vehi9le shall :e unreasona:ly denied the ;oli9y of
insuran9e or surety :ond reCuired :y this 9ha;ter :y the
insuran9e 9o<;anies authoriHed to issue the sa<e,
otherwise, the Land "rans;ortation $ffi9e shall reCuire fro<
said land trans;ortation o;erator or owner of the vehi9le, in
lieu of a ;oli9y of insuran9e or surety :ond, a 9ertifi9ate that
a 9ash de;osit has :een <ade with the o<<issioner in
su9h a<ount reCuired as li<its of inde<nity in *e9tion G8& to
answer for the ;assenger andKor third-;arty lia:ility of su9h
land trans;ortation o;erator or owner of the vehi9le.
3#o insuran9e 9o<;any <ay issue the ;oli9y of insuran9e or
surety :ond reCuired under this 9ha;ter unless so authoriHed
under eBisting laws.
3"he authority to engage in the 9asualty andKor surety lines
of :usiness of an insuran9e 9o<;any that refuses to issue or
renew, without Iust 9ause, the insuran9e ;oli9y or surety
:ond therein reCuired shall :e withdrawn i<<ediately.
3*E. G8G. #o 9an9ellation of the ;oli9y shall :e valid unless
written noti9e thereof is given to the land trans;ortation
o;erator or owner of the vehi9le and to the Land
"rans;ortation $ffi9e at least fifteen D%7E days ;rior to the
intended effe9tive date thereof. U;on re9ei;t of su9h noti9e,
the Land "rans;ortation $ffi9e, unless it re9eives eviden9e of
a new valid insuran9e or guaranty in 9ash or surety :ond as
;res9ri:ed in this 9ha;ter, or an endorse<ent of revival of
the 9an9elled one, shall order the i<<ediate 9onfis9ation of
the ;lates of the <otor vehi9le 9overed :y su9h 9an9elled
;oli9y. "he sa<e <ay :e reissued only u;on ;resentation of
a new insuran9e ;oli9y or that a guaranty in 9ash or surety
:ond has :een <ade or ;osted with the o<<issioner and
whi9h <eets the reCuire<ents of this 9ha;ter, or an
endorse<ent or revival of the 9an9elled one.
3*E. G85. If the 9an9ellation of the ;oli9y or surety :ond is
9onte<;lated :y the land trans;ortation o;erator or owner of
the vehi9le, he shall, :efore the ;oli9y or surety :ond 9eases
to :e effe9tive, se9ure a si<ilar ;oli9y of insuran9e or surety
:ond to re;la9e the ;oli9y or surety :ond to :e 9an9elled or
<a?e a 9ash de;osit in suffi9ient a<ount with the
o<<issioner, and without any ga;, file the reCuired
do9u<entation with the Land "rans;ortation $ffi9e, and
notify the insuran9e 9o<;any 9on9erned of the 9an9ellation
of its ;oli9y or surety :ond.
3*E. G87. In 9ase of 9hange of owner shi; of a <otor
vehi9le, or 9hange of the engine of an insured vehi9le, there
shall :e no need of issuing a new ;oli9y until the neBt date of
registration or renewal of registration of su9h vehi9le, and=
Provided, "hat the insuran9e 9o<;any shall agree to
9ontinue the ;oli9y, su9h 9hange of ownershi; or su9h
9hange of the engine shall :e indi9ated in a 9orres;onding
endorse<ent :y the insuran9e 9o<;any 9on9erned, and a
signed du;li9ate of su9h endorse<ent shall, within a
reasona:le ti<e, :e filed with the Land "rans;ortation $ffi9e.
3*E. G8'. In the settle<ent and ;ay<ent of 9lai<s, the
inde<nity shall not :e availed of :y any a99ident vi9ti< or
9lai<ant as an instru<ent of enri9h<ent :y reason of an
a99ident, :ut as an assistan9e or restitution insofar as 9an
fairly :e as9ertained.
3*E. G8(. !ny ;erson having any 9lai< u;on the ;oli9y
issued ;ursuant to this 9ha;ter shall, without any
unne9essary delay, ;resent to the insuran9e 9o<;any
9on9erned a written noti9e of 9lai< setting forth the nature,
eBtent and duration of the inIuries sustained as 9ertified :y a
duly li9ensed ;hysi9ian. #oti9e of 9lai< <ust :e filed within
siB D'E <onths fro< the date of a99ident, otherwise, the 9lai<
shall :e dee<ed waived. !9tion or suit for re9overy of
da<age due to loss or inIury <ust :e :rought, in ;ro;er
9ases, with the o<<issioner or the 9ourts within one D%E
year fro< denial of the 9lai<, otherwise, the 9lai<antAs right
of a9tion shall ;res9ri:e.
3*E. G86. "he insuran9e 9o<;any 9on9erned shall
forthwith as9ertain the truth and eBtent of the 9lai< and
<a?e ;ay<ent within five D7E wor?ing days after rea9hing an
agree<ent. If no agree<ent is rea9hed, the insuran9e
9o<;any shall ;ay only the no-fault inde<nity ;rovided in
*e9tion G8% without ;reIudi9e to the 9lai<ant fro< ;ursuing
his 9lai< further, in whi9h 9ase, he shall not :e reCuired or
9o<;elled :y the insuran9e 9o<;any to eBe9ute any Cuit
9lai< or do9u<ent releasing it fro< lia:ility under the ;oli9y
of insuran9e or surety :ond issued.
3In 9ase of any dis;ute in the enfor9e<ent of the ;rovisions
of any ;oli9y issued ;ursuant to this 9ha;ter, the adIudi9ation
of su9h dis;ute shall :e within the original and eB9lusive
Iurisdi9tion of the o<<issioner, su:Ie9t to the li<itations
;rovided in *e9tion 5G8.
3*E. G88. It shall :e unlawful for a land trans;ortation
o;erator or owner of <otor vehi9le to reCuire his or its drivers
or other e<;loyees to 9ontri:ute in the ;ay<ent of
;re<iu<s.
3*E. 5&&. #o govern<ent offi9e or agen9y having the duty
of i<;le<enting the ;rovisions of this 9ha;ter nor any offi9ial
53 | P a g e
R.A. 10607 The nsurance Code
or e<;loyee thereof shall a9t as agent in ;ro9uring the
insuran9e ;oli9y or surety :ond ;rovided for herein. "he
9o<<ission of an agent ;ro9uring the said ;oli9y or :ond
shall in no 9ase eB9eed ten ;er9ent D%&LE of the a<ount of
the ;re<iu<s therefor.
3*E. 5&%. !ny land trans;ortation o;erator or owner of
<otor vehi9le or any other ;erson violating any of the
;rovisions of the ;re9eding se9tions shall :e ;unished :y a
fine of not less than /ive hundred ;esos DP7&&.&&E andKor
i<;rison<ent for not <ore than siB D'E <onths. "he violation
of *e9tion G8& :y a land trans;ortation o;erator shall :e a
suffi9ient 9ause for the revo9ation of the 9ertifi9ate of ;u:li9
9onvenien9e issued :y the Land "rans;ortation /ran9hising
and Regulatory Board 9overing the vehi9le 9on9erned.
3*E. 5&0. 1henever any violation of the ;rovisions of this
9ha;ter is 9o<<itted :y a 9or;oration or asso9iation, or :y a
govern<ent offi9e or entity, the eBe9utive offi9er or offi9ers of
said 9or;oration, asso9iation or govern<ent offi9e or entity
who shall have ?nowingly ;er<itted, or failed to ;revent, said
violation shall :e held lia:le as ;rin9i;als.
3,!P"ER >II
3MU"U!L BE#E/I" !**$I!"I$#* !#-
"RU*"* /$R ,!RI"!BLE U*E*
3"I"LE l
3MU"U!L BE#E/I" !**$I!"I$#*
3*E. 5&G. !ny so9iety, asso9iation or 9or;oration, without
9a;ital sto9?, for<ed or organiHed not for ;rofit :ut <ainly for
the ;ur;ose of ;aying si9? :enefits to <e<:ers, or of
furnishing finan9ial su;;ort to <e<:ers while out of
e<;loy<ent, or of ;aying to relatives of de9eased <e<:ers
of fiBed or any su< of <oney, irres;e9tive of whether su9h
ai< or ;ur;ose is 9arried out :y <eans of fiBed dues or
assess<ents 9olle9ted regularly fro< the <e<:ers, or of
;roviding, :y the issuan9e of 9ertifi9ates of insuran9e,
;ay<ent of its <e<:ers of a99ident or life insuran9e :enefits
out of su9h fiBed and regular dues or assess<ents, :ut in no
9ase shall in9lude any so9iety, asso9iation, or 9or;oration
with su9h <utual :enefit features and whi9h shall :e 9arried
out ;urely fro< voluntary 9ontri:utions 9olle9ted not regularly
andKor no fiBed a<ount fro< who<soever <ay 9ontri:ute,
shall :e ?nown as a <utual :enefit asso9iation within the
intent of this ode.
3!ny so9iety, asso9iation, or 9or;oration ;rin9i;ally organiHed
as a la:or union shall :e governed :y the La:or ode
notwithstanding any <utual :enefit feature ;rovisions in its
9harter as in9ident to its organiHation.
3In no 9ase shall a <utual :enefit asso9iation :e organiHed
and authoriHed to transa9t :usiness as a 9harita:le or
:enevolent organiHation, and whenever it has this feature as
in9ident to its eBisten9e, the 9orres;onding 9harter ;rovision
shall :e revised to 9onfor< with the ;rovision of this se9tion.
Mutual :enefit asso9iation, already li9ensed to transa9t
:usiness as su9h on the date this ode :e9o<es effe9tive,
having 9harita:le or :enevolent feature shall a:andon su9h
in9idental ;ur;ose u;on effe9tivity of this ode if they desire
to 9ontinue o;erating as su9h <utual :enefit asso9iations.
3*E. 5&5. ! <utual :enefit asso9iation, :efore it <ay
transa9t as su9h, <ust first se9ure a li9ense fro< the
o<<issioner. "he a;;li9ation for su9h li9ense shall :e filed
with the o<<issioner together with 9ertified true 9o;ies of
the arti9les of in9or;oration or the 9onstitution and :ylaws of
the asso9iation, and all a<end<ents thereto, and su9h other
do9u<ents or testi<onies as the o<<issioner <ay reCuire.
3#o li9ense shall :e granted to a <utual :enefit asso9iation
until the o<<issioner shall have :een satisfied :y su9h
eBa<ination as he <ay <a?e and su9h eviden9e as he <ay
reCuire that the asso9iation is Cualified under eBisting laws to
o;erate and transa9t :usiness as su9h. "he o<<issioner
<ay refuse to issue a li9ense to any <utual :enefit
asso9iation if, in his Iudg<ent, su9h refusal will :est ;ro<ote
the interest of the <e<:ers of su9h asso9iation and of the
;eo;le of this 9ountry. !ny li9ense issued shall eB;ire on the
last day of -e9e<:er of the third year following its issuan9e
and, u;on ;ro;er a;;li9ation, <ay :e renewed if the
asso9iation is 9ontinuing to 9o<;ly with eBisting laws, rules
and regulations, orders, instru9tions, rulings and de9isions of
the o<<issioner. Every asso9iation re9eiving any su9h
li9ense shall :e su:Ie9t to the su;ervision of the
o<<issioner= Provided, "hat no su9h li9ense shall :e
granted to any su9h asso9iation if su9h asso9iation has no
a9tuary.
3*E. 5&7. #o <utual :enefit asso9iation shall :e issued a
li9ense to o;erate as su9h unless it has 9onstituted and
esta:lished a +uaranty /und :y de;ositing with the
o<<issioner an initial <ini<u< a<ount of /ive <illion
;esos DP7,&&&,&&&.&&E in 9ash, or in govern<ent se9urities
with a total value eCual to su9h a<ount, to answer for any
valid :enefit 9lai< of any of its <e<:ers.
3!ll <oneys re9eived :y the o<<issioner for this ;ur;ose
<ust :e de;osited :y hi< in interest-:earing de;osits with
any :an? or :an?s authoriHed to transa9t :usiness in the
Phili;;ines for the a99ount of the ;arti9ular asso9iation
9onstituting the +uaranty /und.
3!ny a99rual to su9h fund, :e it interest earned or dividend
additions on <oneys or se9urities so de;osited, <ay, with
the ;rior a;;roval of the o<<issioner, :e withdrawn :y the
asso9iation if there is no ;ending :enefit 9lai< against it,
in9luding interest thereon or dividend additions thereto.
3"he o<<issioner, ;rior to or after li9ensing a <utual
:enefit asso9iation, <ay reCuire su9h asso9iation to in9rease
its +uaranty /und fro< the initial <ini<u< a<ount reCuired
to an a<ount eCual to the 9a;ital invest<ent reCuired of an
eBisting do<esti9 insuran9e 9o<;any under *e9tion 0&8 of
this ode.
3*E. 5&'. Every <utual :enefit asso9iation li9ensed to do
:usiness as su9h shall issue <e<:ershi; 9ertifi9ates to its
54 | P a g e
R.A. 10607 The nsurance Code
<e<:ers s;e9ifying the :enefits to whi9h su9h <e<:ers are
entitled.
3*u9h 9ertifi9ates, together with the arti9les of in9or;oration
of the asso9iation or its 9onstitution and :ylaws, and all
eBisting laws as <ay :e ;ertinent shall 9onstitute the
agree<ent, as of the date of its issuan9e, :etween the
asso9iation and the <e<:er. "he <e<:ershi; 9ertifi9ate
shall :e in a for< ;reviously a;;roved :y the o<<issioner.
3*E. 5&(. ! <utual :enefit asso9iation <ay, :y reinsuran9e
agree<ent, 9ede in whole or in ;art any individual ris? or
ris?s under 9ertifi9ates of insuran9e issued :y it, only to a life
insuran9e 9o<;any authoriHed to transa9t :usiness or to a
;rofessional reinsurer authoriHed to a99e;t life ris?s in the
Phili;;ines= Provided, "hat a 9o;y of the draft of su9h
reinsuran9e agree<ent shall :e su:<itted to the
o<<issioner for his a;;roval. "he asso9iation <ay ta?e
9redit for the reserves on su9h 9eded ris?s to the eBtent
reinsured.
3*E. 5&6. "he 9onstitution or :ylaws of a <utual :enefit
asso9iation <ust distin9tly state the ;ur;ose for whi9h dues
andKor assess<ents are <ade and 9olle9ted and the ;ortion
thereof whi9h <ay :e used for eB;enses.
3-eath :enefit and other relief funds shall :e 9reated and
used eB9lusively for ;aying :enefits due the <e<:ers under
their res;e9tive <e<:ershi; 9ertifi9ates. ! general fund shall
li?ewise :e 9reated and used for eB;enses of ad<inistration
of the asso9iation.
3! <utual :enefit asso9iation shall only <aintain free and
unassigned sur;lus of not <ore than twenty ;er9ent D0&LE of
its total lia:ilities as verified :y the o<<issioner. !ny
a<ount in eB9ess shall :e returned to the <e<:ers :y way
of dividends, enhan9ing the eCuity value or ;roviding
:enefits in ?ind and other relevant servi9es. In addition,
su:Ie9t to the a;;roval of the o<<issioner, a <utual
:enefit asso9iation <ay allo9ate a ;ortion for 9a;a9ity
:uilding and resear9h and develo;<ent su9h as develo;ing
new ;rodu9ts and servi9es, u;grading and i<;roving
o;erating syste<s and eCui;<ent and 9ontinuing <e<:er
edu9ation.
3*E. 5&8. Every outstanding <e<:ershi; 9ertifi9ate <ust
have an eCuity value eCuivalent to at least fifty ;er9ent D7&LE
of the total 9ontri:utions 9olle9ted thereon. "he eCuity value
only a;;lies to :asi9 life insuran9e ;rodu9t and eB9ludes
o;tional ;rodu9ts.
3*E. 5%&. Every <utual :enefit asso9iation <ust
a99u<ulate and <aintain, out of the ;eriodi9 dues 9olle9ted
fro< its <e<:ers, suffi9ient reserves for the ;ay<ent of
9lai<s or o:ligations for whi9h it shall hold funds in se9urities
satisfa9tory to the o<<issioner 9onsisting of :onds of the
+overn<ent of the Phili;;ines, or any of its ;oliti9al
su:divisions and instru<entalities, or in su9h other good
se9urities as <ay :e a;;roved :y the o<<issioner.
3"he reserve lia:ility shall :e esta:lished in a99ordan9e with
a9tuarial ;ro9edures and shall :e a;;roved :y the
o<<issioner.
3"he arti9les of in9or;oration or the 9onstitution and :ylaws
of a <utual :enefit asso9iation <ust ;rovide that if its
reserve as to all or any 9lass of 9ertifi9ates :e9o<es
i<;aired, its :oard of dire9tors or trustees <ay reCuire that
there shall :e ;aid :y the <e<:ers to the asso9iation the
a<ount of the <e<:ersA eCuita:le ;ro;ortion of su9h
defi9ien9y as as9ertained :y said :oard and that if the
;ay<ent :e not <ade it shall stand as an inde:tedness
against the <e<:ershi; 9ertifi9ates of the defaulting
<e<:ers and draw interest not to eB9eed five ;er9ent D7LE
;er annu< 9o<;ounded annually.
3*E. 5%%. ! <utual :enefit asso9iation <ay invest su9h
;ortion of its funds as shall not :e reCuired to <eet ;ending
9lai<s and other o:ligations in any of the 9lasses of
invest<ents or ty;es of se9urities in whi9h life insuran9e
9o<;anies doing :usiness in the Phili;;ines <ay invest.
3It <ay also grant loans to <e<:ers on the se9urity of a
;ledge or 9hattel <ortgage of ;ersonal ;ro;erties of the
:orrowers, or in the a:sen9e thereof, on the se9urity of the
<e<:ershi; 9ertifi9ate of the :orrowing <e<:ers, in whi9h
event su9h loan shall :e9o<e a first lien on the ;ro9eeds
thereof.
3*E. 5%0. "he o<<issioner or any of his duly designated
re;resentatives, shall have the ;ower of visitation, audit and
eBa<ination into the affairs, finan9ial 9ondition, and <ethods
of doing :usiness of all <utual :enefit asso9iations, and he
shall 9ause su9h eBa<ination to :e <ade at least on9e every
two D0E years or whenever it <ay :e dee<ed ;ro;er and
ne9essary. /ree a99ess to the :oo?s, re9ords and
do9u<ents of the asso9iation shall :e a99orded to the
o<<issioner, or to his re;resentatives, in su9h <anner that
the o<<issioner or his re;resentatives <ay readily verify
or deter<ine the true affairs, finan9ial 9ondition, and <ethod
of doing :usiness of su9h asso9iation. In the 9ourse of su9h
eBa<ination, the o<<issioner or his duly designated
re;resentatives shall have authority to ad<inister oaths and
ta?e testi<ony or other eviden9e on any <atter relating to
the affairs of the asso9iation.
3!ll <inutes of the ;ro9eedings of the :oard of dire9tors or
trustees of the asso9iation, and those of the regular or
s;e9ial <eetings of the <e<:ers, shall :e ta?en, and a 9o;y
thereof, in English or in Pili;ino, shall :e su:<itted to the
o<<issionerAs re;resentatives or eBa<iners in the 9ourse
of su9h eBa<ination.
3! 9o;y of the findings of su9h eBa<ination, together with the
re9o<<endations of the o<<issioner, shall :e furnished
the asso9iation for its infor<ation and 9o<;lian9e, and the
sa<e shall :e ta?en u; i<<ediately in the <eetings of the
:oard of dire9tors or trustees and of the <e<:ers of the
asso9iation.
3*E. 5%G. Every <utual :enefit asso9iation shall, annually
on or :efore the thirtieth day of !;ril of ea9h year, render to
the o<<issioner an annual state<ent in su9h for< and
detail as <ay :e ;res9ri:ed :y the o<<issioner, signed
and sworn to :y the ;resident, se9retary, treasurer, and
55 | P a g e
R.A. 10607 The nsurance Code
a9tuary of the asso9iation, showing the eBa9t 9ondition of its
affairs on the ;re9eding thirty-first day of -e9e<:er.
3*E. 5%5. #o <oney, aid or :enefit to :e ;aid, ;rovided or
tendered :y any <utual :enefit asso9iation, shall :e lia:le to
atta9h<ent, garnish<ent, or other ;ro9ess, or :e seiHed,
ta?en, a;;ro;riated, or a;;lied :y any legal or eCuita:le
;ro9ess to ;ay any de:t or lia:ility of a <e<:er or
:enefi9iary, or any other ;erson who <ay have a right
thereunder, either :efore or after ;ay<ent.
3*E. 5%7. !ny <e<:er of a <utual :enefit asso9iation shall
have the right at all ti<es to 9hange the :enefi9iary or
:enefi9iaries or add another :enefi9iary or other
:enefi9iaries in a99ordan9e with the rules and regulations of
the asso9iation unless he has eB;ressly waived this right in
the <e<:ershi; 9ertifi9ate. Every asso9iation <ay, under
su9h rules as it <ay ado;t, li<it the s9o;e of :enefi9iaries
and ;rovide that no :enefi9iary shall have or o:tain any
vested interest in the ;ro9eeds of any 9ertifi9ate until the
9ertifi9ate has :e9o<e due and ;aya:le under the ter<s of
the <e<:ershi; 9ertifi9ate.
3*E. 5%'. !ny 9ha;ter affiliate inde;endently li9ensed as a
<utual :enefit asso9iation <ay 9onsolidate or <erge with
any other si<ilar 9ha;ter affiliate or with the <other
asso9iation.
3*E. 5%(. !ny <utual :enefit asso9iation <ay :e 9onverted
into and li9ensed as a <utual life insuran9e 9o<;any :y
9o<;lying with the reCuire<ents of the ;ertinent ;rovisions
of this ode and su:<itting the s;e9ifi9 ;lan for su9h
9onversion to the o<<issioner for his a;;roval. *u9h ;lan,
as a;;roved, shall then :e su:<itted to the <e<:ers either
in the regular <eeting or in a s;e9ial <eeting 9alled for the
;ur;ose for their ado;tion. "he affir<ative vote of at least
two-thirds D0KGE of all the <e<:ers shall :e ne9essary in
order to 9onsider su9h ;lan as ado;ted.
3#o su9h 9onversion shall ta?e effe9t unless and until
a;;roved :y the o<<issioner.
3*E. 5%6. #o <utual :enefit asso9iation shall :e dissolved
without first notifying the o<<issioner and furnishing hi<
with a 9ertified 9o;y of the resolution authoriHing the
dissolution, duly ado;ted :y the affir<ative vote of two-thirds
D0KGE of the <e<:ers at a <eeting 9alled for that ;ur;ose,
the finan9ial state<ents as of the date of the resolution, and
su9h other ;a;ers or do9u<ents as <ay :e reCuired :y the
o<<issioner.
3#o dissolution shall ;ro9eed until and unless a;;roved :y
the o<<issioner and all ;ro9eedings in 9onne9tion
therewith shall :e witnessed and attested :y his duly
designated re;resentative.
3#o <utual :enefit asso9iation shall :e offi9ially de9lared as
dissolved until after the o<<issioner so 9ertifies that all
outstanding 9lai<s against the asso9iation have :een duly
settled and liCuidated.
3*E. 5%8. "he o<<issioner shall, after noti9e and
hearing, have the ;ower either to sus;end or revo?e the
li9ense issued to a <utual :enefit asso9iation if he finds that
the asso9iation has=
3DaE /ailed to 9o<;ly with any ;rovision of this odeF
3D:E /ailed to 9o<;ly with any other law or regulation
o:ligatory u;on itF
3D9E /ailed to 9o<;ly with any order, ruling, instru9tion,
reCuire<ent or re9o<<endation of the o<<issionerF
3DdE EB9eeded its ;ower to the ;reIudi9e of its <e<:ersF
3DeE ondu9ted its :usiness fraudulently or haHardouslyF
3DfE Rendered its affairs and 9ondition to one of insolven9yF or
3DgE /ailed to 9arry out its ai<s and ;ur;oses for whi9h it was
organiHed due to any 9ause.
3!fter re9ei;t of the order fro< the o<<issioner
sus;ending or revo?ing the li9ense, the asso9iation <ust
i<<ediately eBert efforts to re<ove su9h 9ause or 9auses
whi9h :rought a:out the order and, u;on ;ro;er showing,
<ay a;;ly with the o<<issioner for the lifting of the order
and restoration or revival of the li9ense so revo?ed or
sus;ended.
3*E. 50&. /or failure to re<ove su9h 9ause or 9auses
whi9h :rought a:out the sus;ension or revo9ation of the
li9ense of a <utual :enefit asso9iation, the o<<issioner
shall a;;ly under this ode for an order fro< the ;ro;er
9ourt to liCuidate su9h asso9iation.
3"he ;rovisions of "itles %5 and %7, ha;ter III, ;ertaining to
the a;;oint<ent of a 9onservator and ;ro9eedings u;on
insolven9y of an insuran9e 9o<;any shall, insofar as
;ra9ti9a:le, a;;ly to <utual :enefit asso9iations.
3*E. 50%. "o se9ure the enfor9e<ent of any ;rovision
under this title, the o<<issioner <ay issue su9h rules,
rulings, instru9tions, orders and 9ir9ulars.
3*E. 500. "he violation of any ;rovision of this title shall
su:Ie9t the ;erson violating or the offi9er of the asso9iation
res;onsi:le therefor to a fine of not less than "en thousand
;esos DP%&,&&&.&&E, or i<;rison<ent of not eB9eeding three
DGE years, or :oth su9h fine and i<;rison<ent, at the
dis9retion of the 9ourt.
3*E. 50G. !ll ;rovisions of this ode governing life
insuran9e 9o<;anies and su9h other ;rovisions whenever
;ra9ti9a:le and ne9essary, shall :e a;;li9a:le to <utual
:enefit asso9iations.
3"I"LE 0
3"RU*"* /$R ,!RI"!BLE U*E*
3*E. 505. "he ter< trust for 9harita:le uses, within the
intent of this ode, shall in9lude, all the real or ;ersonal
;ro;erties or funds, as well as those a9Cuired with the fruits
56 | P a g e
R.A. 10607 The nsurance Code
or in9o<e therefro< or in eB9hange or su:stitution thereof,
given to or re9eived :y any ;erson, 9or;oration, asso9iation,
foundation, or entity, eB9e;t the #ational +overn<ent, its
instru<entalities or ;oliti9al su:divisions, for 9harita:le,
:enevolent, edu9ational, ;ious, religious, or other uses for
the :enefit of the ;u:li9 at large or a ;arti9ular ;ortion
thereof or for the :enefit of an indefinite nu<:er of ;ersons.
3*E. 507. "he ter< trustee shall in9lude any individual,
9or;oration, asso9iation, foundation, or entity, eB9e;t the
#ational +overn<ent, its instru<entalities or ;oliti9al
su:divisions, in 9harge of, or a9ting for, or 9on9erned with
the ad<inistration of, the trust referred to in the se9tion
i<<ediately ;re9eding and with the ;ro;er a;;li9ation of
trust ;ro;erty.
3*E. 50'. "he ter< trust ;ro;erty shall in9lude all real or
;ersonal ;ro;erties or funds ;ertaining to the trust as well as
those a9Cuired with the fruits or in9o<e therefro< or in
eB9hange or su:stitution thereof.
3*E. 50(. !ll trustees shall, :efore entering in the
;erfor<an9e of the duties of their trust, o:tain a 9ertifi9ate of
registration fro< the o<<issioner. "he registration shall
eB;ire on -e9e<:er G% of the third year following its
issuan9e unless it is renewed.
3!ll ;rovisions of this ode governing <utual :enefit
asso9iations and su9h other ;rovisions herein, whenever
;ra9ti9a:le and ne9essary, shall :e a;;li9a:le to trusts for
9harita:le uses.
3*E. 506. "he treasurer of a 9harita:le trust shall file a
fidelity :ond in the a<ount 9o<<ensurate with the value of
the trust ;ro;erty in his 9ustody, as <ay :e deter<ined :y
the o<<issioner.
3,!P"ER >III
3"RU*" BU*I#E** I# +E#ER!L
3*E. 508. !n insuran9e 9o<;any <ay engage in li<ited
trust :usiness, 9onsisting of <anaging funds ;ertaining only
to retire<ent and ;re-need ;lans, ;rovided it has se9ured a
li9ense to do so fro< the Bang?o *entral ng Pili;inas. "his
trust :usiness shall :e se;arate and distin9t fro< the general
:usiness of the insuran9e 9o<;any and shall :e su:Ie9t to
rules and regulations as <ay :e ;ro<ulgated :y the Bang?o
*entral ng Pili;inas in 9onsultation with the o<<issioner.
3,!P"ER IR
3RE+I*"R!"I$#, RE*P$#*IBILI"IE* !#-
$>ER*I+," $/ *EL/-RE+UL!"$R.
$R+!#IM!"I$#*
3*E 5G&. "he o<<issioner shall have the ;ower to
register as a self-regulatory organiHation, or otherwise grant
li9enses, and to regulate, su;ervise, eBa<ine, sus;end or
otherwise dis9ontinue, as a 9ondition for the o;eration of
organiHations whose o;erations are related to or 9onne9ted
with the insuran9e <ar?et su9h as, :ut not li<ited to,
asso9iations of insuran9e 9o<;anies, whether life or non-life,
reinsurers, a9tuaries, agents, :ro?ers, dealers, <utual
:enefit asso9iations, trusts, rating agen9ies, and other
;ersons regulated :y the o<<issioner, whi9h are engaged
in the :usiness regulated :y this ode.
3"he o<<issioner <ay ;res9ri:e rules and regulations
whi9h are ne9essary or a;;ro;riate in the ;u:li9 interest or
for the ;rote9tion of investors to govern self-regulatory
organiHations and other organiHations li9ensed or regulated
;ursuant to the authority granted hereunder in9luding, :ut
not li<ited to, the reCuire<ent of 9oo;eration within and
a<ong all ;arti9i;ants in the insuran9e <ar?et to ensure
trans;aren9y and fa9ilitate eB9hange of infor<ation.
3*E. 5G%. !n asso9iation 9annot :e registered as a self-
regulatory organiHation unless the o<<issioner deter<ines
that=
3DaE "he asso9iation is so organiHed and has the 9a;a9ity to
:e a:le to 9arry out the ;ur;oses of this ode and to 9o<;ly
with, and to enfor9e 9o<;lian9e :y its <e<:ers and ;ersons
asso9iated with its <e<:ers, with the ;rovisions of this
ode, the rules and regulations thereunder, and the rules of
the asso9iation.
3D:E "he rules of the asso9iation, notwithstanding anything in
the or;oration ode to the 9ontrary, ;rovide the following=
3D%E Sualifi9ations and the disCualifi9ations on <e<:ershi;
of the asso9iationF
3D0E ! fair re;resentation of its <e<:ers to serve on the
:oard of dire9tors of the asso9iation and the ad<inistration
of its affairs, and that any natural ;erson asso9iated with a
Iuridi9al entity that is a <e<:er shall also :e dee<ed to :e a
<e<:er for this ;ur;oseF
3DGE "he ;resident of the asso9iation and at least two D0E
inde;endent dire9tors as <e<:ers of the :oard of dire9tors
of the asso9iationF
3D5E ECuita:le allo9ation of reasona:le dues, fees, and other
9harges a<ong <e<:ers and other ;ersons using any
fa9ility or syste< whi9h the asso9iation o;erates or 9ontrolsF
3D7E "he ;revention of fraudulent and <ani;ulative a9ts and
;ra9ti9es to ;rote9t the insuring ;u:li9 and the ;ro<otion of
Iust and eCuita:le ;rin9i;les of :usinessF
3D'E Me<:ers and ;ersons asso9iated with its <e<:ers
su:Ie9t to dis9i;line for violation of any ;rovision of this
ode, the rules or regulations thereunder, or the rules of the
asso9iationF
3D(E /air ;ro9edure for the dis9i;lining of <e<:ers and
;ersons asso9iated with <e<:ersF and
57 | P a g e
R.A. 10607 The nsurance Code
3D6E "he ;rohi:ition or li<itation of a99ess to servi9es offered
:y the asso9iation or a <e<:er thereof.
3*E. 5G0. ! self-regulatory organiHation <ay eBa<ine and
verify the Cualifi9ations of an a;;li9ant to :e9o<e a <e<:er
in a99ordan9e with ;ro9edures esta:lished :y the rules of
the asso9iation.
3! self-regulatory organiHation shall deny <e<:ershi; or
9ondition the <e<:ershi; of an entity, if it does not <eet the
standards of finan9ial res;onsi:ility, o;erational 9a;a:ility,
training, eB;erien9e, or 9o<;eten9e that are ;res9ri:ed :y
the rules of the asso9iationF or has engaged, and there is a
reasona:le li?elihood it will again engage, in a9ts or
;ra9ti9es in9onsistent with Iust and eCuita:le ;rin9i;les of fair
trade.
3! self-regulatory organiHation <ay deny <e<:ershi; to an
entity not engaged in a ty;e of :usiness in whi9h the rules of
the asso9iation reCuire <e<:ers to :e engaged.
3*E. 5GG. U;on the filing of an a;;li9ation for registration
as a self-regulatory organiHation under this title, the
o<<issioner shall have ninety D8&E days within whi9h to
either grant registration or institute a ;ro9eeding to
deter<ine whether registration should :e denied. In the
event ;ro9eedings are instituted, the o<<issioner shall
have two hundred seventy D0(&E days within whi9h to
9on9lude su9h ;ro9eedings at whi9h ti<e he shall, :y order,
grant or deny su9h registration.
3*E. 5G5. Every self-regulatory organiHation shall 9o<;ly
with the ;rovisions of this ode, the rules and regulations
thereunder, and its own rules, and enfor9e 9o<;lian9e
therewith :y its <e<:ers, ;ersons asso9iated with its
<e<:ers or its ;arti9i;ants, notwithstanding any ;rovision of
the or;oration ode to the 9ontrary.
3*E. 5G7. Ea9h self-regulatory organiHation shall su:<it to
the o<<issioner for ;rior a;;roval any ;ro;osed rule or
a<end<ent thereto, together with a 9on9ise state<ent of the
reason and effe9t of the ;ro;osed a<end<ent.
31ithin siBty D'&E days after su:<ission of a ;ro;osed
a<end<ent, the o<<issioner shall, :y order, a;;rove the
;ro;osed a<end<ent. $therwise, the sa<e <ay :e <ade
effe9tive :y the self-regulatory organiHation.
3In the event of an e<ergen9y reCuiring a9tion for the
;rote9tion of the insuring ;u:li9, a self-regulatory
organiHation <ay ;ut a ;ro;osed a<end<ent into effe9t
su<<arily= Provided, however, "hat a 9o;y of the sa<e shall
:e i<<ediately su:<itted to the o<<issioner.
3"he o<<issioner is further authoriHed, if after <a?ing
a;;ro;riate reCuest in writing to a self-regulatory
organiHation that su9h organiHation effe9t on its own :ehalf
s;e9ified 9hanges in its rules and ;ra9ti9es and, after due
noti9e and hearing, it deter<ines that su9h 9hanges have not
:een effe9ted, and that su9h 9hanges are ne9essary, :y rule
or regulation or :y order, <ay alter, a:rogate or su;;le<ent
the rules of su9h self-regulatory organiHation insofar as
ne9essary or a;;ro;riate to effe9t su9h 9hanges in res;e9t of
su9h <atters as=
3DaE *afeguards in res;e9t of the finan9ial res;onsi:ility of
<e<:ers and adeCuate ;rovision against the evasion of
finan9ial res;onsi:ility through the use of 9or;orate for<s or
s;e9ial ;artnershi;sF
3D:E "he su;ervision of <ar?et ;ra9ti9esF
3D9E "he <anner, <ethod and ;la9e of soli9iting :usinessF
3DdE "he fiBing of reasona:le rates of fees, interest, listing
and other 9harges, :ut not rates of 9o<<issionF and self-
regulatory organiHationF and
3DeE "he su;ervision, auditing and dis9i;lining of <e<:ers.
3In addition to the general ;owers of the o<<issioner over
the entities under su;ervision, the o<<issioner, after due
noti9e and hearing, is authoriHed, in the ;u:li9 interest and to
;rote9t the insuring ;u:li9=
3D%E "o sus;end for a ;eriod not eB9eeding twelve D%0E
<onths or to revo?e the registration of a self-regulatory
organiHation, or to 9ensure or i<;ose li<itations on the
a9tivities, fun9tions and o;erations of su9h self-regulatory
organiHation, if the o<<ission finds that su9h a self-
regulatory organiHation has willfully violated or is una:le to
9o<;ly with any ;rovision of this ode or of the rules and
regulations thereunder, or its own rules, or has failed to
enfor9e 9o<;lian9e therewith :y a <e<:er of, ;erson
asso9iated with a <e<:er, or a ;arti9i;ant in su9h self-
regulatory organiHationF
3D0E "o eB;el fro< a self-regulatory organiHation any <e<:er
thereof or any ;arti9i;ant therein who is found to have
willfully violated any ;rovision of this ode or sus;end for a
;eriod not eB9eeding twelve D%0E <onths for violation of any
;rovision of this ode or any other law ad<inistered :y the
o<<ission, or the rules and regulations thereunder, or
effe9ted, dire9tly or indire9tly, any transa9tion for any ;erson
who, su9h <e<:er or ;arti9i;ant had reason to :elieve, was
violating in res;e9t of su9h transa9tion any of su9h
;rovisionsF and
3DGE "o re<ove fro< offi9e or 9ensure any offi9er or dire9tor
of a self-regulatory organiHation if it finds that su9h offi9er or
dire9tor has violated any ;rovision of this ode, any other
law ad<inistered :y the o<<issioner, the rules or
regulations thereunder and the rules of su9h self-regulatory
organiHation, or has a:used his authority, or without
reasona:le Iustifi9ation or eB9use has failed to enfor9e
9o<;lian9e with any of su9h ;rovisions.
3*E. 5G'. DaE ! self-regulatory organiHation is authoriHed to
dis9i;line a <e<:er of or ;arti9i;ant in su9h self-regulatory
organiHation, or any ;erson asso9iated with a <e<:er,
in9luding sus;ending or eB;elling su9h <e<:er or
;arti9i;ant, or sus;ending or :arring su9h ;erson fro< :eing
asso9iated with a <e<:er, if engaged in a9ts or ;ra9ti9es
in9onsistent with Iust and eCuita:le ;rin9i;les of fairness or
in willful violation of any ;rovision of this ode, any other law
58 | P a g e
R.A. 10607 The nsurance Code
ad<inistered :y the o<<ission, the rules or regulations
thereunder, or the rules of the self-regulatory organiHation. In
any dis9i;linary ;ro9eeding :y a self-regulatory organiHation
Dother than a su<<ary ;ro9eeding ;ursuant to ;aragra;h D:E
of this se9tionE the self-regulatory organiHation shall :ring
s;e9ifi9 9harges, ;rovide noti9e to the ;erson 9harged, afford
the ;erson 9harged with an o;;ortunity to defend against the
9harges, and ?ee; a re9ord of the ;ro9eedings. !
deter<ination to i<;ose a dis9i;linary san9tion shall :e
su;;orted :y a written state<ent of the offense, a su<<ary
of the eviden9e ;resented and a state<ent of the san9tion
i<;osed.
3D:E ! self-regulatory organiHation <ay su<<arily=
3D%E *us;end a <e<:er, ;arti9i;ant or ;erson asso9iated
with a <e<:er who has :een or is eB;elled or sus;ended
fro< any other self-regulatory organiHationF or
3D0E *us;end a <e<:er who the self-regulatory organiHation
finds to :e in su9h finan9ial or o;erating diffi9ulty that the
<e<:er or ;arti9i;ant 9annot :e ;er<itted to 9ontinue to do
:usiness as a <e<:er with safety to investors, 9reditors,
other <e<:ers, ;arti9i;ants or the self-regulatory
organiHation= Provided, "hat the self-regulatory organiHation
i<<ediately notifies the o<<ission of the a9tion ta?en. !ny
;erson aggrieved :y a su<<ary a9tion ;ursuant to this
;aragra;h shall :e ;ro<;tly afforded an o;;ortunity for a
hearing :y the asso9iation in a99ordan9e with the ;re9eding
;aragra;h. "he o<<issioner, :y order, <ay stay a
su<<ary a9tion on his own or u;on a;;li9ation :y any
;erson aggrieved there:y, if the o<<issioner deter<ines
su<<arily or after due noti9e and hearing Dwhi9h hearing
<ay 9onsist solely of the su:<ission of affidavits or
;resentation of oral argu<entsE, that a stay is 9onsistent with
the ;u:li9 interest and the ;rote9tion of the insuring ;u:li9.
3D9E ! self-regulatory organiHation shall ;ro<;tly notify the
o<<ission of any dis9i;linary san9tion on any <e<:er
thereof or ;arti9i;ant therein, any denial of <e<:ershi; or
;arti9i;ation in su9h organiHation, or the i<;osition of any
dis9i;linary san9tion on a ;erson asso9iated with a <e<:er
or a :ar of su9h ;erson fro< :e9o<ing so asso9iated. 1ithin
thirty DG&E days after su9h noti9e, any aggrieved ;erson <ay
a;;eal to the o<<issioner fro<, or the o<<issioner on
its own <otion within su9h ;eriod, <ay institute review of,
the de9ision of the self-regulatory organiHation, at the
9on9lusion of whi9h, after due noti9e and hearing Dwhi9h <ay
9onsist solely of review of the re9ord :efore the self-
regulatory organiHationE, the o<<issioner shall affir<,
<odify or set aside the san9tion. In su9h ;ro9eeding, the
o<<issioner shall deter<ine whether the aggrieved ;erson
has engaged or o<itted to engage in the a9ts and ;ra9ti9es
as found :y the self-regulatory organiHation, whether su9h
a9ts and ;ra9ti9es 9onstitute willful violations of this ode,
any other law ad<inistered :y the o<<ission, the rules or
regulations thereunder, or the rules of the self-regulatory
organiHation as s;e9ified :y su9h organiHation, whether su9h
;rovisions were a;;lied in a <anner 9onsistent with the
;ur;oses of this ode, and whether, with due regard for the
;u:li9 interest and the ;rote9tion of investors, the san9tion is
eB9essive or o;;ressive.
3,!P"ER R
3",E I#*UR!#E $MMI**I$#ER
3"I"LE l
3!-MI#I*"R!"I>E !#- !-JU-I!"$R. P$1ER*
3*E. 5G(. "he Insuran9e o<<issioner shall :e a;;ointed
:y the President of the Re;u:li9 of the Phili;;ines for a ter<
of siB D'E years without rea;;oint<ent and who shall serve
as su9h until the su99essor shall have :een a;;ointed and
Cualified. If the Insuran9e o<<issioner is re<oved :efore
the eB;iration of his ter< of offi9e, the reason for the re<oval
<ust :e ;u:lished.
3"he Insuran9e o<<issioner shall have the duty to see that
all laws relating to insuran9e, insuran9e 9o<;anies and
other insuran9e <atters, <utual :enefit asso9iations, and
trusts for 9harita:le uses are faithfully eBe9uted and to
;erfor< the duties i<;osed u;on hi< :y this ode, and
shall, notwithstanding any eBisting laws to the 9ontrary, have
sole and eB9lusive authority to regulate the issuan9e and
sale of varia:le 9ontra9ts as defined in *e9tion 0G6 hereof
and to ;rovide for the li9ensing of ;ersons selling su9h
9ontra9ts, and to issue su9h reasona:le rules and
regulations governing the sa<e.
3"he o<<issioner <ay issue su9h rulings, instru9tions,
9ir9ulars, orders and de9isions as <ay :e dee<ed
ne9essary to se9ure the enfor9e<ent of the ;rovisions of this
ode, to ensure the effi9ient regulation of the insuran9e
industry in a99ordan9e with glo:al :est ;ra9ti9es and to
;rote9t the insuring ;u:li9. EB9e;t as otherwise s;e9ified,
de9isions <ade :y the o<<issioner shall :e a;;eala:le to
the *e9retary of /inan9e.
3In addition to the foregoing, the o<<issioner shall have
the following ;owers and fun9tions=
3DaE /or<ulate ;oli9ies and re9o<<endations on issues
9on9erning the insuran9e industry, advise ongress and
other govern<ent agen9ies on all as;e9ts of the insuran9e
industry and ;ro;ose legislation and a<end<ents theretoF
3D:E !;;rove, reIe9t, sus;end or revo?e li9enses or
9ertifi9ates of registration ;rovided for :y this odeF
3D9E I<;ose san9tions for the violation of laws and the rules,
regulations and orders issued ;ursuant theretoF
3DdE Pre;are, a;;rove, a<end or re;eal rules, regulations
and orders, and issue o;inions and ;rovide guidan9e on and
su;ervise 9o<;lian9e with su9h rules, regulations and
ordersF
3DeE Enlist the aid and su;;ort of, andKor de;utiHe any and all
enfor9e<ent agen9ies of the govern<ent in the
i<;le<entation of its ;owers and fun9tions under this odeF
3DfE Issue 9ease and desist orders to ;revent fraud or inIury
to the insuring ;u:li9F
59 | P a g e
R.A. 10607 The nsurance Code
3DgE Punish for 9onte<;t of the o<<issioner, :oth dire9t
and indire9t, in a99ordan9e with the ;ertinent ;rovisions of
and ;enalties ;res9ri:ed :y the Rules of ourtF
3DhE o<;el the offi9ers of any registered insuran9e
9or;oration or asso9iation to 9all <eetings of sto9?holders or
<e<:ers thereof under its su;ervisionF
3DiE Issue su:;oena du9es te9u< and su<<on witnesses to
a;;ear in any ;ro9eeding of the o<<ission and, in
a;;ro;riate 9ases, order the eBa<ination, sear9h and
seiHure of all do9u<ents, ;a;ers, files and re9ords, taB
returns, and :oo?s of a99ounts of any entity or ;erson under
investigation as <ay :e ne9essary for the ;ro;er dis;osition
of the 9ases :efore it, su:Ie9t to the ;rovisions of eBisting
lawsF
3DIE *us;end or revo?e, after ;ro;er noti9e and hearing, the
li9ense or 9ertifi9ate of authority of any entity or ;erson
under its regulation, u;on any of the grounds ;rovided :y
lawF
3D?E ondu9t an eBa<ination to deter<ine 9o<;lian9e with
laws and regulations if the 9ir9u<stan9es so warrant as
deter<ined :y a;;ro;riate rules and regulationsF
3DlE Investigate not oftener than on9e a year fro< the last
date of eBa<ination to deter<ine whether an institution is
9ondu9ting its :usiness on a safe and sound :asis=
Provided, "hat, the defi9ien9iesKirregularities found :y or
dis9overed :y an audit shall :e i<<ediately addressedF
3D<E InCuire into the solven9y and liCuidity of the institutions
under its su;ervision and enfor9e ;ro<;t 9orre9tive a9tionF
3DnE "o retain and utiliHe, in addition to its annual :udget, all
fees, 9harges and other in9o<e derived fro< the regulation
of insuran9e 9o<;anies and other su;ervised ;ersons or
entitiesF
3DoE "o fiB and assess fees, 9harges and ;enalties as the
o<<issioner <ay find reasona:le in the eBer9ise of
regulationF and
3D;E EBer9ise su9h other ;owers as <ay :e ;rovided :y law
as well as those whi9h <ay :e i<;lied fro<, or whi9h are
ne9essary or in9idental to the eB;ress ;owers granted the
o<<ission to a9hieve the o:Ie9tives and ;ur;oses of this
ode.
3"he o<<ission shall inde<nify the o<<issioner, -e;uty
o<<issioner, and other offi9ials of the o<<ission,
in9luding ;ersonnel ;erfor<ing su;ervision and eBa<ination
fun9tions, for all 9osts and eB;enses reasona:ly in9urred :y
su9h ;ersons in 9onne9tion with any 9ivil or 9ri<inal a9tions,
suits or ;ro9eedings to whi9h they <ay :e <ade a ;arty to
:y the reason of the ;erfor<an9e of their duties and
fun9tions, unless they are finally adIudged in su9h a9tions,
suits or ;ro9eedings to :e lia:le for negligen9e or
<is9ondu9t.
3In the event of settle<ent or 9o<;ro<ise, inde<nifi9ation
shall :e ;rovided only in 9onne9tion with su9h <atters
9overed :y the settle<ent as to whi9h the o<<ission is
advised :y eBternal 9ounsel that the ;ersons to :e
inde<nified did not 9o<<it any negligen9e or <is9ondu9t=
3"he 9osts and eB;enses in9urred in defending the
afore<entioned a9tion, suit or ;ro9eeding <ay :e ;aid :y
the o<<ission in advan9e of the final dis;osition of su9h
a9tion, suit or ;ro9eeding u;on re9ei;t of an underta?ing :y
or on :ehalf of the o<<issioner, -e;uty o<<issioner,
offi9er or e<;loyee to re;ay the a<ount advan9ed should it
ulti<ately :e deter<ined :y the o<<ission that the ;erson
is not entitled to :e inde<nified.
3*E. 5G6. In addition to the ad<inistrative san9tions
;rovided elsewhere in this ode, the Insuran9e
o<<issioner is here:y authoriHed, at his dis9retion, to
i<;ose u;on insuran9e 9o<;anies, their dire9tors andKor
offi9ers andKor agents, for any willful failure or refusal to
9o<;ly with, or violation of any ;rovision of this ode, or any
order, instru9tion, regulation, or ruling of the Insuran9e
o<<issioner, or any 9o<<ission or irregularities, andKor
9ondu9ting :usiness in an unsafe or unsound <anner as
<ay :e deter<ined :y the Insuran9e o<<issioner, the
following=
3DaE /ines not less than /ive thousand ;esos DP7,&&&.&&E
and not <ore than "wo hundred thousand ;esos
DP0&&,&&&.&&EF and
3D:E *us;ension, or after due hearing, re<oval of dire9tors
andKor offi9ers andKor agents.
3*E. 5G8. "he o<<issioner shall have the ;ower to
adIudi9ate 9lai<s and 9o<;laints involving any loss, da<age
or lia:ility for whi9h an insurer <ay :e answera:le under any
?ind of ;oli9y or 9ontra9t of insuran9e, or for whi9h su9h
insurer <ay :e lia:le under a 9ontra9t of suretyshi;, or for
whi9h a reinsurer <ay :e sued under any 9ontra9t of
reinsuran9e it <ay have entered intoF or for whi9h a <utual
:enefit asso9iation <ay :e held lia:le under the <e<:ershi;
9ertifi9ates it has issued to its <e<:ers, where the a<ount
of any su9h loss, da<age or lia:ility, eB9luding interest, 9ost
and attorneyAs fees, :eing 9lai<ed or sued u;on any ?ind of
insuran9e, :ond, reinsuran9e 9ontra9t, or <e<:ershi;
9ertifi9ate does not eB9eed in any single 9lai< /ive <illion
;esos DP7,&&&,&&&.&&E.
3"he ;ower of the o<<issioner does not 9over the
relationshi; :etween the insuran9e 9o<;any and its
agentsK:ro?ers :ut is li<ited to adIudi9ating 9lai<s and
9o<;laints filed :y the insured against the insuran9e
9o<;any.
3"he o<<issioner <ay authoriHe any offi9er or grou; of
offi9ers under hi< to 9ondu9t investigation, inCuiry andKor
hearing and de9ide 9lai<s and he <ay issue rules governing
the 9ondu9t of adIudi9ation and resolution of 9ases. "he
Rules of ourt shall have su;;letory a;;li9ation.
3"he ;arty filing an a9tion ;ursuant to the ;rovisions of this
se9tion there:y su:<its his ;erson to the Iurisdi9tion of the
o<<issioner. "he o<<issioner shall a9Cuire Iurisdi9tion
over the ;erson of the i<;leaded ;arty or ;arties in
60 | P a g e
R.A. 10607 The nsurance Code
a99ordan9e with and ;ursuant to the ;rovisions of the Rules
of ourt.
3"he authority to adIudi9ate granted to the o<<issioner
under this se9tion shall :e 9on9urrent with that of the 9ivil
9ourts, :ut the filing of a 9o<;laint with the o<<issioner
shall ;re9lude the 9ivil 9ourts fro< ta?ing 9ogniHan9e of a
suit involving the sa<e su:Ie9t <atter.
3!ny de9ision, order or ruling rendered :y the o<<issioner
after a hearing shall have the for9e and effe9t of a Iudg<ent.
!ny ;arty <ay a;;eal fro< a final order, ruling or de9ision of
the o<<issioner :y filing with the o<<issioner within
thirty DG&E days fro< re9ei;t of 9o;y of su9h order, ruling or
de9ision a noti9e of a;;eal to the ourt of !;;eals in the
<anner ;rovided for in the Rules of ourt for a;;eals fro<
the Regional "rial ourt to the ourt of !;;eals.
3/or the ;ur;ose of any ;ro9eeding under this se9tion, the
o<<issioner, or any offi9er thereof designated :y hi< is
e<;owered to ad<inister oaths and affir<ation, su:;oena
witnesses, 9o<;el their attendan9e, ta?e eviden9e, and
reCuire the ;rodu9tion of any :oo?s, ;a;ers, do9u<ents, or
9ontra9ts or other re9ords whi9h are relevant or <aterial to
the inCuiry.
3! full and 9o<;lete re9ord shall :e ?e;t of all ;ro9eedings
had :efore the o<<issioner, or the offi9ers thereof
designated :y hi<, and all testi<ony shall :e ta?en down
and trans9ri:ed :y a stenogra;her a;;ointed :y the
o<<issioner.
3In order to ;ro<ote ;arty autono<y in the resolution of
9ases, the o<<issioner shall esta:lish a syste< for
resolving 9ases through the use of alternative dis;ute
resolution.
3"I"LE 0
3/EE* !#- $",ER *$URE* $/ /U#-*
3*E. 55&. DaE /or the issuan9e or renewal of 9ertifi9ates of
authority, li9enses and 9ertifi9ates of registration, ;ursuant to
;ertinent ;rovisions of this ode, the o<<issioner shall
9olle9t and re9eive fees whi9h shall :e not less than the
following=
3/or ea9h 9ertifi9ate of authority issued to an insuran9e
9o<;any doing :usiness in the Phili;;ines, "wo hundred
;esos DP0&&.&&E.
3/or ea9h s;e9ial 9ertifi9ate of authority issued to a servi9ing
insuran9e 9o<;any, $ne hundred ;esos DP%&&.&&E.
3/or ea9h li9ense issued to a general agent of an insuran9e
9o<;any, /ifty ;esos DP7&.&&E.
3/or ea9h li9ense issued to an insuran9e agent, "wenty-five
;esos DP07.&&E.
3/or ea9h li9ense issued to an agent of varia:le 9ontra9t
;oli9y, "wenty-five ;esos DP07.&&E.
3/or ea9h li9ense issued to an insuran9e :ro?er, $ne
hundred ;esos DP%&&.&&E.
3/or ea9h li9ense issued to a reinsuran9e :ro?er, $ne
hundred ;esos DP%&&.&&E.
3/or ea9h li9ense issued to an insuran9e adIuster, $ne
hundred ;esos DP%&&.&&E.
3/or ea9h 9ertifi9ate of registration issued to an a9tuary, /ifty
;esos DP7&.&&E.
3/or ea9h 9ertifi9ate of registration issued to a resident
agent, /ifty ;esos DP7&.&&E.
3/or ea9h li9ense issued to a rating organiHation, $ne
hundred ;esos DP%&&.&&E.
3/or ea9h 9ertifi9ate of registration issued to a non-life
9o<;any underwriter, /ifty ;esos DP7&.&&E.
3/or ea9h li9ense issued to a <utual :enefit asso9iation, "en
;esos DP%&.&&E
3/or ea9h 9ertifi9ate of registration issued to a trust for
9harita:le uses, "en ;esos DP%&.&&E.
3!ll 9ertifi9ates of authority and all other li9enses, as well as
all 9ertifi9ates of registration, issued to any ;erson,
;artnershi;, asso9iation or 9or;oration under the ;ertinent
;rovisions of this ode for whi9h no eB;iration date has :een
;res9ri:ed, shall eB;ire on the last day of -e9e<:er of the
third year fro< its issuan9e and shall :e renewed u;on
a;;li9ation therefor and ;ay<ent of the 9orres;onding fee, if
the li9ensee or holder of su9h li9ense or 9ertifi9ate is
9ontinuing to 9o<;ly with all the a;;li9a:le ;rovisions of
eBisting laws, and of rules, instru9tions, orders and de9isions
of the o<<issioner.
3D:E /or the filing of the annual state<ent referred to in
*e9tion 008, the o<<issioner shall 9olle9t and re9eive
fro< the insuran9e 9o<;any so filing a fee of not less than
/ive hundred ;esos DP7&&.&&E= Provided, "hat a fine of not
less than $ne hundred ;esos DP%&&.&&E shall :e i<;osed
and 9olle9ted :y the o<<issioner for ea9h wee? of delay,
or any fra9tion thereof, in the filing of the annual state<ent.
3/or the filing of annual state<ent referred to in *e9tion 5%G,
the o<<issioner shall 9olle9t and re9eive fro< the <utual
:enefit asso9iation so filing a fee of not less than "en ;esos
DP%&.&&E= Provided, "hat a fine of not less than "en ;esos
DP%&.&&E shall :e i<;osed and 9olle9ted :y the
o<<issioner for ea9h wee? of delay, or any fra9tion
thereof, in the filing of the annual state<ent.
3D9E /or the eBa<ination ;res9ri:ed in *e9tion 07G, the
o<<issioner shall 9olle9t and re9eive fees a99ording to the
a<ount of its total assets, in the 9ase of a do<esti9
9o<;any, or of its assets in the Phili;;ines, in the 9ase of a
foreign 9o<;any, not less than the a<ount as follows=
61 | P a g e
R.A. 10607 The nsurance Code
3D%E "wo <illion ;esos or <ore :ut less than /our <illion
;esos, /our hundred ;esos DP5&&.&&EF
3D0E /our <illion ;esos or <ore :ut less than *iB <illion
;esos, Eight hundred ;esos DP6&&.&&EF
3DGE *iB <illion ;esos or <ore :ut less than Eight <illion
;esos, $ne thousand two hundred ;esos DP%,0&&.&&EF
3D5E Eight <illion ;esos or <ore :ut less than "en <illion
;esos, $ne thousand siB hundred ;esos DP%,'&&.&&EF
3D7E "en <illion ;esos or <ore, "wo thousand ;esos
DP0,&&&.&&EF
3Provided, "hat if the said eBa<ination is <ade in ;la9es
outside the Metro;olitan Manila area, :esides these fees, the
o<<issioner shall reCuire of the 9o<;any eBa<ined the
;ay<ent of the a9tual and ne9essary travelling and
su:sisten9e eB;enses of the eBa<iner or eBa<iners
9on9erned.
3/or the eBa<ination ;res9ri:ed in *e9tion 5%0, the
o<<issioner shall 9olle9t and re9eive a <ini<u< fee of not
less than $ne hundred ;esos DP%&&.&&E fro< the <utual
:enefit asso9iation eBa<ined= Provided, "hat if su9h
asso9iation has total assets of <ore than $ne hundred
thousand ;esos DP%&&,&&&.&&E, an additional fee of not less
than "en ;esos DP%&.&&E for every /ifty thousand ;esos
DP7&,&&&.&&E in eB9ess thereof shall :e i<;osed=
3DdE /or the filing of an a;;li9ation to withdraw fro< the
Phili;;ines under "itle %6, the o<<issioner shall 9olle9t
and re9eive fro< the foreign 9o<;any so withdrawing a fee
of not less than $ne thousand ;esos DP%,&&&.&&E.
3DeE "he o<<issioner <ay fiB and 9olle9t fees or 9harges
for do9u<ents, trans9ri;ts, or other <aterials whi9h <ay :e
furnished :y hi< not in eB9ess of reasona:le 9ost.
3*E. 55%. "he o<<issioner, in a99ordan9e with the rules
and regulations of the -e;art<ent of Budget and
Manage<ent and other relevant regulatory agen9ies, shall
sour9e the salary, allowan9es and other eB;enses fro< the
retained a<ount of the fees, 9harges, ;enalties and other
in9o<e fro< the regulation of insuran9e 9o<;anies and
other 9overed ;ersons and entities, and fro< the Insuran9e
/und, whi9h is 9reated out of the ;ro9eeds of taBes on
insuran9e ;re<iu<s <entioned in *e9tion 077 of the
#ational Internal Revenue ode, as a<ended.
3MI*ELL!#E$U* PR$>I*I$#*
3*E. 550. !ny ;erson, 9o<;any or 9or;oration su:Ie9t to
the su;ervision and 9ontrol of the o<<issioner who
violates any ;rovision of this ode, for whi9h no ;enalty is
;rovided, shall :e dee<ed guilty of a ;enal offense, and
u;on 9onvi9tion :e ;unished :y a fine not eB9eeding "wo
hundred thousand ;esos DP0&&,&&&.&&E or i<;rison<ent of
siB D'E <onths, or :oth, at the dis9retion of the 9ourt.
3If the offense is 9o<<itted :y a 9o<;any or 9or;oration, the
offi9ers, dire9tors, or other ;ersons res;onsi:le for its
o;eration, <anage<ent, or ad<inistration, unless it 9an :e
;roved that they have ta?en no ;art in the 9o<<ission of the
offense, shall li?ewise :e guilty of a ;enal offense, and u;on
9onvi9tion :e ;unished :y a fine not eB9eeding "wo hundred
thousand ;esos DP0&&,&&&.&&E or i<;rison<ent of siB D'E
<onths, or :oth, at the dis9retion of the 9ourt.
3*E. 55G. !ll 9ri<inal a9tions for the violation of any of the
;rovisions of this ode shall ;res9ri:e after three DGE years
fro< the dis9overy of su9h violation= Provided, "hat su9h
a9tions shall in any event ;res9ri:e after ten D%&E years fro<
the 9o<<ission of su9h violation.
3*E. 555. !ny ;erson, ;artnershi;, asso9iation or
9or;oration heretofore authoriHed, li9ensed or registered :y
the o<<issioner shall :e dee<ed to have :een authoriHed,
li9ensed or registered under the ;rovisions of this ode and
shall :e governed :y the ;rovisions thereof= Provided,
however, "hat where any su9h ;erson, ;artnershi;,
asso9iation or 9or;oration is affe9ted :y the new
reCuire<ents of this ode, said ;erson, ;artnershi;,
asso9iation or 9or;oration shall, unless otherwise herein
;rovided, :e given a ;eriod of one D%E year fro< the
effe9tivity of this ode within whi9h to 9o<;ly with the sa<e.
3*E. 557. "ransitory Provision. T Renewal of eBisting
li9enses, 9ertifi9ates of authority or a99reditation whi9h will
eB;ire on June G&, 0&%G shall :e valid until -e9e<:er G%,
0&%7. "hereafter, renewal shall :e filed on the last day of
-e9e<:er every third year following the date of eB;iry of the
li9ense, 9ertifi9ate of authority or a99reditation.
3*E. 55'. Re;ealing lause. T EB9e;t as eB;ressly
;rovided :y this ode, all laws, de9rees, orders, rules and
regulations or ;arts thereof, in9onsistent with any ;rovision
of this ode shall :e dee<ed re;ealed, a<ended or
<odified a99ordingly.
3*E. 55(. *e;ara:ility lause. T If any ;rovision of this
ode or any ;art hereof :e de9lared invalid or
un9onstitutional, the re<ainder of the law or other ;rovisions
not otherwise affe9ted shall re<ain valid and su:sisting.
3*E. 556. "his ode shall ta?e effe9t fifteen D%7E days
following its ;u:li9ation in a news;a;er of general
9ir9uation.4
!;;roved,
D*gd.E JI#++$. EJERI"$ E*"R!-!
!9ting *enate President
D*gd.E /ELII!#$ BELM$#"E JR.
*e9retary +eneral
,ouse of Re;resentatives
62 | P a g e
R.A. 10607 The nsurance Code
"his !9t whi9h is a 9onsolidation of ,ouse Bill #o. 56'( and
*enate Bill #o. G06& was finally ;assed :y the ,ouse of
Re;resentatives and the *enate on /e:ruary ', 0&%G.
D*gd.E EMM! LIRI$-RE.E*
*e9retary of the *enate
D*gd.E M!RIL.# B. B!RU!-.!P
*e9retary +eneral
,ouse of Re;resentatives
!;;roved= !U+ %7 0&%G
D*gd.E BE#I+#$ *. !SUI#$ III
President of the Phili;;ines
63 | P a g e
R.A. 10607 The nsurance Code