Republic of the Philippines.
HOUSE OF REPRESENTATIVES.
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 5162

RECEIVED
¥ are EB 03 2020

TIME:
2, BY: a
Gp s
<pex SS

a
v

Introduced by Representative Sharon S. Garin

EXPLANATORY NOTE

The insurance business is an industry akin to banking and financial
institutions which greatly affects the economic growth of the country.

Therefore, its regulation is of paramount importance.

Historically, the insurance industry has always been regulated by
‘one person, the Insurance Commissioner, which is in contrast to the
general corporate and banking industries that are regulated by collegial
bodies -- the Securities and Exchange Commission and the Monetary

Board of the Bangko Sentral ng Pilipinas, respectively.

Taking these into consideration, the creation of a collegial body to
regulate the insurance industry is necessitated. The collegiality will bring
stability in the Commission as its actions in setting policies and guidelines,
as well as the exercise of its administrative and adjudicatory powers, would

now require a majority vote of its members.

In view of the foregoing, the approval of this bill is earnestly

requested.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILLNO.__ 5162

__ Introduced by Representative Sharon S. Garin

AN ACT
REORGANIZING AND CONVERTING THE INSURANCE COMMISSION
INTO A COLLEGIAL BODY, AMENDING SECTIONS 437, 438, AND 439 OF
REPUBLIC ACT NO. 10607, OTHERWISE KNOWN AS
“THE INSURANCE CODE”, AS AMENDED.

Be it enacted by the Senate and House of Representatives of the Philippines in

Congress assembled:

1 SEC. 1. Section 437 of Republic Act No. 10607 is hereby amended to read as
2 follows:

3 “SECTION 437. THIS CODE SHALL BE ADMINISTERED BY THE
4 INSURANCE COMMISSION (HEREINAFTER REFERRED TO AS THE
5 "COMMISSION") AS A COLLEGIAL BODY, COMPOSED OF A
6 CHAIRPERSON AND (4) COMMISSIONERS, APPOINTED BY THE
7 PRESIDENT FOR A TERM OF (6) SIX YEARS EACH AND WHO SHALL
8 SERVES AS SUCH UNTIL THEIR SUCCESSOR SHALL HAVE BEEN

9 APPOINTED AND QUALIFIED. A COMMISSIONER APPOINTED TO FILL A


10

u

12

13

14

15

16

7

18

19

20

241

22

23

24

25

VACANCY OCCURRING PRIOR TO THE EXPIRATION OF THE TERM FOR
WHICH HIS/HER PREDECESSOR WAS APPOINTED, SHALL SERVE ONLY
FOR THE UNEXPIRED PORTION OF THEIR TERMS. UNLESS THE
CONTEXT INDICATES OTHERWISE, THE TERM "COMMISSIONER"
INCLUDES THE CHAIRPERSON. ALL PREVIOUS REFERENCES TO THE
“INSURANCE COMMISSIONER” IN THE CODE SHALL HEREBY REFER TO
THE “COMMISSION”.

THE COMMISSIONERS MUST BE NATURAL-BORN CITIZENS OF THE
PHILIPPINES, AT LEAST FORTY (40) YEARS OF AGE FOR THE
CHAIRPERSON AND AT LEAST THIRTY-FIVE (35) YEARS OF AGE FOR
THE COMMISSIONERS, OF GOOD MORAL CHARACTER, OR
UNQUESTIONABLE INTEGRITY, OF KNOWN PROBITY AND PATRIOTISM,
AND WITH RECOGNIZED COMPETENCE IN THE INSURANCE INDUSTRY.
IF A COMMISSIONER IS REMOVED BEFORE THE EXPIRATION OF HIS/HER
TERM OF OFFICE, THE REASON FOR THE REMOVAL MUST BE
PUBLISHED.

THE CHAIRPERSON IS CHIEF EXECUTIVE OFFICER OF THE
COMMISSION. THE CHAIRPERSON SHALL EXECUTE AND ADMINISTER
THE POLICIES, DECISIONS, ORDERS AND RESOLUTIONS APPROVED BY
THE COMMISSION AND SHALL HAVE THE GENERAL EXECUTIVE
DIRECTION AND SUPERVISION OF THE WORK AND OPERATION OF THE
COMMISSION AND ITS MEMBERS, BODIES, BOARDS, OFFICES,
PERSONNEL AND ALL ITS ADMINISTRATIVE BUSINESS.

THE SALARY OF THE CHAIRPERSON AND THE COMMISSIONERS
SHALL BE FIXED BY THE PRESIDENT OF THE PHILIPPINES BASED ON


14

15

16

7

18

19

20

2

THE OBJECTIVE CLASSIFICATION SYSTEM AT A SUM COMMENSURATE
IMPORTANCE AND RESPONSIBILITIES ATTACHED TO THE POSITION.

THE COMMISSION SHALL HOLD MEETINGS AT LEAST ONCE A
WEEK FOR THE CONDUCT OF BUSINESS OR AS OFTEN AS MAY BE
NECESSARY UPON THE CALL OF THE CHAIRPERSON OR UPON THE
REQUEST OF (3) COMMISSIONERS. THE NOTICE OF THE MEETING
SHALL BE GIVEN TO ALL COMMISSIONERS AND THE PRESENCE OF
THREE (3) COMMISSIONERS SHALL CONSTITUTE A QUORUM. IN THE
ABSENCE OF THE CHAIRPERSON, THE MOST SENIOR COMMISSIONER
SHALL ACT AS PRESIDING OFFICER OF THE MEETING.

THE COMMISSION MAY, FOR PURPOSES OF EFFICIENCY,
DELEGATE ANY OF ITS FUNCTIONS TO ANY DEPARTMENT OF OFFICE
OF THE COMMISSION, AN INDIVIDUAL COMMISSIONER OR STAFF
MEMBER OF THE COMMISSION EXCEPT ITS REVIEW OR APPELLATE
AUTHORITY AND ITS POWER TO ADOPT, ALTER AND SUPPLEMENT ANY
RULE OR REGULATION. THE COMMISSION MAY REVIEW UPON ITS OWN
INITIATIVE OR UPON THE PETITION OF ANY INTERESTED PARTY ANY
ACTION OF ANY DEPARTMENT OR OFFICE, INDIVIDUAL COMMISSIONER,
OR STAFF MEMBER OF THE COMMISSION.

THE COMMISSION SHALL BE UNDER THE DIRECT CONTROL AND
SUPERVISION BY THE BANGKO SENTRAL NG PILIPINAS.”

SEC. 2. A new section, Section 437-A, is hereby inserted to Republic Act No.

10607 to read as follows:

“Section 437-A. The COMMISSION shall have the duty to see that all laws

relating to insurance, insurance companies and other insurance matters, mutual


10

cB

12

13

14

15

16

17

18

19

20

2

22

23

24

25

benefit associations, and trusts for charitable uses are faithfully executed and to
perform the duties imposed by this Code, and shall, notwithstanding any existing
laws to the contrary, have sole and exclusive authority to regulate the issuance
and sale of variable contracts as defined in Section 238 hereof and to provide for
the licensing of persons selling such contracts, and to issue such reasonable
rules and regulations governing the same.

The COMMISSION may issue such rulings, instructions, circulars, orders
and decisions as may be deemed necessary to secure the enforcement of the
provisions of this Code, to ensure the efficient regulation of the insurance industry
in accordance with global best practices and to protect the insuring public. Except
as otherwise specified, decisions made by the COMMISSION shall be
appealable to the GOVERNOR OF THE BANGKO SENTRAL NG PILIPINAS.

In addition to the foregoing, the COMMISSION shall have the following
powers and functions:

20K
(g) Punish for contempt of the COMMISSION, both direct and indirect, in
accordance with the pertinent provisions of and penalties prescribed by the
Rules of Court;

OK
(0) To fix and assess fees, charges and penalties as the COMMISSION may
find reasonable in the exercise of regulation; and

0K

The Commission shall indemnify the COMMISSIONERS and other officials
of the Commission, including personnel performing supervision and examination

functions, for all costs and expenses reasonably incurred by such persons in


10

soe

12

13

14

15

16

7

18

19

20

21

22

24

connection with any civil or criminal actions, suits or proceedings to which they
may be made a party to by the reason of the performance of their duties and
functions, unless they are finally adjudged in such actions, suits or proceedings
to be liable for negligence or misconduct.
20K

The costs and expenses incurred in defending the aforementioned action,
suit or proceeding may be paid by the Commission in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the COMMISSIONERS, officer or employee to repay the amount
advanced should it ultimately be determined by the Commission that the person
is not entitled to be indemnified.

SEC. 3. Section 438 of Republic Act No. 10607 is hereby amended to read as

follows:

“Section 438. In addition to the administrative sanctions provided
elsewhere in this Code, the Insurance COMMISSION is hereby authorized, at
ITS discretion, to impose upon insurance companies, their directors and/or
officers and/or agents, for any willful failure or refusal to comply with, or violation
of any provision of this Code, or any order, instruction, regulation, or ruling of the
Insurance COMMISSION, or any commission or irregularities, and/or conducting
business in an unsafe or unsound manner as may be determined by the
Insurance COMMISSION, the following:

0K

SEC. 4, Section 439 of Republic Act No. 10607 is hereby amended to read as

follows:


10

see

12

13

14

15

16

7

18

19

20

21

22

23

24

"Section 439. The COMMISSION shall have the power to adjudicate claims
and complaints involving any loss, damage or liability for which an insurer may
be answerable under any kind of policy or contract of insurance, or for which
such insurer may be liable under a contract of suretyship, or for which a reinsurer
may be sued under any contract of reinsurance it may have entered into; or for
which a mutual benefit association may be held liable under the membership
certificates it has issued to its members, where the amount of any such loss,
damage or liability, excluding interest, cost and attorney's fees, being claimed or
sued upon any kind of insurance, bond, reinsurance contract, or membership
certificate does not exceed in any single claim Five million pesos
(P5,000,000.00).

"The power of the COMMISSION does not cover the relationship between
the insurance company and its agents/brokers but is limited to adjudicating
claims and complaints filed by the insured against the insurance company.

"The COMMISSION may authorize any officer or group of officers under
him to conduct investigation, inquiry and/or hearing and decide claims and he
may issue rules governing the conduct of adjudication and resolution of cases.
The Rules of Court shall have suppletory application.

"The party filing an action pursuant to the provisions of this section thereby
submits his person to the jurisdiction of the COMMISSION. The COMMISSION
shall acquire jurisdiction over the person of the impleaded party or parties in
accordance with and pursuant to the provisions of the Rules of Court.

“The authority to adjudicate granted to the COMMISSION under this section

shall be concurrent with that of the civil courts, but the filing of a complaint with


10

uw

12

13

14

15

16

7

18

19

20

2

the COMMISSION shall preclude the civil courts from taking cognizance of a suit
involving the same subject matter.

"Any decision, order or ruling rendered by the COMMISSION after a
hearing shall have the force and effect of a judgment. Any party may appeal from
a final order, ruling or decision of the COMMISSION by filing with the
COMMISSION within thirty (30) days from receipt of copy of such order, ruling or
decision a notice of appeal to the Court of Appeals in the manner provided for in
the Rules of Court for appeals from the Regional Trial Court to the Court of
Appeals.

"For the purpose of any proceeding under this section, the COMMISSION,
or any officer thereof designated [by him] is empowered to administer oaths and
affirmation, subpoena witnesses, compel their attendance, take evidence, and
require the production of any books, papers, documents, or contracts or other
records which are relevant or material to the inquiry.

"A full and complete record shall be kept of all proceedings had before the
COMMISSION, or the officers thereof designated by him, and all testimony shall
be taken down and transcribed by a stenographer appointed by the
COMMISSION.

"In order to promote party autonomy in the resolution of cases, the
COMMISSION shall establish a system for resolving cases through the use of
alternative dispute resolution.

SEC. 5. Separability Clause. — If any provision of this Act shall be held

unconstitutional or invalid, the other provisions not otherwise affected shall remain in

full force and effect.


1

2

5)

SEC. 6. Repealing Clause. — All laws, decrees, executive orders, rules and
regulations or parts thereof which are contrary to or inconsistent with this Act are
hereby repealed, amended or modified accordingly.

SEC. 7. Effectivity. — This Act shall take effect fifteen (15) days after its complete
Publication either in the Official Gazette or in a newspaper of general circulation.

Approved,