15TH CONGRESS OFTHE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
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S. No. 2S00 
Introduced by Sen. S.'R. Osmena III 
EXPLANATORY NOTE 
The State recognizes that a sound and efficient insurance industry is essential in 
promoting the national economy and the country's financial growth. Insurance provides 
protection and security to the insuring public and their dependents while promoting 
capital market development by mobilizing savings for investments and other productive 
activities to spur economic progress. It is an efficient form of raising much needed 
capital to fuel OUf economy and provides a stable and rich source of long-term capital, 
which is critical in our national development. 
It is also underscored that the pension and retirement 'plan aspects of the! 
indiJstry efficiently supplemenf, if not substitute for, state-provided social security 
programs. In a way, the insurance industry encourages and empowers the 'people to 
provide for their own retirement instead of just relying on the government to take care of 
its senior citizens. 
It is thus critical to maintain a healthy and stable insurance industry amidst 
changing economic conditions, particularly the intensifying globalization of the financial 
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sector. Yet the law which primarily governs the industry, Presidential Decree No. 612 
otherwise known as The Insurance Code, has undergone only a few amendments in 
1918, 1981 and 1985 since its passage into law in 1974. 


In those long years however, a number of developments have shaped and 
reshaped the insurance industry, particularly the expahsion of insurance activities, the 
growth in commerce and trade giving rise to new insurance products, the progression in 
regulations brought about by decades of institutional experience, and the global 
financial crises ,that beset the international financial markets. 
This bill aims to formulate a legal framework which shall enable the insurance 
industry to adequately address the various issues and challenges emerging from these 
developments both in the domestic and foreign insurance markets. The end in view is 
the enhancement of growth by maintaining a safe, sound and strong industry that 
enables the insurers to efficiently achieve their business ends and expand their 
insurance activities while further promoting the security, protection and interests of the 
insl:lring public .. Some of the significant changes proposed in this bill relate to new 
insurance activities and business models such as micro-insurance and bancassurance. 
Some are geared towards reinforcing the authority of the Insurance Commission to 
effectively pursue its mandate and perform its functions with the requisite prudence. In 
addition, several titles of the code are also proposed to be strengthened including those 
on sales agencies and technical services and the parameters of the insurance business 
and contract. All these proposals which effectively revise the code are intended to make 
the insurance industry a robust partner of the government in pursuing economic 
development for the greater benefit of the Filipino. 
In view of the foregoing, the approval of this bill is earnestly requested. 
L.JLIfit~ 
SJ:~PIO OSMI:NA III 
Senator' 


15TH CONGRESS OFTHE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S. No. 2500 
Introduced by Sen. S. R. Osmena III 
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AN ACT REVISING PRESIDENTIAL DECREE NO. 612, OTHERWISE KNOWN AS 
THE INSURANCE CODE, AS AMENDED BY PRESIDENTIAL DECREE NOS. 1141, 
1280, 1455, 1460, 1814, AND 1981, AND BATAS PAMBANSA BLG. 874, AND FOR 
OTHER PURPOSES. 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
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SECTION. 1. Section 2, paragraph 2 (d) of The Insurance Code, as amended, is 
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hereby amended to read as follows: 
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"(d) doing or proposing to do any business in sUbstance equivalent to any of the 
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foregoing in a manner designed to evade the provisions of this Code, including 
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the practice of self-insurance by any person or entity extending life insurance or 
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similar protection to its borrowers, depositors, clients or third parties." 
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SEC 2. 'Section 3 of The Insurance Code, as amended, is hereby amended to 
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read as follows: 
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"Sec. '3. Any contingent or unknown event, whether past or future, which 
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may damnify 'a person haVing an insurable interest or create a liability against 
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him, may be inswred against, subject to the provisions of this chapter. 
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"The consent of the spouse is not necessary for the validity of an 
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insurance policy taken out by a married person on his or her life or that of his or 
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her children. 
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"All rights, title and ,interest in the policy of iniSurance taken out by an 
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original owner on the life or health of the person insured shall automatically vest 
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in the latter upon the death of the original owner, unless otherwise provided for in 
the policy." 
SEC. 3. Section 6 of The Insurance Code, as amended, is hereby amended to 
read as follows: 
"Sec. 6. Every corporation, partnership, or association duly authorized to 
transact insurance business as elsewhere provided in this code, may be an 
insurer." 
SEC. 4. Section 12 of The Insurance Code, as amended, is hereby amended to 
read as follows: 
"Sec. 12. The interest of a beneficiary in a life insurance policy shall be 
forfeited when the beneficiary is the principal, accomplice, or accessory in 
willfully bringing about the death of the insured. In such a case, the share 
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forfeited shall p!,!ss on to the other beneficiaries, unless otherwise disqualified. In 
the absence of other beneficiaries, the proceeds shall be paid in accordance with 
the policy contract. If the policy contract is silent, the proceeds shall be paid to 
the insured's estate." 
SEC. 5. Section 45 of The Insurance Code, as amended, is hereby amended to 
read as follows: 
"Sec. 45. If a represe'ntation is false in a material point, whether affirmative 
or promissory, the injured party is entitled to rescind the contract from the time 
when the representation becomes false." 
SEC. 6. The' last paragraph of Section 50 of The Insurance Code, as amended, 
is hereby deleted. 
SEC. 7.c Section 60 of the Insurance Code, as amended, is hereby amended to 
read as follows: 
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"Sec. 60. An open policy is one in which the value of the thing insured is 
not agreed upon; and the amount of the insurance merely represents the 
insurer's maximum liability. The value of such thing insured shall be ascertained 
at the time of the loss." 
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SEC. 8. 
Section 64, paragraph (f) of The Insurance Code, as amended, is 
hereby amended to read as follows: 
"(f) discovery of other insurance coverage that makes the total insurance 
in excess of the value of the property insured; or a determination by the 
Commissioner that the continuation of the policy would violate or would place the 
insurer in violation of this Code." 
SEC. 9. Section 65 of The Insurance Code, as amended, is hereby amended to 
read as follows: 
"Sec. 65. All notices of cancellation mentioned in the preceding section 
shall be in writing, mailed .or delivered to the named insured at the address 
shown in the policy or to his broker, and shall state (a) which of the grounds set 
forth in section sixty-four is relied upon and (b) that, upon written request of the 
named insured, the insurer will furnish the facts on which the cancellation is 
based. 
SEC. 10. Section 77 of The Insurance Code, as amended, is hereby amended to 
read as follows: 
"Sec. 77 .. An insurer is entitled to payment of the premium as soon as the 
thing insured is exposed to the peril insured against. 
Notwithstanding any 
agreement to the contrary, no policy or contract of insurance issued by an 
insurance company is valid and binding unless and until the premium thereof has 
been paid, except in the case of a life or an industrial life policy whenever the 
grace period provision applies, or whenever under the agency agreements with 
duly licensed intermediaries, a gO-day credit extension is given. 
No credit 
extension to a duly licensed intermediary should exceed gO-days from date of 
issuance of the policy. 
Payments of premium to brokers are not considered 
payment of premium to the insurers." 
SEC, 11. A new Section ,78 of The Insurance Code, as amended, is hereby 
added to read as follows: 
"Sec. 78. An employee of the Republic of the Philippines, including its 
political subdivisions and instrumentalities, and government owned or controlled 
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corporations, may pay his insurance premium ar.ld loan obligations through salary 
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deduction: Provided, the treasurer, cashier, paymaster or official of the entity 
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employing the government employee is authorized, notwithstanding the 
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provisions of any existing law, rules and regulations to the contrary, to make 
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deductions from the salary, wage or income of the latter pursuant to the 
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agreement between the insurer and the government employee and to remit such 
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deductions to the insurer concerned, and collect such reasonable fee for its 
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services." 
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SEC. 12. The old Section 78 of The Insurance Code, as amended, is hereby 
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renumbered as Section 79 and the sections subsequent thereto are accordingly 
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renumbered until Section 80, which shall be renumbered as Section 81. 
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SEC. 13. 
Section 81 of The Insurance Code, as amended, is hereby 
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renumbered as Section 82 and amended to read as follows: 
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"Sec. 82. A person insured is entitled to return of the premium when the 
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contract is voidable and subsequently annulled under the provisions of the Civil 
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Code; or, on account of fraud or intentional misrepresentation of the insurer, or of 
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his agent, or on account of facts, the existence of which the insured was ignorant 
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without his fault; or when by any default of the insured other than actual fraud, 
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the insurer never incurred any liability under the policy. 
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"A person insured is not entitled to a return of premium if the policy is 
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annulled, rescinded or if a claim is denied by reason of his fraud or 
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misrepresentation." 
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SEC. 14. 
Section 82 of The Insurance Code, as amended, is hereby 
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renumbered as Section 83 and amended to read as follows: 
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"Sec. 83. In case of an over-insurance by several insurers other than life, 
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the insured is entitled to a ratable return of the premium, proportioned to the 
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amount by which the aggregate sum insured in all the policies exceeds the 
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insurable value of the thing at risk." 
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SEC. 15. A new Section 84 of The Insurance Code, as amended, is hereby 
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added to read as follows: 
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"Sec. 84. An insurer may contract and accept payments, in addition to 
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regular premium, for the purpose of paying future premiums on the policy or to 
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increase the benefits thereof" 
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SEC. 16. The old Section '83 of The Insurance Code, as amended, is hereby 
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renumbered as Section 85 and. the sections subsequent thereto are accordingly 
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renumbered until Section 87, which shall be renumbered as Section 89. 
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SEC. 17. 
Section 88 of The Insurance Code, as amended, is hereby 
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renumbered as Section 90 and amended to read as follows: 
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"Sec. 90. In case of loss, an insurer is exonerated, if notice thereof be not 
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given to him by an insured, or some person entitled to the benefit of the 
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insurance, without unnecessary delay from occurrence of the loss. In case of 
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death, an insurer is likewise exonerated if notice thereof be not given the insurer 
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without unnecessary delay from discovery of death." 
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SEC. 18. The old Section 89 of The Insurance Code, as amended, is hereby 
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renumbered as Section 91 and the sections subsequent thereto are accordingly 
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renumbered until Section 93, whic~ shall be renumbered as Section 95. 
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SEC. 19. 
Section 94 of The Insurance Code, as amended, is hereby 
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renumbered as Section 96 and amended to read as follows: 
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"Sec. 96. Where the insured, in a policy other than life, is overinsured by 
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double insurance: 
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"(a) The insured, unless the policy otherwise provides, may claim payment 
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from the insurers in such order as he may select, up to the amount for which the 
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insurers are severally liable under their respective contracts; 
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"(b) Where the policy under which the insured claims is a valued policy, 
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any sum received by him under any other policy shall be deducted from the value 
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of the policy without regard to the actual value of the subject matter insured; 
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"(c) Where the policy under which the insured claims is an unvalued policy 
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any sum received by him under any policy shall be deducted against the full 
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insurable value, for any sum received by him under any policy; 
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"(d) Where the insured receives any sum in excess of the valuatjon in the 
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case of valued policies, or of the insurable value in the case of unvalued policies, 
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he must hold such sum in trust for the insurers, according to their right of 
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contribution among themselves; 
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"(e) Each insurer is bound, as between himself and the other insurers, to 
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contribute ratably to the loss in proportion to the amount for which he is liable 
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under his contract." 
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SEC. 20. The old Section 95 of The Insurance Code, as amended, is hereby 
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renumbered as Section 97 and. the sections subsequent thereto are accordingly 
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renumbered until Section 178, which shall be renumbered as Section 180. 
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SEC. 21. 
Section 179 of The Insurance Code, as amended, is hereby 
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renumbered as Section 181 and amended to read as follows: 
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"Sec. 181. Life insurance is insurance on human lives and insurance 
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appertaining thereto or connected therewith. 
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"Every contract or undertaking for the payments of annuities including 
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contracts for the payment of lump sums under a retirement program where a life 
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insurance company manages or acts as a trustee for such retirement program 
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shall be considered a life insurance contract for purposes of this Code. 
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"A life insurance policy may also be taken by an individual who intends to 
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travel by ship or airplane. Such policy shall be effective only during the course of 
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the travel." 
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SEC. 22. 
Section 180 of The Insurance Code, as amended, is hereby 
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renumbered as Section 182 and amended to read as follows: 
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"Sec. 182. An insurance upon life may be made payable on the death of 
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the person, or on his surviving a specified period, or otherwise contingently on 
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the continuance or cessation of life. 
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"Every contract or piedge for the payment of endowments or annuities 
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shall be considered a life insurance contract for purpose of this Code. 
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"In the absence of a judicial guardian, the father, or in the laUer's absence 
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or incapacity, the mother, or any minor, who is an insured or a beneficiary under 
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a contract of life, health or,accident insurance, may exercise, in behalf of said 
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minor, any right under the policy, without necessity of court authority or the giving 
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of a bond, where the interest of the minor in the particular act involved does not 
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exceed two hundred fifty -thousand pesos or in such amount as may be 
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determined by the Commissioner. Such right may include, but shall not be limited 
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to, obtaining a policy loan, surrendering the policy, receiving the proceeds of the 
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policy, and giving the minor's consent to any transaction on the policy, 
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"In the absence or in case of the incapacity of the father or mother, the 
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grandparent, the eldest brother or sister at least eighteen years of age, or any 
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relative who has actual custody of the minor insured or beneficiary, shall act as a 
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guardian without need of a court order or judicial appointment as such guardian, 
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as long as such person is not otherwise disqualified or incapacitated. Payment 
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made by the insurer pursuant to this section shall relieve it of any liability under 
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the contract." 
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SEC. 23. The old Section 1.80-A of The Insurance Code, as amended, is nereby 
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renumbered as Section 183 and the sections subsequent thereto are accordingly 
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renumbered until Section 183, which shall be renumbered as Section 186. 
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SEC. 24. 
A new Title on Microinsurance and a new Section 187 of The 
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Insurance Code, as amended, are hereby added to read as follows: 
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"Title 6 
"MIC~OINSURANCE 
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"Sec. 187. The terlTl "microinsurance" shall mean an activity providing 
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specific insurance, insurance-like and other similar products and services that 
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meet the needs of the low~income sector for risk protection and relief against" 
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distress, misfortune and other contingent events. This shall include all forms of 
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insurance,. insurance-like and other similar activities with the following features: 
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a. 
Premiums, contributiQns, fees or charges are collected/deducted prior to 
the occurrence of the a contingent event; and 
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Guaranteed benefits are provided upon occurrence of a contingent event. 
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"No insurance company shall engage in the business of microinsurance 
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unless it possesses all the requirements as may be prescribed by the 
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Commissioner. 
The Commissioner shall issue such rules and regulations 
governing microinsurance." . 
SEC. 25. 
Section 184 of The Insurance Code, as amended, is hereby 
renumbered as Section 188 and amended to read as follows: 
"Sec. 188. For purposes of this Code, the term "insurer" or "insurance 
company" shall include all partnerships, associations, or corporations, including 
government-owned or controlled corporations or entities, engaged as principals 
in the insurance business. Unless the context otherwise requires, the terms shall 
also include professional reinsurers defined in section [two hundred eighty]. 
"Domestic company" shall .. include companies formed, organized or existing 
under the laws of the Philippines. "Foreign company" when used without 
limitation shall include companies formed, organized, or existing under any laws 
other than those of the Philippines." 
SEC. 26. 
Section 185 of The Insurance Code, as amended, is hereby 
renumbered as Section 1.89 and amended to read as follows: 
"Sec. 189. The provisions of the Corporation Code, as amended, shall 
apply to all insurance corporations now or hereafter engaged in business in the 
Philippines insofar as they do not conflict with the provisions of this chapter." 
SEC. 27. 
Section 186 of The Insurance Code, as amended, is hereby 
renumbered as Section 190 and amended to read as follows: 
"Sec. 190. No corporation, partnership, or association of persons shall 
transact any insurance business in the Philippines except as agent of a 
corporation, partnership or association authorized to do the business of 
insurance in the Philippines~ unless possessed of the capital and assets required 
of an insurance corporation doing the same kind of business in the Philippines 
and invested in the same manner; nor unless the Commissioner shall have 
granted to it a certificate to the effect that it has complied with all the provisions of 
this Code. 
"Every corporation, partnership, or association receiving any such 
certificate of authority shall be subject to the insurance and other applicable laws 
of the Philippines and to the jurisdiction and supervision of the Commissioner 
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and other appropriate government agencies." 
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SEC. 28. 
Section 187 of The Insurance Code, as amended, is hereby 
renumbered as Section 191 and amended to read as follows: 
"Sec. 191. No insurance company shall transact any insurance business 
in the Philippines until after It shall have obtained a certificate of authority for that 
purpose from the Commissioner upon application therefor and payment by the 
company concerned of the fees hereinafter prescribed. 
"The Commissioner may refuse to issue a certificate of authority to any 
insurance company if, in his judgment, such refusal will best promote the interest 
of the people of this country. No such certificate of authority shall be granted to 
any such company until the Commissioner shall have satisfied himself by such 
examination as he may make and such evidence as he may require that such 
company is qualified by the laws of the Philippines to transact business therein, 
that the grant of such authority appears to be justified in the light of economic 
requirements, and that the direction and administration, as well as the integrity 
and responsibility of the organizers and administrators, the financial organization 
and the amount of capital, reasonably assure the safety of the interests of the 
policyholders and the public. 
"In order to maintain the quality of the management of the insurance 
companies and afford better protection to policyholders and the public in general, 
any person of good moral character, unquestioned integrity and recognized 
competence may be elected or appointed director or officer of insurance 
companies, in accordance with the pertinent provisions contained in the 
Corporate. Governance circulars prescribed by the Commissioner. In addition 
hereto, the Commissioner shall prescribe the qualifications of directors, executive 
officers and other key officials of insurance companies for purposes of this 
section. 
"No' person shall co~currently be a director and/or officer of an insurance 
company and an adjustment company. Before issuing such certificate of 
authority, the Commissioner must be satisfied that the name of the company is 
not that of any other known company transacting a similar business in the 
Philippines, or a na)lle so similar as to be calculated to mislead the public, in 
accordance with the provisions of the Corporation Code on the use of corporate 
names. 
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"Every company receiving any such certificates of authority shall be 
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subject to the provisions of this Code and other related laws and to the 
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jurisdiction and supervision of the Commissioner and other appropriate 
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government agencies. 
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"No insurance company may be authorized to transact in the Philippines 
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the business of life and non-life insurance concurrently unless specifically 
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authorized to do so by the Commissioner: Provided, That the terms "life" and 
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"non-life" insurance shall b'e deemed to include health, accident and disability 
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insurance. 
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"No insurance company shall have equity in an adjustment company and 
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neither shall an adjustment company have equity in an insurance company." 
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SEC. 29. 
Section 188 cif The Insurance Code, as amended, is hereby 
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renumbered as Section 192 and amended to read as follows: 
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"Sec. 192. No domestic stock insurance company shall engage in 
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insurance or reinsurance business in the Philippines unless possessed of the 
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required capitalization which includes minimum net worth and paid-up capital, as 
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defined and provided under applicable orders and/or circulars issued by the 
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Secretary of Finance, upon recommendation of the Insurance Commissioner. 
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The Secretary of Finance may change such minimum net worth and paid-up 
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capital stock requirement, under such terms and conditions as he may impose, to 
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an amount which, in his opinion, would reasonably assure the safety of the 
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interests of the policyholders and the public. 
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"The Commissioner. may, as a pre-licensing requirement of a new 
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insurance company, in addition to the paid-up capital stock, require the 
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stockholders to pay in cash to the company in proportion to their subscription 
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interests a contributed surplus fund in an amount as may be fixed inapplicable 
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orders and circulars duly issued by the Commissioner. He may also require such 
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company or already. existing companies, to submit to him a capital build-up 
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program or a business plan showing the company's estimated receipts and 
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disbursements, as well as the basis therefor, for the next succeeding three years. 
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"If organized as a mutual company, in lieu of such capital stock, it must 
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have available cash assets in an amount not less than that required under 
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present or future applicable orders or circulars issued by the Secretary of 
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Finance, upon recommendation of the Commissioner. 
These required cash 
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assets must be net of all liabilities for losses reported, expenses, taxes, legal 
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reserve, and reinsurance of all outstanding risks, and the contributed surplus 
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fund must be equal to the amounts required of stock corporations. A stock 
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insurance company doing business in the Philippines may, subject to the 
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pertinent laws and regulations which now are of hereafter may be in force, alter 
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its organization and transform itself into a mutual insurance company." 
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SEC. 30. The old Section 189 of The Insurance Code, as amended, is hereby 
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renumbered as Section 193 and. the sections subsequent thereto are accordingly 
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renumbered until Section 190, which shall be renumbered as Section 194. 
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SEC. 31. 
Section 191 of The. Insurance Code, as amended, is hereby 
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renumbered as Section 195 and amended to read as follows: 
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"Sec. 195. No insurance company organized or existing under the 
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government or laws other than those of the Philippines shall engage in business 
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in the Philippines unless possessed of paid-up unimpaired capital or assets and 
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reserve not less than that. required of domestic insurance companies under 
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applicable or order or circUlars of the Commissioner, nor until it shall have 
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deposited with the CommisSioner for the benefit and security of the policyholders 
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and creditors of such company in the Philippines, securities satisfactory to the 
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Commissioner consisting of good securities of the Philippines, including new 
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issues of stock of "registered enterprises", as this term is defined in Omnibus 
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Investments Code, as amended, to the actual market value of not less than the 
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minimum paid-up capital required of domestic insurance companies: Provided, 
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That at least fifty per centum of such securities shall consist of bonds or other 
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evidences of debt of the Government of the Philippines, its political subdivisions 
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and instrumentalities, or of government-owned or controlled corporations and 
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entities, including the Bangko Sentral ng Pilipinas. Provided further, that the total 
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investment bf a for.eign insurance company in any registered enterprise shall not 
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exceed twenty per centum of the net worth of said foreign insurance company 
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nor twenty per centum of the capital of the registered enterprise, unless 
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previously authorized in writing by the Commissioner. 
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"For purposes of this Code, the net worth of a foreign insurance company 
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shall refer only to its net worth in the Philippines." 
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SEC. 32. 
Section 192 of The Insuram;e Code, as amended, is hereby 
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renumbered as Section 196 and amended to read as follows: 
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"Sec. 196. The Commissioner shall hold the securities, deposited as 
required in the immediately preceding section, for the benefit and security of all 
the policyholders and creditors of the company depositing the same. Provided, 
That the Commissioner may, as long as the company is solvent, permit it to 
collect the interest or divideflds on the securities so deposited, and, from time to 
time, with his assent, to withdraw any of such securities, upon depositing with 
said Commissioner other like securities, the market value of which shall be equal 
to the market value of such as may be withdrawn. In the event of any company 
ceasing to do business in the Philippines, the securities deposited as aforesaid 
shall be returned upon the company, upon the Commissioner's written approval 
and only after the company has duly proven in its application therefor that it has 
no further liability whatsoever under any of its policies nor to any of its creditors 
in the Philippines." 
SEC. 33. The old Section 193 of The Insurance Code, as amended, is hereby 
renumbered as Section 197. 
SEC. 34. 
Section 194 of The Insurance Code, as amended, is hereby 
renumbered as Section 198 and amended to read as follows: 
"Sec. 198. An insurance company doing business in the Philippines shall 
at all times maintain the minimum paid-up capital and networth requirements as 
prescribed by the Commissioner. Such requirements shall be based on 
internationally accepted solvency frameworks and adopted only after due 
consultation with and consideration of the recommendations of the insurance 
industry associations. 
Such assets, liabilities and reserves shall exclude assets, liabilities and reserves 
included in separate accounts established in accordance with section [two 
hundred thirty-seven]. Whenever the aforementioned margin be found to be less 
than that herein required to be maintained, the Commissioner shall forthwith 
direct the company to mak~ good any such deficiency by cash, to be contributed 
by all stockholders of record in proportion to their respective interest, and paid to 
the treasurer of the company, within fifteen days from receipt of the order: 
ProVided, That the company in the interim shall not be permitted to take any new 
risk of any kind or character unless and until it make good any such deficiency: 
Provided, further, that a stockholder who aside from paying the contribution due 
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from him, pays the contribution due from the another stockholder by reason of 
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the failure or refusal of the latter to do so, shall have a lien on the certificates of 
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stock of the insurance company concerned appearing in its books in the name of 
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the defaulting stockholder on the date of default, as well as on any interests or 
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dividends that have accrued or will accrue to the said certificates of stock, until 
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the corresponding payment or reimbursement is made by the defaulting 
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stockholder." 
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SEC. 35. 
Section 195 of The Insurance Code, as amended, is hereby 
10 
renumbered as Section 199 and amended to read as follows: 
11 
"Sec. 199. No domestic insurance corporation shall declare or distribute 
12 
any dividend on its outstanding stocks unless it has met the minimum paid-up 
13 
capital and net worth requirements under Section One Hundred Ninety Eight and. 
14 
except from profits attested in a sworn statement to the Commissioner by the 
15 
president or treasurer of the corporation to be remaining on hand after retaining 
16 
unimpaired: 
17 
"(a) The entire paid-up capital stock; 
18 
"(b) In the case of life insurance corporation, the legal reserve fund required by 
19 
section [two hundred eleven); 
20 
"(c) In the case of corporations other than life, the legal reserve fund required by 
21 
section [two hundred thirteen]; 
22 
"(d) A sum sufficient to pay all net losses reported, or in the course of settlement, 
23 
and all liabilities for expenses and taxes. 
24 
"Any dividend declared or distributed under the preceding paragraph shall 
25 
be reported to the Commissioner within thirty days after such declaration or 
26 
distribution. 
27 
28 
"If the Commissioner finds that any such corporation has declared or 
29 
distributed any such dividend in violation of this section, he may order such 
30 
corporation to cease and desist from doing business until the amount of such 
31 
dividend or the portion thereof in exces.s of the amount allowed under this section 
32 
has been restored to said corporation." 
33 
13 


1 
SEC. 36. 
Section 196 6f The Insurance Code, as amended, is hereby 
2 
renumbered as Section 200 and amended to read as follows: 
3 
"Sec. 200. In any determination of the financial condition of any insurance 
4 
, company doing business in the Philippines, there shall be allowed and admitted 
5 
as assets only such assets legally or beneficially owned by the insurance 
6 
company concerned as determined by external auditors accredited by the 
7 
Commissioner who examined the financial statements of the insurance company 
8 
concerned and which consi~t of: 
9 
"1. Cash in the possession of the insurance company or in transit under its 
10 
control, and the true and duly verified balance of any deposit of such company in 
11 
a financially sound commercial bank or trust company. 
12 
"2. Investments in securities, including money market instruments, and in 
13 
real property acquired or held in accordance with and subject to the applicable 
14 
provisions of this Code and ·the income realized therefrom or accrued thereon. 
15 
"3. Loans granted by the insurance company concerned to the extent of 
16 
that portion thereof adequately secured by non-speculative assets with readily 
17 
realizable values in accordance with and subject to the limitations imposed by 
18 
applicable provisions of this Code. 
19 
"4. Policy loans and other policy assets and liens on policies, contracts or 
20 
certificates of a life insurance company, in an amount not exceeding legal 
21 
reserves and other policy liabilities carried on each individual life insurance 
22 
policy, contract or certificate,: 
23 
"6. The net amount" of uncollected and deferred' premiums and annuity 
24 
considerations in the case. of a life insurance company which carries the full 
25 
mean tabular reserve liability. 
26 
"6. Reinsurance recoverable by the ceding insurer: (a) from an insurer 
27 
authorized to transact business in this country, the full amount thereof; or (b) 
28 
from an insurer not authorized in this country, in an amount not exceeding the 
29 
liabilities carried by the ceding insurer for amounts withheld under a reinsurance 
30 
treaty with such unauthorized insurer as security for the payment of obligations 
31 
thereunder if such funds are held subject to withdrawal by, and under the control 
32 
of, the ceding insurer. The Commissioner may prescribe the conditions under 
33 
which a ceding insurer may be allowed credit, as an asset or as a deduction from 
14 


1 
loss and unearned premium reserves, for reinsurance recoverable from an 
2 
insurer not authorized in this country but which presents satisfactory evidence 
3 
that it meets the applicable standards of solvency required in this country. 
4 
"7. Funds withheld by a ceding insurer under a reinsurance treaty, 
5 
provided reserves for unpaid losses and unearned premiums are adequately 
6 
provided. 
7 
"8. Deposits or amounts recoverable from underwriting associations, 
8 
syndicates and reinsurance funds, or from any suspended banking institution, to 
9 
the extent deemed by the .Commissioner to be available for the payment of 
10 
losses and claims and values to be determined by him. 
11 
"9. Electronic data processing machines, as may be authorized by the 
12 
Commissioner to be acquired by the insurance company concerned, the 
13 
acquisition cost of which to be amortized in equal annual amounts within a period 
14 
of five years from the date of acquisition thereof. 
15 
"10. 
Mutual funds, real estate investment trusts, unit investment trust 
16 
funds and special deposit accounts. 
17 
"11. Other assets, not inconsistent with the provisions of paragraphs 1 to 
18 
10 hereof, which are deemed by the Commissioner to be readily realizable and 
19 
available for the payment of losses and claims at values to be determined by him 
20 
in a circular, rule or regulation. 
21 
"12. Other investments not otherwise covered by the above, provided that 
22 
such rnay be reclassified as non-admitted assets after a subsequent audit 
23 
conducted by the Commissi?ner." 
24 
SEC. 37. The old Section 197 of The Insurance Code, as amended, is hereby 
25 
renumbered as section 201. 
26 
27 
SEC. 38. 
Section 198 of The Insurance Code, as amended, is hereby 
28 
renumbered as Section 202 and amended to read as follows: 
29 
"Sec. 202. A life insurance company may lend to any of its policyholders 
30 
upon the security of the value of its policy such sum as may be determined 
31 
pursuant to the provisions of the policy. 
15 


1 
"No insurance company shall loan any of its money or deposits to any 
2 
person, corporation or association, except upon the security of any of the 
3 
following: 
4 
"a) first mortgage or deeds of trust of registered, unencumbered, improved 
5 
or unimproved real estate, including condominiums, in cities and centers of 
6 
population of municipalities in the Philippines; or 
7 
"b) first mortgages or deeds of trust of actually cultivated, improved and 
8 
unencumbered agricultural lands in the Philippines; or 
9 
"c) purchase money mortgages, lease purchase agreements or similar 
10 
securities executed or received by it on account of the sale or exchange of recH 
11 
property acquired pursuant to sections [two htJndred and two hundred two]; or 
12 
"d) bonds or other evidences of indebtedness issued or guaranteed by the 
13 
of the Government of the Philippines or its political subdivisions authorized by 
14 
law to incur such obligations or issue such guarantees or of government-owned 
15 
or controlled corporations and instrumentalities including the Bangko Sentral ng 
16 
Pilipinas; or 
17 
"e) obligations issued or guaranteed by universal banks, commercial 
18 
banks, 
offshore 
banking 
0 units, 
investment 
houses 
or 
other financial 
19 
intermediaries duly registered with the Bangko Sentral ng Pilipinas; or 
20 
"f) obligations issued or guaranteed by foreign banks or corporations, each 
21 
of which shall have total assets of one billion US dollars, as shown in their 
22 
financial statements as of the immediately preceding fiscal year; or 
23 
"g) assignments of monetary instruments such as cash deposits, 
24 
promissory notes, deposit certificates or other similar instruments of universal 
25 
banks, commercial banks, investments houses or other financial intermediaries 
26 
duly registered with the Bangko Sentral ng Pilipinas; 
27 
28 
"h) pledges of shares of stock, bonds or other evidences of indebtedness 
29 
specified in section [two hundred thirty-four]; 
30 
31 
32 
33 
"i) chattel mortgages over equipment not more than three years old; and 
"j) such other security as may be approved by the Commissioner. 
16 


-
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
"The loans provided in the preceding subsection shall be subject to the 
following conditions: 
"a) 
The amount of loan secured by real estate mortgage over a non-
agricultural land shall not exceed eighty per centum of its appraised value, and in 
the case of a loan secured by a real estate mortgage over an agricultural land, 
the amount of loan shall ,not exceed forty per centrum of its market value. 
Provided that, in no case shall such loan have a maturity period in excess of 
twenty-five years; 
"b) 
Unless approved by the Commission, no loan may be granted upon 
the security of a mortgage on improved real estate if the improvements thereon 
do not belong the owner of the land and the owner of the improvements does not 
signed the deed of mortgage. 
However, if the owner of the land is the 
Government of the Philippines or any or its political subdivisions and a long term 
lease has been executed in favor of the owner of the improvements, the owner of 
the land need not be a party to the deed of mortgage. The expiration date of the 
lease shall not, however, precede the maturity of the loan. The phrase "improved 
real estate" as used herein shall mean land with permanent ,building or buildings 
erected thereon; 
"c) 
Purchase money mortgage, lease-agreements or similar securities 
received on the sale of real estate property shall not exceed one hundred per 
centum of the selling price of said property, or one hundred per centum of its 
market value at the time of its disposition, whichever amount is lower. However, 
in no case shall such mortgage or agreement have a maturity period of twenty-
five years; 
"d) 
Loans secured by pledges of shares of stock of solvent 
corporations or institutions shall not exceed fifty per centum of: 
1) The latest selling. price of such stocks listed in the stock exchange or 
unlisted stock traded elsewhere; 
2) The book value of said stock, in ~ase of stocks which are neither listed 
in any stock exchange nor transacted elsewhere; but the stock 
certificates for the shares pledge shall be endorsed or assigned to the 
17 


1 
2 
3 
4 
5 
6 
lending insurance company. The phrase "solvent corporation" as used 
herein shall mean a corporation or entity which has recorded profits for 
a period of at least three years immediately preceding the date of the 
loan; 
"e) 
Loans secured by the chattel mortgages over equipment shall not 
7 
exceed seventy-five per centum of the market value of said equipment; and 
8 
"f) 
Venture capit~1 investments, equity on loans, shall not exceed, per 
9 
investment, forty per centum of the insurance company's net worth as shown in 
10 
its latest financial statement approved by the Commission." 
11 
SEC. 39. 
Section 199 of The Insurance Code, as amended, is hereby 
12 
renumbered as Section 203 and amended to read as follows: 
13 
14 
"Sec. 203. No loan by any insurance company on the security of real 
15 
estate shall. be made unless the title to such real estate shall have first been 
16 
registered in accordance with the existing Land Registration Act, or shall have 
17 
been previously registered' under the provisions of the existing Mortgage Law 
18 
and the lien or interest of the insurance company as mortgagee has been 
19 
registered." 
20 
21 
SEC. 40. 
Section 200 of The Insurance Code, as amended, is hereby 
22 
renumbered as Section 204 and amended to read as follows: 
23 
"Sec. 204. (1) An insurance company may purchase, hold, own and 
24 
convey such property, real and personal, as may have been mortgaged, pledged, 
25 
or conveyed to it in good faith in trust for its benefit by reason of money loaned 
26 
by it in pursuance of the regular business of the company, and 'such real or 
27 
personal property as may have been purchased by it at sales under pledges, 
28 
mortgages or deeds of trust for its benefit on account of money loaned by it; and 
29 
such real and personal property as may have been conveyed to it by borrowers 
30 
in satisfaction and discharge of loans made by the company in payment or by 
31 
reason of any loan made by it shall be sold by the company within twenty years 
32 
after the title thereto has been vested in it 
33 
"(2) An insurance company may purchase, hold, own and convey real and 
34 
personal property as follow~: 
18 


"(a) The real property in which the company conducts and carries on its 
2 
business; Provided, That no domestic non-life insurance company shall invest in 
3 
the kinds permitted under this section an amount in excess of twenty per centum 
4 
of the net worth of such insurer as shown by its latest financial statement 
5 
approved by the Board. 
6 
"(b) Bonds or other evidence of indebtedness of the Government of the 
7 
Philippines or its political sabdivisions authorized by law to issue bonds at the 
8 
reasonable market value thereof. 
9 
"(c) Bonds or other' evidences of debt of the government-owned or 
10 
controlled corporations and entities, including the Bangko Sentral ng Pilipinas. 
11 
"(d) Bonds, debentures or other evidences of indebtedness of any solvent 
12 
corporations or institution created or existing under the laws of the Philippines: 
13 
Provided, however, That the issuing, assuming or guaranteeing entity or its 
14 
predecessors shall not have defaulted in the payment of interest on any of its 
15 
securities and that during each of any three including the last two of the five fiscal 
16 
years next preceding the date of acquisition by such insurance company of such 
17 
bonds, debentures, or other evidences of indebtedness, the net earnings of the 
18 
issuing, assuming or guara'nteeing institution available for its fixed charges, as 
19 
hereinafter defined, shall have been not less than one and one-quarter times the 
20 
total of its fixed charges for such year; and Provided, further, that no life 
21 
insurance company shall invest in or loan upon the obligations of anyone 
22.institution in the kinds permitted under this sub-section an amount in excess of 
23 
twenty-five per centum of the total admitted assets of such insurer as of 
24 
December thirty-first next preceding the date of such investment. 
25 
"As used in this sub-section the term "net earnings available for fixed 
26 
charges" shall mean net income after deducting operating and maintenance 
27 
expenses, taxes. other thim income taxes, depreciation and depletion; but 
28 
excluding extraordinary non-recurring items of income or expense appearing in 
29 
the regular financial statement of the issuing, assuming or guaranteeing 
30 
institution. The term "fixed charges" shall include interest on funded and 
31 
unfunded debt, amortization of debt discount, and rentals for leased properties. 
32 
"(e) Preferred or guaranteed stocks of any solvent corporation or 
33 
institution created or existing under the laws of the Philippines; Provided, That if 
34 
the stocks are guaranteed, the amount of stocks so guaranteed is not excess of 
35 
fifty per centum of the amount of the preferred or common stocks, as the case 
19 


1 
may be, of the guaranteeing corporation; and Provided, finally, That no life 
2 
insurance company shall invest in or loan upon obligations of anyone institutioh 
3 
in the kinds permitted under this sub-section an amount in excess of ten per 
4 
centum of the total admitted assets of such insurer as of December thirty-first 
5 
next preceding the date of such investment. 
6 
"(f) Common stocks of any solvent corporation or institution created or 
7 
existing under the laws of the Philippines; Provided, however, That no life 
8 
insurance company shall invest in or loan upon the obligations of anyone 
9 
corporation or institution in the kinds permitted under this sub-section an amount 
10 
in excess of ten per centum of the total admitted assets of such insurer as of 
11 
December thirty-first next preceding the date of such investment. 
12 
"(g) Securities issued by an "registered enterprise", as this term is defined 
13 
in Republic Act No. 5186, otherwise known as the Investment Incentives Act, as 
14 
amended, provided that the total investment of a domestic non life insurance 
15 
company in any registered enterprise shall not exceed fifty per centum of the net 
16 
worth of said insurance company as shown by its aforesaid financial statement 
17 
unless previously authorized by the Commissioner. 
18 
"(h) Certificates, notes and other obligations issued by the trustees or 
19 
receivers of any institution yreated or existing under the laws of the Philippines 
20 
which, or the assets of which, are being administered under the direction of any 
21 
court having jurisdiction; Provided, however, That such certificates, notes or 
22 
other obligations are adequately secured as to principal and interests. 
23 
"(i) Equipment trust obligations or certificates which are adequately 
24 
secured or other adequately secured instruments evidencing an interest in 
25 
equipment wholly or in part 'within the Philippines: Provided, however, That there 
26 
is a right to receive determined portions of rental, purchase or other fixed 
27 
obligatory payments for the use or purchase of such equipment. 
28 
"0) Any obligation cif any corporation or institution created or existing 
29 
under the laws of the Philippines which is, on the date of acquisition by the 
30 
insurer, adequately secured and has qualities and characteristics wherein the 
31 
speculative elements are not predominant. 
32 
"(k) Such other securities as may be approved by the Commissioner. 
20 


1 
"(3) Any domestic insure'r which has outstanding insurance, annuity or 
2 
reinsurance contracts in currencies other than the national currency of the 
3 
Philippines may invest in, or otherwise acquire or loan upon securities and 
4 
investments in such currency which are substantially of the same kinds, classes 
5 
and investment grades as those eligible for investment under the foregoing 
6 
subdivisions of this section; but the aggregate amount of such investment and of 
7 
such cash in such currency which is at anytime held by such insurer shall not 
8 
exceed one and one-half times the amount of its reserves and other obligations 
9 
under such contracts or the amount of its reserves and other obligations under 
10 
such contracts or the amount which such insurer is required by the law of any 
11 
country outside the Republic of the Philippines to be invest in such country, 
12 
whichever shall be greater." 
13 
14 
SEC. 41. 
Section 201 of The Insurance Code, as amended, is hereby 
15 
renumbered as Section 205 and amended to read as follows: 
16 
17 
"Sec. 205. An insurance company may (1) invest in equities of other 
18 
financial institutions, and (2) engage in the buying and selling of short-term debt 
19 
instruments: Provided, Thaf any or all of such investments shall be with the prior 
20 
approval of the Commissioner, except listed equities of other financial 
21 
institutions," 
22 
23 
SEC. 42. 
Section 202 of The Insurance Code, as amended, is hereby 
24 
renumbered as Section 206 and its paragraph (a) is hereby amended to read as follows: 
25 
26 
"(a) Acquire or construct housing projects and, in connection with any 
27 
such project, may acquire'land or any interest therein by purchase, lease or 
28 
otherwise, or use land acquired pursuant to any other provision of this Code, 
29 
Such company may thereafter own, maintain, manage, collect or receive income 
30 
from, or sell and convey,' any land or interest therein so acquired and any 
31 
improvements thereon, The aggregate book value of the investments of any such 
32 
company in all such projects shall not exceed at the time of such investments 
33 
twenty five per centum of the total admitted assets of such company on the thirty-
34 
first day of December next preceding; Provided, That the funds of the company 
35 
for the payment of pending claims and obligations shall not be used for such 
36 
investments;" 
37 
21 


1 
SEC. 43. The old Section 203 of The Insurance Code, as amended, is hereby 
2 
renumbered as Section 207 and the sections subsequent thereto are accordingly 
3 
renumbered until Section 207, which shall be renumbered as Section 211. 
4 
5 
SEC. 44. 
Section 208 of The Insurance Code, as amended, is hereby 
6 
renumbered as Section 212 and amended to read as follows: 
7 
"Sec. 212. (1) All bonds or other evidences of indebtedness having a fixed 
8 
term. and rate of interest and held by any life insurance company authorized to do 
9 
business in this country, if amply secured and if not in default as to principal or 
10 
interest, shall be valued based on their amortized cost using effective interest 
11 
method less impairment flnd unrecoverable amount based on appropriate 
12 
measurement methods which are generally accepted in the industry and 
13 
accepted by the Commission. 
The Commissioner shall have the power to 
14 
determine the eligibility of !'lny such investments for valuation on the basis of 
15. 
amortization, and may by regulation prescribe or limit the classes of securities so 
16 
eligible for amortization. All bonds or other evidences of indebtedness which in 
17 
the judgment of the Commissioner are not amply secured shall not be eligible for 
18 
amortization and shall be valued in accordance with paragraph two. 
The 
19 
Commissioner may, if he finds that the interest of policy holders so permit or 
20 
require, by official regulation permit or require any class or classes of insurers, 
21 
other than life insurance companies, authorized to do business in this country, to 
22 
value their bonds or other evidences of indebtedness in accordance with the 
23 
foregoing rule. 
24 
"(2) The investments of all insurers authorized to do business in this 
25 
country, except securities subject to amortization and except as otherwise 
26 
provided in this chapter, shall be valued, in the discretion of the Commissioner, at 
27 
their market value at their amortized cost using effective interest method less 
28 
29 
impairment and 
market value. 
unrecoverable amount or at valuation representing their fair 
If the Commissioner finds that in view of the character of 
30 
investments of any insurer authorized to do business in this country it would be 
31 
prudent for such insurer to establish a special reserve for possible losses or 
32 
fluctuations in the values of its investments, he may require such insurer to 
33 
establish such reserve, reasonable in amount, and include a report thereon in 
34 
any statement or report of the financial condition of such insurer. The 
35 
Commissioner may, in con'nection with any examination or required financial 
36 
statement of an authorized .. insurer, require such insurer to furnish him complete 
37 
financial statements and . audited report of the financial condition of any 
22 


1 
corporation of which the securities are owned wholly or partly by such insurer 
2 
and may cause an examination to be made of any subsidiary or affiliate of such 
3 
insurer as appropriate to specific investments as provided in appropriate circulars 
4 
issued by the Commissioner. 
5 
"(3) The stock of an insurance company shall be valued as follows: a) 
6 
listed stocks shall be valued at market value and periodically adjusted to reflect 
7 
market changes through a. special valuation account to reflect their realizable 
8 
value when sold; b) unlisted stocks shall be valued at book value based on the 
9 
latest unqualified audited financial statements of the company which issued such 
10 
stocks; and c) stocks of a corporation under the control of the insurer shall be 
11 
valued using the equity method which is the cost plus or minus the share of the 
12 
controlling company in the' earnings or losses of the controlled company after 
13 
acquisition of such stocks, 
14 
"(4) The stock of an insurance company shall be valued at the lesser of its 
15 
market value or its book value as shown by its last approved audited financial 
16 
statements or the last report on examination, whichever is more recent. The book 
17 
value of a share of common stock of an insurance company shall be ascertained 
18 
by dividing (a) the amount of its capital and surplus less the value of all of its 
19 
preferred stock, if any, outstanding, by (b) the number of shares of its common 
20 
stock issued and outstanding. 
Notwithstanding the foregoing provisions, an 
21 
insurer may, at its option, yalue its holdings of stock in a subsidiary insurance 
22 
company in an amount not less than acquisition cost if such acquisition cost is 
23 
less than the value determined as hereinbefore provided. 
24 
"(5) Real estate required by foreclosure or by deed in lieu thereof, in the 
25 
absence of a recent appraisal deemed by the Commissioner to be reliable, shall 
26 
not be valued at an amount greater than the unpaid principal of the defaulted 
27 
loan at the date of such foreclosure or deed, together with any taxes, and 
28 
expenses paid or incurred by such insurer at such time in connection with such 
29 
acquisition, and the cost of additions or improvements thereafter paid by such 
30 
insurer and any amount or amounts thereafter paid by such insurer on any 
31 
assessments levied for improvements in connection with the property. 
32 
"(6) Purchase money mortgages received on dispositions of real property 
33 
held pursuant to section [one hundred ninety-eight] shall be valued in an amount 
34 
equivalent to ninety per centum of the value of such real property. Purchase 
35 
money mortgages received on disposition of real property otherwise held shall be 
23 


1 
valued in an amount not exceeding ninety per centum of the value of such real 
2 
property as determined by an appraisal made by an appraiser at or about the 
3 
time of disposition of such real property. 
4 
"(7) The stock of a subsidiary of an insurer shall be valued on the basis of 
5 
the greater of (i) the value of only such subsidiary of the assets of such 
6 
subsidiary as would constitute lawful investments for the insurer if acquired or 
7 
held directly by the insurer or (ii) such other value determined pursuant to 
8 
standards and cumulative limitations, contained in a regulation to be promulgated 
9 
by the Commissioner. 
10 
"(8) Notwithstanding any provision contained in this section or elsewhere 
11 
in this chapter, if the Commissioner find that the interests of policyholders so 
12 
permit or require, he may permit or require any class or classes of insurers 
13 
authorized to do business in this country to value their investments or any class 
14 
or classes thereof as of any date heretofore or hereafter in accordance with any 
15 
applicable valuation or meth·od." 
16 
17 
SEC. 45. The old Section 209 of The Insurance Code, as amended, is hereby 
18 
renumbered as Section 213. 
19 
20 
SEC. 46. 
Section 210 of The Insurance Code, as amended, is hereby 
21 
renumbered as Section 214 and amended to read as follows: 
22 
"Sec. 214. Every life insurance company, doing business in the 
23 
Philippines, shall annually make a valuation of all policies, additions thereto, 
24 
unpaid dividends, and all other obligations outstanding on the thirty-first day of 
25 
December of the preceding year. All such valuations shall be made according to 
26 
the standard adopted by the company, as prescribed by the Commissioner in 
27 
accordance with internationally accepted actuarial standards, which standard 
28 
shall be stated in its annual report. 
29 
"Such standard of valuation shall be according to a standard table of 
30 
mortality with interest at not more than six per centum compound interest. When 
31 
the preliminary term basis ip used, the term insurance shall be limited to the first 
32 
policy year. 
33 
"The results of such valuations shall be reported to the Commissioner on 
34 
or before the thirtieth day of April of each year accompanied by a sworn 
35 
statement of the company's actuary certifying to the figures and stating upon 
24 


1 
what mortality table it is based, upon what rate of interest the valuation is made, 
2 
and the methods used in arriving at the result obtained." 
3 
4 
SEC. 47. The old Section 211 of The Insurance Code, as amended, is hereby 
5 
renumbered as Section 212 and the sections subsequent thereto are accordingly 
6 
renumbered until Section 218, which shall be renumbered as Section 222. 
7 
8 
SEC. 48. 
Section 219 of The Insurance Code, as amended, is hereby 
9 
renumbered as Section 223 and amended to read as follows: 
10 
"Sec. 223. Any insurance company doing business in the Philippines 
11 
deSiring to cede their excess risks to foreign insurance or reinsurance companies 
12 
not authorized to transact business in the Philippines may do so under such 
13 
terms and conditions which the Commissioner may prescribe. 
14 
"Should any reinsurance agreement be for any reason cancelled or 
15 
terminated, the ceding company concerned shall inform the Commissioner in 
16 
writing of such cancellation or termination within thirty days from the date of such 
17 
cancellation or termination or from the date notice or information of such 
18 
cancellation or termination is received by such company as the case may be." 
19 
20 
SEC. 49. 
Section 220 of The Insurance Code, as amended, is hereby 
21 
renumbered as Section 224 and amended to read as follows: 
22 
23 
"Sec. 224. 
Every insurance company authorized to do business in the 
24 
Philippines shall report to the Commissioner on forms prescribed by him the 
25 
particulars of reinsurance treaties or any new treaties or changes in existing 
26 
treaties within six months from their effectivity." 
27 
28 
SEC. 50. The old Section 221 of The Insurance Code, as amended, is hereby 
29 
renumbered as Section 225 and the sections subsequent thereto are accordingly 
30 
renumbered until Section 224, which shall be renumbered as Section 228. 
31 
32 
SEC. 51. 
Section 225 of The Insurance Code, as amended, is hereby 
33 
renumbered as Section 229 and a(1lended to read as follows: 
34 
35 
"Sec. 229. Within thirty days after the approval of the Board of Directors, 
36 
every insurance company doing business in the Philippines shall publish in a 
37 
n€1wspaper of general circulation a sypnosis of its audited annual financial 
25 


1 
statements showing· fully the conditions of its business and setting forth its 
2 
resources and liabilities, in accordance with such form prescribed by the 
3 
Commissioner." 
4 
5 
SEC. 52. A new Section 230 of The Insurance Code, as amended, is hereby 
6 
added to read as follows: 
7 
8 
"Sec. 230. The Commissioner shall have the authority to make, amend, 
9 
and rescind such accounting rules and regulations as may be necessary to carry 
10 
out the provisions of this Code, and define accounting, technical and trade terms 
11 
used in this Code, provided that such shall be in accordance with internationally 
12 
accepted accounting standards. Among other things, the Commissioner may 
13 
prescribe the form or forms in which required information shall be set forth, the 
14 
items or details to be shown in the balance sheet and income statement, and the 
15 
methods to be followed in the preparation of accounts, appraisal or valuation of 
16 
assets and liabilities, determination of recurring and nonrecurring income, 
17 
differentiation of investment and operating income, and in the preparation, where 
18 
the Commissioner deems it necessary or deSirable, of consolidated balance 
19 
sheets or income accounts of any person directly or indirectly controlling or 
20 
controlled by the insurance company." 
21 
22 
SEC. 53. The old Section 226 of The Insurance Code, as amended, is hereby 
23 
renumbered as Section 231 and the sections subsequent thereto are accordingly 
24 
renumbered until Section 227, which shall be renumbered as Section 231. 
25 
26 
SEC. 54. 
Section 228 of The Insurance Code, as amended, is hereby 
27 
renumbered as Section 232 and its paragraphs (g) and (i) are hereby amended to read 
28 
as follows: 
29 
30 
"(g) A provision that the insurer will issue to the policyholder for delivery to 
. 
. 
31 
each person insured a statement as to the insurance protection to which he is 
32 
entitled, to whom the insurance benefits are payable, and the rights set forth in 
33 
paragraphs (h), (i) and U) fo)lowing;" and 
34 
35 
"(i) A provision that if the group policy terminates or is amended so as to 
36 
terminate the insurance of -any class of insured persons, every person insured 
37 
thereunder at the date of such termination whose insurance terminates and who 
38 
has been so insured for five years prior to such termination date shall be entitled 
26 


1 
to have issued to him by the insurer an individual policy of life insurance subject 
2 
to the same limitations as set forth in paragraph (h), except that the group policy 
3 
may provide that the amount of such individual policy shall not exceed the 
4 
amount of the person's life insurance protection ceasing;" 
5 
6 
SEC. 55. The old Section 229 of The Insurance Code, as amended, is hereby 
7 
renumbered as Section 233 and the sections subsequent thereto are accordingly 
8 
renumbered until Section 244, whic;h shall be renumbered as Section 248. 
9 
10 
SEC. 56. A new Section 249 of The Insurance Code, as amended, is hereby 
11 
added to read as follows: 
12 
13 
"Sec. 249. It is unlawful to: a) present or cause to be presented any false 
14 
or fraudulent claim for the payment of a loss under a contract of insurance; and 
15 
b) prepare, make or subscribe any writing with intent to present or use the same, 
16 
or to allow it to be presented or used in support of any such claim. Any person 
17 
who violates this section shall be punished by a fine not exceeding twice the 
18 
amount claimed or imprisonment of five years or both at the discretion of the 
19 
Court." 
20 
21 
SEC. 57. The old Section ;245 of The Insurance Code, as amended, is hereby 
22 
renumbered as Section 250 and the sections subsequent thereto are accordingly 
23 
renumbered until Section 247, which shall be renumbered as Section 252. 
24 
25 
SEC. 58. 
Section 248 of The Insurance Code, as amended, is hereby 
26 
renumbered as Section 253 and a.new last paragraph is added to read as follows: 
27 
28 
"No insurance company, life or non-life, or any professional reinsurer, 
29 
ordered to be liquidated by the Commissioner under the provisions hereunder 
30 
may be rehabilitated or authorized to transact anew, insurance or reinsurance 
31 
business, as the case may be." 
32 
33 
SEC. 59. The old Section 249 of The Insurance Code, as amended, is hereby 
34 
renumbered as Section 254 and the sections subsequent thereto are accordingly 
35 
renumbered until Section 270, which shall be renumbered as Section 276. 
36 
27 


1 
SEC. 60. 
Section 271 of The Insurance Code, as amended, is hereby 
2 
renumbered as Section 277 and .its paragraphs (4) and (8) are amended to read as 
3 
follows: 
4 
5 
"(4) The presence in person or by proxy of five per centum of the members 
6 
entitled to vote at any meeting shall constitute a quorum for the transaction of 
7 
business, including the amendment of the Articles of Incorporation and/or the by-
8 
laws, unless otherwise provided by the by-laws." and 
9 
10 
"(8) All insurers mutualized under the provisions of this chapter shall be subject 
11 
to all other applicable provisions of this Code. The provisions of the Corporation 
12 
Code shall apply in a suppletory manner." 
13 
14 
SEC. 61. The old Section 272 of The Insurance Code, as amended, is hereby 
15 
renumbered as Section 278. 
16 
17 
SEC. 62. A new Section 279 of The Insurance Code, as amended, is hereby 
18 
added to read as follows: 
19 
20 
"Sec. 279. A domestic mutual life insurance company doing business in 
21 
the Philippines may convert itself into an incorporated stock life insurance 
22 
company by demutualization. To that end, it may provide and carry out a plan for 
23 
the conversion by complying with the requirements of this Title. 
24 
25 
"The conversion of a domestic mutual life insurance company to an 
26 
incorporated stock life insljfance company shall be carried out pursuant to a 
27 
conversion plan duly approved by the Commissioner. 
28 
29 
"The Commissioner shall promulgate such rules and regulations as he or 
30 
she may deem necessary to carry out the provisions of this Title, after due 
31 
consultation with representatives of the insurance industry. 
32 
33 
"All converted insurers under the provisions of this Title shall be subject to 
34 
all other applicable provisions of Code. The provisions of the Corporation Code 
35 
shall apply in a suppletory manner." 
36 
28 


1 
SEC. 63. The old Section.273 of The Insurance Code, as amended, is hereby 
2 
renumbered as Section 280 and the sections subsequent thereto are accordingly 
3 
renumbered until Section 275, which shall be renumbered as Section 282. 
4 
5 
SEC. 64. 
Section 276 of The Insurance Code, as amended, is hereby 
6 
renumbered as Section 283 and amended to read as follows: 
7 
8 
"Sec. 283. The Commissioner shall cause an examination of the books 
9 
and records of the withdrawing company, and if, upon such examination, the 
1 0 
Commissioner finds that the)nsurer has no outstanding liabilities to policyholders 
11 
and creditors in· the Philippines, and no policies uncancelled; or its primary 
12 
liabilities have not been reij1sured and assumed by another insurance company 
13 
authorized to transact business in the Philippines, as required in the preceding 
14 
section, it shall cancel the withdrawing company's certificate of authority, if 
15 
unexpired, and shall permit the insurer to withdraw. The cost and expenses of all 
16 
such examination shall be paid as prescribed in section [four hundred 
17 
seventeen]." 
18 
19 
SEC. 65. The old Section 277 of The Insurance Code, as amended, is hereby 
20 
renumbered as Section 284 and the sections subsequent thereto are accordingly 
21 
renumbered until Section 279, which shall be renumbered as Section 286. 
22 
23 
SEC. 66. 
Section 280 of The Insurance Code, as amended, is hereby 
24 
renumbered as Section 287 and amended to read as follows: 
25 
"Sec. 287. Except as otherwise provided in this Code, no person, 
26 
partnership, association qr corporation shall transact any business in the 
27 
Philippines as a professional reinsurer until it shall have obtained a certificate of 
28 
authority for that purpose from the Commissioner upon the application therefor 
29 
and payment by s.uch person, partnership, association or corporation of the fees 
30 
hereinafter prescribed. As used in this Code, the term ''professional reinsurer" 
31 
shall mean any person, partnership, association or corporation that transacts 
32 
solely and exclusively reinsurance business in the Philippines. 
33 
''The Commissioner may refuse to issue a certificate of authority to any 
34 
partnership, association or corporation if, in his judgment, such refusal will best 
35 
promote public interest No. such certificate of authority shall be granted to any 
36 
such partnership, associatipn or corporation unless and until the Commissioner 
37 
shall have satisfied himself by such examination as he may make and such 
29 


1 
evidence as he may require that such partnership, association or corporation is 
2 
qualified by the laws of the Philippines to transact business therein as a 
3 
professional reinsurer. 
4 
"Before issuing such certificate of authority of the Commissioner must be 
5 
satisfied that the name of the applicant is not that of any other known company 
6 
transacting insurance or reinsurance business in the Philippines, or a name so 
7 
similar as to be calculated to mislead the public. 
8 
"The certificate of authority shall be valid unless sooner revoked or 
9 
cancelled by the Commissioner. 
10 
"Every such partnership, association, or corporation receiving such 
I I 
certificate of authority shall be subject to the provisions of this Code and other 
12 
related laws, and to the jurisdiction and supervision of the Commissioner." 
13 
14 
SEC. 67. 
Section 281 of The Insurance Code, as amended, is hereby 
15 
renumbered as Section 288 and amended to read as follows: 
16 
17 
"Sec. 288. Any partnership, aSSOCiation, or corporation authorized to 
18 
transact solely reinsurance business must have a capitalization of at least two 
19 
billion pesos, paid in cash, of which at least fifty per centum consists of paid-up 
20 
capital and the remaining portion thereof as contributed surplus, which in.no case 
21 
shall be less than four hundred million pesos or such capitalization as may be 
22 
determined by the Secret.ary of Finance, upon the recommendation of the 
23 
Commissioner; Provided, That twenty-five per centum of the paid-up capital must 
24 
be invested in securities satisfactory to the Commissioner, consisting of bonds or 
25 
other evidences of debt of the Government of the Philippines or its political 
26 
subdivisions or instrumentalities, or of government-owned or controlled 
27 
corporations and entities, including the Bangko Sentral ng Pilipinas, and 
28 
deposited with the Commissioner, and the remaining seventy-five per centum in 
29 
such other securities as may be allowed and. permitted by the Commissioner, 
30 
which securities shall at all times be maintained free from any lien or 
3 I 
encumbrance: Provided, That the aforesaid capital requirement is without 
32 
prejudice to other requirements to be imposed under any risk-based capital 
33 
method that may be adopted by the Commissioner: Provided, Finally, That the 
34 
provisions of this chapter applicable to insurance companies shall so far as 
35 
practicable be likewise applicable to professional reinsurers." 
36 
30 


1 
SEC. 68. The old Section 282 of The Insurance Code, as amended, is hereby 
2 
renumbered as Section 289 and the sections subsequent thereto are accordingly 
3 
renumbered until Section 298, which shall be renumbered as Section 305. 
4 
5 
SEC. 69. 
Section 299 of The Insurance Code, as amended, is hereby 
6 
renumbered as Section 306 and its second paragraph is amended to read as follows: 
7 
8 
"No insurance company doing business in the Philippines, nor any agent 
9 
thereof, shall pay any commission or other compensation to any person for 
10 
services in obtaining insurance, unless such person shall have first procured 
11 
from the Commissioner a license to act as an insurance agent of such company 
12 
or as an insurance broker as hereinafter provided. An insurance agent is an 
13 
independent contractor and not an employee of the company represented. 
14 
"Insurance agent" includes agency leader, agency manager, or their equivalent. 
15 
16 
"No person shall act·as an insurance agent or as an insurance broker in 
17 
the solicitation or procurement of applications for insurance, or receive for 
18 
services in obtaining insurance, any commission or other compensation from any 
19 
insurance company doing business in the Philippines, or any agent thereof, 
20 
without first procuring a license to act from the Commissioner, which must be 
21 
renewed every five years thereafter. Such license, which shall ipso facto expire 
22 
upon termination of the agent's agreement with the insurance company, shall be 
23 
issued by the Commissioner only upon the written application of the person 
24 
desiring it, such application if for a license to act as insurance agent, being 
25 
approved and countersigned by the company such person desires to represent, 
26 
and shall be upon a form prescribed by the Commissioner giving such 
27 
information as he may require, and upon payment of the corresponding fee 
28 
hereinafter prescribed. The Commissioner shall satisfy himself as to competence 
29 
and trustworthiness of the applicant and shall have the right to refuse to issue or 
30 
renew and to suspend or revoke any such license in his discretion." 
31 
32 
SEC. 70. A new Section 299-A of The Insurance Code, as amended, is hereby 
33 
added to read as follows: 
34 
"The provisions of Sections 299 and 300 shall apply to an employee who 
35 
shall be engaged to sell insurance products by an insurance company. 
36 
"Since the insurance industry is imbued with public interest, the insurance 
37 
companies upon approval of the Commission may exercise wide latitude in 
31 


1 
supervising the activities of their insurance agents to ensure the protection of the 
2 
insuring public." 
3 
4 
SEC. 71. The old Section 300 of The Insurance Code, as amended, is hereby 
5 
renumbered as Section 307 and the sections subsequent thereto are accordingly 
6 
renumbered until Section 316, which shall be renumbered as Section 323. 
7 
8 
SEC. 72. 
Section 317 of The Insurance Code, as amended, is hereby 
9 
renumbered as Section 324 and its first paragraph is amended to read as follows: 
10 
11 
"A certificate of registration issued to a resident agent shall expire on the 
12 
thirtieth day of June of the fifth year following its issuance unless it is renewed." 
13 
14 
SEC. 73. The old Section 318 of The Insurance Code, as amended, is hereby 
15 
renumbered as Section 325 and the sections subsequent thereto are accordingly 
16 
renumbered until Section 327, which shall be renumbered as Section 334. 
17 
18 
SEC. 74. 
Section 328 of The Insurance Code, as amended, is hereby 
19 
renumbered as Section 335 and amended to read as follows: 
20 
21 
"Sec. 335. Any adjuster's license issued hereunder shall be valid until 
22 
after the thirtieth day of June of the fifth year following the issuance of such 
23 
license unless it is renewed; Provided that, such license shall ipso facto expire 
24 
upon termination of the independent adjuster's agreement with the insurance 
25 
company, or of the public adjuster's agreement with the insured, as the case may 
26 
be." 
27 
28 
SEC. 75. The old Section 329 of The Insurance Code, as amended, is hereby 
29 
renumbered as Section 336 and the sections subsequent thereto are accordingly 
30 
renumbered until Section 335, which shall be renumbered as Section 342. 
31 
32 
SEC. 76. 
Section 336 of The Insurance Code, as amended, is hereby 
33 
renumbered as Section 343 and its second paragraph is amended to read as follows: 
34 
35 
"No certificate of registration issued under this title shall be valid after the 
36 
thirtieth day of June of the fifth year following its issuance unless it is renewed." 
37 
32 


1 
SEC. 77. The old Section 337 of The Insurance Code, as amended, is hereby 
2 
renumbered as Section 344 and the sections subsequent thereto are accordingly 
3 
renumbered until Section 364, which shall be renumbered as Section 371. 
4 
5 
SEC. 78. A new Section 372 of The Insurance Code, as amended, is hereby 
6 
added to read as follows: 
7 
8 
"Sec. 372. The Commissioner, in consultation with the duly accredited 
9 
associations representing the insurance industry, shall adopt and promulgate a 
10 
code of conduct to promote integrity, honesty and ethical business practices 
11 
among insurance agents, distributors and other intermediaries." 
12 
13 . 
SEC. 79. 
A new Title on Bancassurance and Sections 373 to 375 of The 
14 
Insurance Code, as amended, are hereby added to read as follows: 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
"Title 9 
"BANCASSURANCE 
"Sec. 373. The term "bancassurance" shall mean the presentation and 
sale to bank customers by an insurance company of its insurance products within 
or outside the premises of, the head office of such bank duly licensed by the 
Bangko Sentral ng Pi!ipinas or any of its branches under such rules and 
regulations which 
the Commission 
may promulgate. 
To engage 
in 
bancassurance, the bank· is not required to have equity ownership of. the 
insurance company. 
No insurance company shall engage in the business of 
bancassurance unless it possesses all the requirements as may be prescribed by 
the Commission. 
"No insurance product under this Section, whether life or non-life, shall be 
issued or delivered unless in the form previously approved by the Commission. 
33 
"Sec. 374. Personnel tasked to present and sell insurance products within 
34 
the bank premises shall be duly licensed by the Commission and shall be subject 
35 
to the rules and regulations of this Act. 
36 
33 


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"Sec. 375. The Commission, in coordination with the Bangko Sentral ng 
Pilipinas, shall promulgate . rules and regulations to effectively supervise the 
business of bancassurance." 
SEC. 80. Chapter of the Insurance Code, "Security Fund", consisting of Sections 
365 up to 372 is hereby deleted. 
SEC. 81. The old Section 373 of the Insurance Code, as amended, is hereby 
renumbered qS Section 376 and the sections subsequent thereto are accordingly 
renumbered until Section 412, which shall be renumbered as Section 415. 
SEC. 82. 
Section 413 of The Insurance Code, as amended, is hereby 
renumbered as Section 424 and amended to read as folrows: 
"Sec. 416. All trustees shall, before entering in the performance of the 
duties of their trust, obtain a' certificate of registration from the Commissioner. 
"All provisions of this Code governing mutual benefit associations and 
such other provisions herein, whenever practicable and necessary, shall be 
applicable to trusts for charitable uses." 
SEC. 83. A new Section 425 of The Insurance Code, as amended, is hereby 
added to read as follows: 
"Sec. 417. The treasurer of a charitable trust shall file a fidelity bond in the 
amount commensurate with the value of the trust property in his custody, as may 
be determined by the Commissioner." 
SEC. 84. A new Chapter on Trust Business in General and Section 418 to 422 
of The Insurance Code, as amended, are hereby added to read as follows: 
"Chapter VIII 
"TRUST BUSINESS IN GENERAL 
"Sec. 418. 
An insurance company duly authorized by the Insurance 
Commission may engage in trust business, which trust business shall be 
separate and distinct from the general business of the insurance company, 
without need of securing a license from the Bangko Sentral ng Pilipinas. The 
insurance company shall act as a trustee or administer any trust or hold property 
in trust or on deposit for the use, benefit, or behoof of others. For purposes of this 
34 


• 
Act, such separate, distinct'.and duly authorized trust business shall be referred 
2 
to as a trust entity. 
3 
4 
"Sec. 419. A trust entity shall administer property under its custody with 
5 
the diligence that a prudent man would exercise in the conduct of an enterprise 
6 
of a like character and with similar aims. No trust entity shall, for the account of 
7 
the trustor or the beneficiary of the trust, purchase or acquire property from, or 
8 
sell, transfer, assign or lend money or property to, or purchase debt instruments 
9 
of, any of the departments, directors, officers, stockholders, or employees of the 
10 
trust entity, relatives within the first degree of consanguinity or affinity, or the 
11 
related interests, of such directors, officers and stockholders, unless prior to the 
12 
transaction, such transaction is specifically authorized by the trustor and the 
13 
relationship between the trustee and the other party involved in the transaction is 
14 
fully disclosed to the trustor or beneficiary of the trust. 
The Insurance 
15 
Commission shall promulgate such rules and regulations as may be necessary to 
16 
regulate the conduct of trust business by insurance companies. 
17 
18 
"Sec. 420. 
The trust business and all funds, properties or securities 
19 
received by any trust entity as executor, administrator, trustee, receiver, or 
20 
depositary shall be kept separate and distinct from the general business of the 
21 
insurance company, or allied insurance company including all other funds, 
22 
properties, and assets of such trust entity. 
The accounts of all such funds, 
23 
properties, or securities shall likewise be kept separate and distinct from the 
24 
accounts of the general business of the trust entity. 
25 
26 
"Sec. 421. Unless otherwise directed by the instrument creating the trust, 
27 
the lending and investment of funds and other assets acquired by a trust entity as 
28 
executor, administrator, or trustee, shall be limited to loans or investments as 
29 
may be prescribed by law, a~d/or the Insurance Commission. 
30 
31 
"Sec. 422. No assets held by a trust entity in its capacity as trustee shall 
32 
be subject to any claims other than those of the parties interested in the specific 
33 
trusts." 
34 
35 
SEC. 85. A new Chapter on Registration, Responsibilities and Oversight of Self-
36 
Regulatory Organizations and Sections 423 to 429 of The Insurance Code, as 
37 
amended, are hereby added to read as follows: 
38 
35 


, 
1 
"Chapter IX 
2 
"REGISTRATION, RESPONSIBILITIES AND OVERSIGHT OF SELF-
3 
REGULA TORY ORGANIZATIONS 
4 
5 
"Sec. 423. The Commissioner shall have the power to register as a self-
6 
regulatory organization, or otherwise grant licenses, and to regulate, supervise, 
7 
examine, suspend or otherwise discontinue, as a condition for the operation of 
8 
organizations whose operations are related to or connected with the insurance 
9 
market such as but not limited to associations of insurance companies, whether 
10 
life or non-life, reinsurers, actuaries, agents, brokers, dealers, mutual benefit 
11 
associations, trusts, rating· agencies, and other persons regulated by the 
12 
Commissioner, which are engaged in the business regulated by this Code. 
13 
14 
"The Commissioner may prescribe rules and regulations which are 
15 
necessary or appropriate in the public interest or for the protection of investors to 
16 
govern self-regulatory organizations and other organizations licensed or 
17 
regulated pursuant to the authority granted in hereunder, including but not limited 
18 
to the requirement of cooperation within and among all participants in the 
19 
insurance market to ensure transparency and facilitate exchange of information. 
20 
"Sec. 424. 
An association cannot be registered as a self-regulatory 
21 
organization unless the Commissioner determines that: 
22 
"(a) 
The association is so organized and has the capacity to be able to 
23 
carry out the purposes of. this Code and to comply with, and to enforce 
24 
compliance by its members and persons associated with its members, with the 
25 
provisions of this Code, the rules and regulations thereunder, and the rules of the 
26 
association. 
27 
"(b) 
The rules of the association, notwithstanding anything in the 
28 
Corporation Code to the contrary, provide that: 
29 
30 
31 
32 
33 
34 
(i) 
(ii) 
Any entity possessing the qualifications set out in the rules and none of 
the disqualifications may become a member of the association; 
There exists a fair representation of its members to serve on the Board of 
Directors of the association and in the administration of its affairs, and that 
any natural person associated with a juridical entity that is a member shall 
himself be deemed to be a member for this purpose; 
36 


1 
(iii) 
The Board of Directors of the association includes in its composition: (a) 
2 
the president of the association and (b) at least 2 independent directors; 
3 
(iv) 
For the equitable allocation of reasonable dues, fees, and other charges 
4 
5 
6 
7 
8 
(v) 
among members and other persons using any facility or system which the 
association operates or controls; 
For the prevention of fraudulent and manipulative acts and practices, the 
promotion of just and equitable principles of business, and, in general, the 
protection of the insuring public; 
9 
(vi) 
That its members and persons associated with its members shall be 
10 
appropriately disciplined for violation of any provision of this Code, the 
11 
rules or regulations thereunder, or the rules of the association; 
12 
(vii) 
That a fair procedure for the disciplining of members and persons 
13 
associated with members, the denial of membership to any person 
14 
seeking membership therein, the barring of any person from becoming 
15 
associated with a member thereof, and the prohibition or limitation by the 
16 
association of any person with respect to access to services offered by the 
17 
association or a member thereof. 
18 
"Sec. 425. 
A self-regulatory organization may examine and verify the 
19 
qualifications of an applicant to become a member in accordance with 
20 
procedures established by the rules of the association. 
21 
"A self-regulatory organization shall deny membership or condition the 
22 
membership of, an entity, if the entity: 
23 
24 
25 
.26 
(i) 
(ii) 
Does not meet the standards of financial responsibility, operational 
capability, training, experience, or competence that are prescribed by the 
rules of the association; or 
Has engaged, and there is a reasonable likelihood it will again engage, in 
27 
acts or practices inconsistent with just and equitable principles of fair 
28 
trade. 
29 
"A self-regulatory organization may deny membership t9 an entity not 
30 
engaged in a type of business in which the rules of the association require 
31 
members to be engaged. 
37 


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"Sec 426. 
Upon the filing of an application for registration as a self-
regulatory organization under this Title, the Commissioner shall have ninety (90) 
days within which to either grant registration or institute a proceeding to 
determine whether registration should be denied. In the event proceedings are 
instituted, the Commissioner shall have two hundred seventy (270) days within 
which to conclude such proceedings at which time it shall, by order, grant or deny 
such registration. 
"Sec. 427. 
Every self-regulatory organization shall comply with the 
provisions of this Code, the rules and regulations thereunder, and its own rules, 
and enforce compliance ,therewith, notwithstanding any provision of the 
Corporation Code to the contrary, by its members, persons associated with its 
members or its participants. 
"Sec. 428. 
Each self-regulatory organization shall submit to the 
Commissioner for prior approval any proposed rule or amendment thereto, 
together with a concise statement of the reason and effect of the proposed 
amendment. 
"Within sixty (60) days after submission of a proposed amendment, the 
Commissioner shall, by order, approve the proposed amendment. Otherwise, the 
same may be made effective by the self-regulatory organization. 
"In the event of an emergency requiring action for the protection of the 
insuring public, a self-regulatory organization may put a proposed amendment 
into effect summarily: Provided, however, That a copy of the same shall be 
immediately submitted to the Commissioner. 
"The Commissioner is further authorized, if after making appropriate 
request in writing to a self-regulatory organization that such organization effect 
on its own behalf specified changes in its rules and practices and, after due 
notice and hearing it determines that such changes have not been effected, and 
that such changes are necessary, by rule or regulation or by order, may alter, 
abrogate or supplement the.rules of such self-regulatory organization in so far as 
necessary or appropriate to'effect such changes in respect of such matters as: 
"(a) 
Safeguards in respect of the financial responsibility of members 
and adequate provision against the evasion of financial responsibility through the 
use of corporate forms or special partnerships; 
"(b) 
The supervision of market practices; 
38 


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"(c) 
The manner, method, and place of soliciting business; 
"(d) 
The fixing of reasonable rates of fees, interest, listing and other 
charges, but not rates of commission; and self-regulatory organization 
"(e) 
The supervision, auditing and disciplining of members. 
"In addition to the general powers of the Commissioner over the entities 
under his/her supervision, the Commissioner, after due notice and hearing, is 
authorized, in the public interest and to protect insuring public: 
"(a) 
To suspend for a period not exceeding twelve (12) months or to 
revoke the registration of a self-regulatory organization, or to censure or impose 
limitations on the activities, functions, and operations of such self-regulatory 
organization, if the Commission finds that such a self-regulatory organization has 
willfully violated or is unable to comply with any provision of this Code or of the 
rules and regulations thereunder, or its own rules, or has failed to enforce 
compliance therewith by a member of, person associated with a member, or a 
participant in such self-regulatory organization; 
"(b) 
To expel from."a self-regulatory organization any member thereof or 
any participant therein who is found to have willfully violated any provision of this 
Code or suspend for a period not exceeding twelve (12) months for violation of 
any provision of this Code or any other laws administered by the Commission, or 
the rules and regulations thereunder, or effected, directly or indirectly, any 
transaction for any person who, such member or participant had reason to 
believe, was violating in respect of such transaction any of such provisions; and 
"(c) 
To remove fro.m office or censure any officer or director of a self-
regulatory organization if it finds that such officer or director has violated any 
provision of this Code, any other law administered by the Commissioner, the 
rules or ~egulations thereunder, or the rules of such self-regulatory organization, 
abused his authority, or without reasonable justification or excuse has failed to 
enforce compliance with any of such provisions. 
"Sec. 429. (a) A self-regulatory organization is authorized to discipline a 
member of or participant\n such self-regulatory organization, or any person 
associated with a member, including the suspension or expulsion of such 
member or participant, and the suspension or bar from being associated with a 
member, if such person has engaged in acts or practices inconsistent with just 
and equitable principles of fairness or in willful violation of any provision of the 
39 


1 
Code, any other law administered by the Commission, the rules or regulations 
2 
thereunder, or the rules of the self-regulatory organization. In any disciplinary 
3 
proceeding by a self-regulafory organization (other than a summary proceeding 
4 
pursuant to paragraph (b) .. of this subsection) the self-regulatory organization 
5 
shall bring specific charges, provide notice to the person charged, afford the 
6 
person charged with an opportunity to defend against the charges, and keep a 
7 
record of the proceedings. A determination to impose a disciplinary sanction shall 
8 
be supported by a written statement of the offense, a summary of the evidence 
9 
presented and a statement of the sanction imposed. 
10 
"(b) 
A self-regulatory organization may summarily: (i) suspend a 
11 
member, participant or person associated with a member who has been or is 
12 
expelled or suspended from any other self-regulatory organization; or (ii) 
13 
suspend a member who the self-regulatory organization finds to be in such 
14 
financial or operating difficulty that the member or participant cannot be permitted 
15 
to continue to do business as a member with safety to investors, creditors, other 
16 
members, participants or the self-regulatory organization: Provided, That the self-
17 
regulatory organization immediately notifies the Commission of the action taken. 
18 
Any person aggrieved by a summary action pursuant to this paragraph shall be 
19 
promptly afforded an opportunity for a hearing by the association in accordance 
20 . 
with the provisions of paragraph (a) of this subsection. The Commissioner, by 
21 
order, may stay a summary action on its own motion or upon application by any 
22 
person aggrieved thereby, ,if the Commissioner determines summarily or after 
23 
due notice and hearing (which hearing may consist solely of the submission of 
24 
affidavits or presentation of oral arguments) that a stay is consistent with the 
25 
public interest and the protection of the insuring public. 
26 
"(c) A self-regulatory organization shal.1 promptly notify the Commission of 
27 
any disciplinary sanction on ~my member thereof or participant therein, any denial 
28 
of membership or' participation in such organization, or the imposition of any 
29 
disciplinary sanction on a 'person associated with a member or a bar of such 
30 
person from becoming so associated. Within thirty (30) days after such notice, 
31 
any aggrieved person may appeal to the Commissioner from, or the 
32 
Commissioner on its own motion within such period, may institute review of, the 
33 
decision of the self-regulatory organization, at the conclusion of which, after due 
34 
notice and hearing (which may consist solely of review of the record before the 
35 
self-regulatory organization), the Commissioner shall affirm, modify or set aside 
36 
the sanction. In such proceeding the Commissioner shall determine whether the 
37 
aggrieved person has engaged or omitted to engage in the acts and practites as 
40 


• 
found by the self-regulatory organization, whether such acts and practices 
2 
constitute willful violations of this Code, any other law administered by the 
3 
Commission, the rules or regulations thereunder, or the rules. of the self-
4 
regulatory organization as specified by such organization, whether such 
5 
provisions were applied in a manner consistent with the purposes of this Code, 
6 
and whether, with due regard for the public interest and the protection of 
7 
investors the sanction is excessive or oppressive." 
8 
9 
SEC. 86. 
A new Chapter on Confidentiality and a new Section 430 of The 
10 
Insurance Code, as amended, are hereby added to read as follows: 
11 
12 
13 
14 
"Chapter X 
"CONFIDENTIALITY 
15 
"Sec. 430. All life insurance companies doing business in the Philippines 
16 
are hereby required to inform persons applying for life insurance as well as 
17 
persons proposed for insurance that as part of the underwriting procedure, a 
18 
report may be obtained by the insurance company that will provide it with 
19 
applicable and relevant information regarding the person's health, mode of living, 
20 
and other personal background as gathered from the person himself, from the 
21 
results of any required physical examination, from the reports obtained from 
22 
physicians or other medical personnel, institutions or facilities where the person 
·23 
had been attended, or, in general, from any other sources. 
24 
25 
"All these information in relation to the person's insurability shall be treated 
26 
as confidential and shall not be disclosed by the life insurance company, its 
27 
directors, officers, employees, agents, brokers, or other business partners, in any 
28 
form or manner, unless otherwise required by law, by lawful order of a Court of 
29 
competent jurisdiction, or upon the written permission of the person himself, 
30 
provided, however, that the insurance company may release information in its file 
31 
to other life insurance comp'anies to whom the person may apply for life, accident 
32 
or health insurance/ or to whom a claim for benefits may be submitted." 
33 
34 
SEC. 87. A new Chapter on Taxation and a new Section 431 of The Insurance 
35 
Code, as amended, are hereby added to read as,foliows: 
36 
37 
41 


• 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
"Chapter XI 
"TAXATION 
"Sec. 431. The death benefits received under a life insurance policy shall 
be exempt from all taxes." 
SEC. 88. Chapter VIII on The Insurance Commissioner of The Insurance Code, 
as amended, is hereby renumbered as Chapter XII. 
SEC. 89. 
Section 414 of The Insurance Code, as amended, is hereby 
renumbered as Section 432 and amended to read as follows: 
"Sec. 432. The Insurance Commissioner shall have the duty to see that all 
laws relating to insurance, insurance companies and other insurance matters, 
mutual benefit associations, and trusts for charitable uses are faithfully executed 
and to perform the 
duti~s imposed upon him 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 [two hundred thirty-two] and to provide for the licensing of persons selling 
such contracts, and to issue such reasonable rules and regulations governing the 
same. 
"The Commissioner may issue such rulings, instructions, circulars, orders 
and decision as he may deem necessary to secure the enforcement of the 
provisions of this Code, t9 ensure the efficient regulation of the insurance 
industry in accordance with global best practices and to protect the insuring 
public, subject to the approval of the Secretary of Finance. Except as otherwise 
specified, decisions made' by the Commissioner shall be appealable to the 
Secretary of Finance. 
"In addition to the foregoing, the Commissioner shall have the following 
powers and functions: 
"a) Formulate policies and recommendations on issues concerning the 
insurance industry, advise, Congress and other government agencies on all 
aspects of the insurance industry and propose legislation and amendments 
thereto; 
42 


• 
"b) Approve, reject, s~spend revoke or require amendments to registration 
2 
and licensing applications provided for by this Code; 
3 
4 
"c) Impose sanctions for the violation of laws and the rules, regulations 
5 
and orders issued pursuant thereto; 
6 
7 
"d) Prepare, approve, amend or repeal rules, regulations and order, and 
8 
issue opinions and provide guidance on and supervise compliance with such 
9 
rules, regulations and orders; 
10 
11 
"e) Enlist and aid and support of and/or deputize any and all enforcement 
12 
agencies of the Government, civil or military as well as any private institution, 
13 
corporation, firm, association or person in the implementation of its powers and 
14 
functions under this Code; 
15 
16 
"f) Issue cease and desist orders to prevent fraud or injury to the insuring 
17 
public; 
18 
19 
"g) Punish for contempt of the Commission, both direct and indirect, in 
20 
accordance with the pertinent provisions of and penalties prescribed by the Rules 
21 
of Court; 
22 
23 
"h) Compel the officers of any registered insurance corporation or 
. 24 
association to call meetings of stockholders or members thereof under its 
25 
supervisions; 
26 
27 
"i) Issue subpoena duces tecum and summon witnesses to appear in any 
28 
proceedings of the Commission and in appropriate cases, order the examination, 
29 
search and seizure of all documents, papers, files and records, tax returns, and 
30 
books of accounts of any entity or person under investigation as may be 
31 
necessary for the proper disposition of the cases before it, subject to the 
32 
provision of existing laws; 
33 
34 
"j) Suspend or revoke, after proper notice and hearing the license or 
35 
certificate of authority of any entity or person under its regulation, upon any of the 
36 
grounds provided by law; 
37 
43 


.. 
• 
1 
"k) Conduct of examination to determine compliance with laws and 
2 
regulations if the circumstances so warrant as determined by appropriate rules 
3 
and regulations; 
4 
5 
"I) Regular investigati'on which shall not be oftener than once a year from 
6 
the last date of examination to determine whether an institution is conducting its 
7 
business on a safe an sound basis; Provided, That, the deficiencies/irregularities 
8 
found by or discovered by an audit shall be immediately addressed; 
9 
10 
"m) Inquire into the solvency and liquidity of the institutions under its 
11 
supervision and enforce prompt corrective action; and 
12 
"k) Exercise such other powers as may be provided by law as well as 
13 
those which may be implied from, or which are necessary or incidental to the 
14 
carrying out of, the express powers granted the Commission to achieve the 
15 
objectives and purposes of these laws." 
16 
SEC. 90. The old Section 415 of The Insurance Code, as amended, is hereby 
17 
renumbered as Section 433 and the sections subsequent thereto are accordingly 
18 
renumbered until Section 424, which shall be renumbered as Section 442. 
19 
.. 
20 
SEC. 91. This Act shall also amend the section numbers referred to in The 
21 
Insurance Code to reflect the renumbering resulting from the amendments brought 
22 
about by this Act. 
23 
24 
SEC. 92. Separability Clause. If any provision or part hereof, is held invalid or 
25 
unconstitutional, the remainder of the law or the provision not otherwise affected shall 
26 
remain valid and subsisting. 
27 
28 
SEC. 93. Repealing Clause. All laws, decrees, orders, rules and regulations or 
29 
parts thereof, inconsistent with this.Act are hereby amended or modified accordingly. 
30 
31 
SEC. 94. Effectivity. This Act shall take effect 15 days following its publication 
32 
in a newspaper of general circulation, provided that the tax incentives granted 
33 
hereunder shall take effect on _____ _ 
34 
35 
Apprbved, 
44