Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

House Bill No.__379'7

Introduced by Honorable Representative
HERMILANDO I. MANDANAS
2” District, Batangas

AN ACT AMENDING PRESIDENTIAL DECREE NO. 612, AS
AMENDED, 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

EXPLANATORY NOTE

This bill seexs to amend Presidential Decree No. 1460 (PD 1460) as
amended, otherwise known as “The Insurance Code of 1978”. Thirty two
years of experience under the Insurance Code adopted in 1978 marked by
monumental changes and development in the world of commerce, trade
and industry have exposed the unsuitability of certain provisions of the
Insurance Code and their inadequacies to address the emerging issues in
the field of insurance and changing business climate in both the domestic
and foreign markets. In the light of this development, it has become
imperative upon our lawmakers to attune our insurance laws to the
prevailing economic conditions if the insurance industry is to remain an
engine of economic growth.

A sound and efficient insurance industry is critical in promoting our
country’s financial growth and developing our national economy.
Insurance provides economic protection and financial security to the policy
owners and their dependents. It significantly contributes to capital market
development and savings mobilization which can be tapped to finance
various investments and other productive economic activities. It is an
efficient form of raising much needed capital to fuel our economy and
provides a stable and rich source of long-term capital which is critical in
our national development. Its long term investments offer more ideal
source of financing that satisfy the needs of both the public and the
private sector. Insurance products are vehicles for increasing our national
wealth in the form of financial savings generated from the policy owners.


Its pension and retirement plans efficiently supplement, if not substitute,
for the declining 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 welfare
program and dole-outs. It is critical that a healthy and stable insurance
industry is promoted and maintained to make it more dynamic and
responsive to the increasing needs of our people and the demands of the
changing economic conditions.

In pursuing this major legislative initiative, it is our intention to
formulate a legislative framework which shall enable the insurance
industry to sufficiently cope with the new trends and challenges both in
the domestic and foreign insurance markets. Our objective is to enhance
the growth of the industry by maintaining a safe, sound and strong
industry which will enable the insurers to efficiently achieve their business
ends and expand their insurance activities that will further promote the
security, protection and interest of the insuring public. This bill introduces
significant changes to the present Code. However, despite the several
changes proposed by this bill to The Insurance Code of 1978, many
relevant provisions thereof which have served us well in the past are
retained. This legislative measure has also incorporated the relevant
circulars and regulations issued by the Insurance Commission in the
course of its prudent regulation and supervision of the insurance industry.
We have also adopted new insurance activities and business models such
‘as micro-insurance and bank assurance to reflect current developments in
the industry. This bill is also introduce to further reinforce the authority of
the Insurance Commission to effectively pursue its mandate and prudently
perform its regulatory functions particularly in enhancing the interest of
the insuring public. We strongly believe that legislative intervention and
structural reforms are needed to strengthen and revitalize the insurance
industry and make it a robust partner of our government in pursuing
economic development for the greater benefit of our people. Amending
the Insurance Code shall not only sustain the gains of the insurance
industry and accelerate its further growth but shall develop a strong
domestic insurance industry which can fairly compete with foreign insurers
once the ASEAN Economic Market is launched in 2015.

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

REP. HERMILANDO I. MANDANAS
2" District, Batangas


FIFTEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

H.B.N. _ 3 e 3 7

Introduced by Honorable Representative
HERMILANDO |. MANDANAS
2" District, Batangas

AN ACT AMENDING PRESIDENTIAL DECREE NO. 612, AS AMENDED, 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.

SECTION 1. Title. - This Act shall be known as ~The Insurance Code of 2010"

‘SEC. 2. Section 1 of the Insurance Code, as amended, is hereby amended to read as
follows:
“Section 1. This Act shall be known as “The Insurance Code of 2010’.

SEC. 3. Section 2, paragraph 2(d) of The Insurance Code, as amended, is hereby amended
to read as follows:

“(@) doing or proposing to do any business in substance equivalent to any of the foregoing in
a manner designed to evade the provisions of this Code, including the practice of self-
insurance by any person or entity extending life insurance or similar protection to its
borrowers, depositors, clients or third parties.

Section 3 of the Insurance Code, as amended, is hereby amended to read as

“Sec. 3. Any contingent or unknown event, whether past or future, which may
damnify a person having an insurable interest or create a liability against him, may be insured
against, subject to the provisions of this chapter.

“The consent of the spouse is not necessary for the validity of an insurance policy
taken out by a married person on his or her life or that of his or her children.

“All rights, title and interest in the policy of insurance taken out by an original owner
on the life or health of the person insured shall automatically vest in the latter upon the death
of the original owner, unless otherwise provided for in the policy.”

SEC. 5. 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. 6. 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 forfeited shall pass 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. 7. Section 45 of The Insurance Code, as amended, is hereby amended to read as follows:
*Sec. 45. If a representation 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. 8. The last paragraph of Section 50 of The Insurance Code, as amended, is hereby
deleted.

‘SEC. 9. Section 60 of the Insurance Code, as amended, is hereby amended to read as follows:

“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.”

SEC. 10. 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. 11. Section 65 of The Insurance Code, as amended,

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. 12. 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 90-day credit extension is given. No credit extension to a duly licensed
intermediary should exceed 90-days from date of issuance of the policy. Payments of premium to
brokers are not considered payment of premium to the insurers.”



‘SEC. 13. 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 corporations, may pay
his insurance premium and loan obligations through salary deduction: Provided, the treasurer,
cashier, paymaster or official of the entity employing the government employee is authorized,
notwithstanding the provisions of any existing law, rules and regulations to the contrary, to make
deductions from the salary, wage or income of the latter pursuant to the agreement between the
insurer and the government employee and to remit such deductions to the insurer concerned, and
collect such reasonable fee for its services.”

SEC. 14, The old Section 78 of The Insurance Code, as amended, is hereby renumbered as
Section 79 and the sections subsequent thereto are accordingly renumbered until Section 80,
which shall be renumbered as Section 81

SEC. 15. Section 81 of The Insurance Code, as amended, is hereby renumbered as Section 82
and amended to read as follows:

"Sec. 82. A person insured is entitled to return of the premium when the contract is
voidable and subsequently annulled under the provisions of the Civil Code; or, on account of
fraud or intentional misrepresentation of the insurer, or of his agent, or on account of facts, the
existence of which the insured was ignorant without his fault; or when by any default of the
insured other than actual fraud, the insurer never incurred any liability under the policy.

“A person insured is not entitled to a return of premium if the policy is annulled, rescinded
or if a claim is denied by reason of his fraud or misrepresentation.”

SEC. 16. Section 82 of The Insurance Code, as amended, is hereby renumbered as Section 83
and amended to read as follows:

"Sec. 83. In case of an over-insurance by several insurers other than life, the insured is
entitled to a ratable return of the premium, proportioned to the amount by which the aggregate
‘sum insured in all the policies exceeds the insurable value of the thing at risk.”

SEC. 17. A new Section 84 of The Insurance Code, as amended, is hereby added to read as
follows:

“Sec. 84. An insurer may contract and accept payments, in addition to regular premium,
for the purpose of paying future premiums on the policy or to increase the benefits thereof”

SEC. 18. The old Section 83 of The Insurance Code, as amended, is hereby renumbered as
‘Section 85 and the sections subsequent thereto are accordingly renumbered until Section 87,
which shall be renumbered as Section 89.

SEC. 19. Section 88 of The Insurance Code, as amended, is hereby renumbered as Section 90
and amended to read as follows:

"Sec. 90. In case of loss, an insurer is exonerated, if notice thereof be not given to him by
an insured, or some person entitled to the benefit of the insurance, without unnecessary delay
from occurrence of the loss. In case of death, an insurer is likewise exonerated if notice thereof
be not given the insurer without unnecessary delay from discovery of death.”


SEC. 20. The old Section 89 of The Insurance Code, as amended, is hereby renumbered as
Section 91 and the sections subsequent thereto are accordingly renumbered until Section 93,
which shall be renumbered as Section 95.

SEC. 21. Section 94 of The Insurance Code, as amended, is hereby renumbered as Section 96
and amended to read as follows:

“Sec. 96. Where the insured, in a policy other than life, is overinsured by double
insurance’

“(a) The insured, unless the policy otherwise provides, may claim payment from the
insurers in such order as he may select, up to the amount for which the insurers are severally
liable under their respective contracts;

“(b) Where the policy under which the insured claims is a valued policy, any sum received
by him under any other policy shall be deducted trom the value of the policy without regard to the
actual value of the subject matter insured;

“(c) Where the policy under which the insured claims is an unvalued policy any sum
received by him under any policy shall be deducted against the full insurable value, for any sum
received by him under any policy;

“(d) Where the insured receives any sum in excess of the valuation in the case of valued
policies, or of the insurable value in the case of unvalued policies, he must hold such sum in trust
for the insurers, according to their right of contribution among themselves;

“(e) Each insurer is bound, as between himself and the other insurers, to contribute
ratably to the loss in proportion to the amount for which he is liable under his contract.”

SEC. 22. The old Section 95 of The Insurance Code, as amended, is hereby renumbered as
Section 97 and the sections subsequent thereto are accordingly renumbered until Section 178,
which shall be renumbered as Section 160.

SEC. 23. Section 179 of The Insurance Code, as amended, is hereby renumbered as Section
181 and amended to read as follows:

“Sec. 181. Life insurance is insurance on human lives and insurance appertaining thereto
or connected therewith.

“Every contract or undertaking for the payments of annuities including contracts for the
payment of lump sums under a retirement program where a life insurance company manages or
acts as a trustee for such retirement program shall be considered a life insurance contract for
purposes of this Code.

“A life insurance policy may also be taken by an individual who intends to travel by ship
or airplane. Such policy shall be effective only during the course of the travel.”

SEC. 24. Section 180 of The Insurance Code, as amended, is hereby renumbered as Section
182 and amended to read as follows:

“Sec. 182, An insurance upon life may be made payable on the death of the person, or
on his surviving a specified period, or otherwise contingently on the continuance or cessation of
life


“Every contract or pledge for the payment of endowments or annuities shall be
considered a life insurance contract for purpose of this Code.

“in the absence of a judicial guardian, the father, or in the latter's absence or incapacity,
the mother, or any minor, who is an insured or a beneficiary under a contract of life, health or
accident insurance, may exercise, half of said minor, any right under the policy, without

ity of court authority or the giving of a bond, where the interest of the minor in the
particular act involved does not exceed two hundred fifty thousand pesos or in such amount as
may be determined by the Commissioner. Such right may include, but shall not be limited to,
‘obtaining a policy loan, surrendering the policy, receiving the proceeds of the policy, and giving
the minor’s consent to any transaction on the policy.

“In the absence or in case of the incapacity of the father or mother, the grandparent, the
eldest brother or sister at least eighteen years of age, or any relative who has actual custody of
the minor insured or beneficiary, shall act as a guardian without need of a court order or judicial
appointment as such guardian, as long as such person is not otherwise disqualified or
incapacitated. Payment made by the insurer pursuant to this section shall relieve it of any liability
under the contract.”

SEC. 25. The old Section 180-A of The Insurance Code, as amended, is hereby renumbered as
Section 183 and the sections subsequent thereto are accordingly renumbered until Section 183,
which shalll be renumbered as Section 186,

SEC. 26. A new Title on Microinsurance and a new Section 187 of The Insurance Code, as
amended, are hereby added to read as follows:

“Title 6
“MICROINSURANCE,

“Sec. 187. The term “microinsurance" shall mean an activity providing specific insurance,
insurance-like and other similar products and services that meet the needs of the low-income
‘sector for risk protection and relief against distress, misfortune and other contingent events. This
‘shall include all forms of insurance, insurance-like and other similar activities with the following
features:

‘a. Premiums, contributions, fees or charges are collected/deducted prior to the occurrence
of the a contingent event; and

b. Guaranteed benefits are provided upon occurrence of a contingent event.

“No insurance company shail engage in the business of microinsurance unless it
possesses all the requirements as may be prescribed by the Commissioner. The Commissioner
‘shall issue such rules and regulations governing microinsurance.”

SEC. 27. 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. 28. Section 185 of The Insurance Code, as amended, is hereby renumbered as Section
189 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. 29. 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 and other appropriate government agencies,”

SEC. 30. 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 concurrently be a director andlor 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 name 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.


“Every company receiving any such certificates of authority shall be subject to the
provisions of this Code and other related laws and to the jurisdiction and supervision of the
Commissioner and other appropriate government agencies.

“No insurance company may be authorized to transact in the Philippines the business of
life and non-life insurance concurrently unless specifically authorized to do so by the
Commissioner: Provided, That the terms “life” and “non-life” insurance shall be deemed to include
health, accident and disability insurance.

“No insurance company shall have equity in an adjustment company and neither shall an
adjustment company have equity in an insurance company.”

SEC. 31. Section 188 of The Insurance Code, as amended, is hereby renumbered as Section
192 and amended to read as follows:

“Sec. 192. No domestic stock insurance company shall engage in insurance or
reinsurance business in the Philippines unless possessed of the required capitalization which
includes minimum net worth and paid-up capital, as defined and provided under applicable orders
andlor circulars issued by the Secretary of Finance, upon recommendation of the Insurance
‘Commissioner. The Secretary of Finance may change such minimum net worth and paid-up
capital stock requirement, under such terms and conditions as he may impose, to an amount
which, in his opinion, would reasonably assure the safety of the interests of the policyholders and
the public.

“The Commissioner may, as a pre-licensing requirement of a new insurance company, in
addition to the paid-up capital stock, require the stockholders to pay in cash to the company in
proportion to their subscription interests 2 contributed surplus fund in an amount as may be fixed
inapplicable orders and circulars duly issued by the Commissioner. He may also require such
company or already existing companies, to submit to him a capital build-up program or a
business plan showing the company's estimated receipts and disbursements, as well as the basis
therefor, for the next succeeding three years,

“If organized as a mutual company, in lieu of such capital stock, it must have available
cash assets in an amount not less than that required under present or future applicable orders or
circulars issued by the Secretary of Finance, upon recommendation of the Commissioner. These
required cash assets must be net of all liabilities for losses reported, expenses, taxes, legal
reserve, and reinsurance of all outstanding risks, and the contributed surplus fund must be equal
to the amounts required of stock corporations. A stock insurance company doing business in the
Philippines may, subject to the pertinent laws and regulations which now are of hereafter may be
in force, alter its organization and transform itself into a mutual insurance company.”

SEC, 32. The old Section 189 of The Insurance Code, as amended, is hereby renumbered as
Section 193 and the sections subsequent thereto are accordingly renumbered until Section 190,
which shall be renumbered as Section 194.

SEC, 33. Section 191 of The Insurance Code, as amended, is hereby renumbered as Section
195 and amended to read as follows:

“Sec. 195. No insurance company organized or existing under the government or laws
other than those of the Philippines shall engage in business in the Philippines unless possessed
of paid-up unimpaired capital or assets and reserve not less than that required of domestic
insurance companies under applicable or order or circulars of the Commissioner, nor unti it shall
have deposited with the Commissioner for the benefit and security of the policyholders and
creditors of such company in the Philippines, securities satisfactory to the Commissioner


consisting of good securities of the Philippines, including new issues of stock of “registered
enterprises", as this term is defined in Omnibus Investments Code, as amended, to the actual
market value of not less than the minimum paid-up capital required of domestic insurance
companies: Provided, That at least fifty per centum of such securities shall consist of bonds or
‘other evidences of debt of the Government of the Philippines, its political subdivisions and
instrumentalities, or of government-owned or controlled corporations and entities, including the
Bangko Sentral ng Pilipinas. Provided further, that the total investment of a foreign insurance
company in any registered enterprise shall not exceed twenty per centum of the net worth of said
foreign insurance company nor twenty per centum of the capital of the registered enterprise,
unless previously authorized in writing by the Commissioner.

“For purposes of this Code, the net worth of a foreign insurance company shall refer only
to its net worth in the Philippines.”

SEC. 34. Section 192 of The Insurance Code, as amended, is hereby renumbered as Section
196 and amended to read as follows:

“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 dividends 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
PI es, the securities deposited as aforesaid shall be returned upon the company, upon the
Commissioner's written approval and only after the company has dilly proven in its application
therefore that it has no further liability whatsoever under any of its policies nor to any of its
Creditors in the Philippines.”

SEC. 35. The old Section 193 of The Insurance Code, as amended, is hereby renumbered as
Section 197,

SEC. 36. 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 make 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 from him, pays the contribution due from the another stockholder by
reason of the failure or refusal of the latter to do so, shall have a lien on the certificates of stock of
the insurance company concemed appearing in its books in the name of the defaulting
stockholder on the date of default, as well as on any interests or dividends that have accrued or
will accrue to the said certificates of stock, until the corresponding payment or reimbursement is
made by the defaulting stockholder.”



SEC. 37. Section 195 of The Insurance Code, as amended, is hereby renumbered as Section
199 and amended to read as follows:

“Sec. 199. No domestic insurance corporation shall declare or distribute any dividend on
its outstanding stocks unless it has met the minimum paid-up capital and net worth requirements
under Section One Hundred Ninety Eight and except from profits attested in a swom statement to
the Commissioner by the president or treasurer of the corporation to be remaining on hand after
retaining unimpaired:

“(a) The entire paid-up capital stock;

“(b) In the case of life insurance corporation, the legal reserve fund required by section [two
hundred eleven);

“(0) In the case of corporations other than life, the legal reserve fund required by section [two
hundred thirteen];

“(d) A sum sufficient to pay all net losses reported, or in the course of settlement, and all liabilities
for expenses and taxes.

“Any dividend declared or distributed under the preceding paragraph shall be reported to
the Commissioner within thirty days after such declaration or distribution

“If the Commissioner finds that any such corporation has declared or distributed any such
dividend in violation of this section, he may order such corporation to cease and desist from doing
business until the amount of such dividend or the portion thereof in excess of the amount allowed
under this section has been restored to said corporation.”

SEC. 38. Section 196 of The Insurance Code, as amended, is hereby renumbered as Section
200 and amended to read as follows:

"Sec. 200. In any determination of the financial condition of any insurance company doing
business in the Philippines, there shall be allowed and admitted as assets ‘only such assets
legally or beneficially owned by the insurance company concerned as determined by external
auditors accredited by the Commissioner who examined the financial statements of the insurance
‘company concerned and which consist of:

“1. Cash in the possession of the insurance company or in transit under its control, and
the true and duly verified balance of any deposit of such company in a financially sound
commercial bank or trust company.

“2. Investments in securities, including money market instruments, and in real property
acquired or held in accordance with and subject to the applicable provisions of this Code and the
income realized therefrom or accrued thereon,

"3, Loans granted by the insurance company concerned to the extent of that portion
thereof adequately secured by non-speculative assets with readily realizable values in
accordance with and subject to the limitations imposed by applicable provisions of this Code.

“4. Policy loans and other policy assets and liens on policies, contracts or certificates of a
life insurance company, in an amount not exceeding legal reserves and other policy liabilities
carried on each individual life insurance policy, contract or certificate.


“5. The net amount of uncollected and deferred premiums and annuity considerations in
the case of a life insurance company which carries the full mean tabular reserve liability.

"6. Reinsurance recoverable by the ceding insurer: (a) from an insurer authorized to
transact business in this country, the full amount thereof, or (b) from an insurer not authorized in
this country, in an amount not exceeding the liabilities carried by the ceding insurer for amounts
withheld under a reinsurance treaty with such unauthorized insurer as security for the payment of
obligations thereunder if such funds are held subject to withdrawal by, and under the control of,
the ceding insurer. The Commissioner may prescribe the conditions under which a ceding insurer
may be allowed credit, as an asset or as a deduction from loss and uneamed premium reserves,
for reinsurance recoverable from an insurer not authorized in this country but which presents
‘Satisfactory evidence that it meets the applicable standards of solvency required in this country.

“7. Funds withheld by a ceding insurer under a reinsurance treaty, provided reserves for
unpaid losses and unearned premiums are adequately provided.

“8. Deposits or amounts recoverable from underwriting associations, syndicates and
reinsurance funds, or from any suspended banking institution, to the extent deemed by the
‘Commissioner to be available for the payment of losses and claims and values to be determined
by him,

“9, Electronic data processing machines, as may be authorized by the Commissioner to
be acquired by the insurance company concerned, the acquisition cost of which to be amortized
in equal annual amounts within a period of five years from the date of acquisition thereof.

"40. Mutual funds, real estate investment trusts, unit investment trust funds and special
deposit accounts.

“11. Other assets, not inconsistent with the provisions of paragraphs 1 to 10 hereof,
which are deemed by the Commissioner to be readily realizable and available for the payment of
losses and claims at values to be determined by him in a circular, rule or regulation.

"12. Other investments not otherwise covered by the above, provided that such may be
reclassified as non-admitted assets after a subsequent audit conducted by the Commissioner.’

SEC. 39. The old Section 197 of The Insurance Code, as amended, is hereby renumbered as
Section 201

SEC. 40. Section 198 of The Insurance Code, as amended, is hereby renumbered as Section
202 and amended to read as follows:

“Sec, 202. A life insurance company may lend to any of its policyholders upon the
security of the value of its policy such sum as may be determined pursuant to the provisions of
the policy

“No insurance company shall loan any of its money or deposits to any person,
corporation or association, except upon the security of any of the following:

*a) first mortgage or deeds of trust of registered, unencumbered, improved or unimproved
real estate, including condominiums, in cities and centers of population of municipalities in the
Philippines; or

10


“b) first mortgages or deeds of trust of actually cultivated, improved and unencumbered
agricultural lands in the Philippines: or

“c) purchase money mortgages, lease purchase agreements or similar securities
executed or received by it on account of the sale or exchange of real property acquired pursuant
to sections [two hundred and two hundred two]; or

“d) bonds or other evidences of indebtedness issued or guaranteed by the of the
Government of the Philippines or its political subdivisions authorized by law to incur such
obligations or issue such guarantees or of government-owned or controlled corporations and
instrumentalities including the Bangko Sentral ng Pilipinas; or

“e) obligations issued or guaranteed by universal banks, commercial banks, offshore
banking -units, investment houses or other financial intermediaries duly registered with the
Bangko Sentral ng Pilipinas; or

“f) obligations issued or guaranteed by foreign banks or corporations, each of which shall
have total assets of one billion US dollars, 28 shown in their financial statements as of the
immediately preceding fiscal year; or

“g) assignments of monetary instruments such as cash deposits, promissory notes,
deposit certificates or other similar instruments of universal banks, commercial banks,
investments houses or other financial intermediaries duly registered with the Bangko Sentral ng
Pilipinas;

“h) pledges of shares of stock, bonds or other evidences of indebtedness specified in
section [two hundred thirty-four);

“i) chattel mortgages over equipment not more than three years old; and
“j) such other security as may be approved by the Commissioner.

“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,

ll


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 case 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 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 exceed
seventy-five per centum of the market value of said equipment; and

“f) Venture capital investments, equity on loans, shall not exceed, per investment,
forty per centum of the insurance company’s net worth as shown in its latest financial statement
approved by the Commission.”

‘SEC. 41. Section 199 of The Insurance Code, as amended, is hereby renumbered as Section
203 and amended to read as follows:

“Sec. 203. No loan by any insurance company on the security of real estate shall be
made unless the title to such real estate shall have first been registered in accordance with the
existing Land Registration Act, or shall have been previously registered under the provisions of
the existing Mortgage Law and the lien or interest of the insurance company as mortgagee has
been registered.”

‘SEC. 42. Section 200 of The Insurance Code, as amended, is hereby renumbered as Section
204 and amended to read as follows:

“Sec. 204. (1) An insurance company may purchase, hold, own and convey such
Property, real and personal, as may have been mortgaged, pledged, or conveyed to it in good
faith in trust for its benefit by reason of money loaned by it in pursuance of the regular business of
the company, and such real or personal property as may have been purchased by it at sales
under pledges, mortgages or deeds of trust for its benefit on account of money loaned by it, and
Such real and personal property as may have been conveyed to it by borrowers in satisfaction
and discharge of loans made by the company in payment or by reason of any loan made by it
shall be sold by the company within twenty years after the title thereto has been vested in i.

(2) An insurance company may purchase, hold, own and convey real and personal property as
follows:

“(a) The real property in which the company conducts and carries on its business;
Provided, That no domestic non-life insurance company shall invest in the kinds permitted under
this section an amount in excess of twenty per centum of the net worth of such insurer as shown
by its latest financial statement approved by the Board.


“(b) Bonds or other evidence of indebtedness of the Government of the Philippines or its
political subdivisions authorized by law to issue bonds at the reasonable market value thereof.

*(c) Bonds or other evidences of debt of the government-owned or controlled
corporations and entities, including the Bangko Sentral ng Pilipinas.

"(@) Bonds, debentures or other evidences of indebtedness of any solvent corporations or
institution created or existing under the laws of the Philippines: Provided, however, That the
issuing, assuming or guaranteeing entity or its predecessors shall not have defaulted in the
payment of interest on any of its securities and that during each of any three including the last two
Of the five fiscal years next preceding the date of acquisition by such insurance company of such
bonds, debentures, or other evidences of indebtedness, the net earnings of the issuing, assuming
or guaranteeing institution available for its fixed charges, as hereinafter defined, shall have been
not less than one and one-quarter times the total of its fixed charges for such year, and Provided,
further, that no life insurance company shall invest in or loan upon the obligations of any one
institution in the kinds permitted under this sub-section an amount in excess of twenty-five per
centum of the total admitted assets of such insurer as of December thirty-first next preceding the
date of such investment

“As used in this sub-section the term “net earings available for fixed charges” shall
mean net income after deducting operating and maintenance expenses, taxes other than income
taxes, depreciation and depletion; but excluding extraordinary non-recurring items of income or
expense appearing in the regular financial statement of the issuing, assuming or guaranteeing
institution. The term ‘fixed charges” shall include interest on funded and unfunded debi,
amortization of debt discount, and rentals for leased properties.

“(e) Preferred or guaranteed stocks of any solvent corporation or institution created or
existing under the laws of the Philippines; Provided, That if the stocks are guaranteed, the
amount of stocks so guaranteed is not excess of fifty per centum of the amount of the preferred or
‘common stocks, as the case may be, of the guaranteeing corporation, and Provided, finally, That
no life insurance company shall invest in or loan upon obligations of any one institution in the
kinds permitted under this sub-section an amount in excess of ten per centum of the total
admitted assets of such insurer as of December thirty-first next preceding the date of such
investment.

“() Common stocks of any solvent corporation or institution created or existing under the
laws of the Philippines; Provided, however, That no life insurance company shall invest in or loan
upon the obligations of any one corporation or institution in the kinds permitted under this sub-
section an amount in excess of ten per centum of the total admitted assets of such insurer as of
December thirty-first next preceding the date of such investment.

“(g) Securities issued by an “registered enterprise”, as this term is defined in Republic Act
No. 5186, otherwise known as the Investment Incentives Act, as amended, provided that the total
investment of a domestic non life insurance company in any registered enterprise shall not
exceed fifty per centum of the net worth of said insurance company as shown by its aforesaid
financial statement unless previously authorized by the Commissioner.

“(h) Certificates, notes and other obligations issued by the trustees or receivers of any
institution created or existing under the laws of the Philippines which, or the assets of which, are
being administered under the direction of any court having jurisdiction; Provided, however, That
‘Such certificates, notes or other obligations are adequately secured as to principal and interests.


Equipment trust obligations or certificates which are adequately secured or other
adequately secured instruments evidencing an interest in equipment wholly or in part within the
Philippines: Provided, however, That there is a right to receive determined portions of rental,
purchase or other fixed obligatory payments for the use or purchase of such equipment.

“q) Any obligation of any corporation or institution created or existing under the laws of
the Philippines which is, on the date of acquisition by the insurer, adequately secured and has
qualities and characteristics wherein the speculative elements are not predominant

“(k) Such other securities as may be approved by the Commissioner.

"(3) Any domestic insurer which has outstanding insurance, annuity or reinsurance contracts in
currencies other than the national currency of the Philippines may invest in, or otherwise acquire
or loan upon securities and investments in such currency which are substantially of the same
Kinds, classes and investment grades as those eligible for investment under the foregoing
subdivisions of this section; but the aggregate amount of such investment and of such cash in
such currency which is at anytime held by such insurer shall not exceed one and one-half times
the amount of its reserves and other obligations under such contracts or the amount of its
reserves and other obligations under such contracts or the amount which such insurer is required
by the law of any country outside the Republic of the Philippines to be invest in such country,
whichever shall be greater.”

SEC. 43. Section 201 of The Insurance Code, as amended, is hereby renumbered as Section
205 and amended to read as follows:

“Sec. 205. An insurance company may (1) invest in equities of other financial institutions,
and (2) engage in the buying and selling of short-term debt instruments: Provided, That any or all
of such investments shall be with the prior approval of the Commissioner, except listed equities of
other financial institutions.”

SEC. 44. Section 202 of The Insurance Code, as amended, is hereby renumbered as Section
206 and its paragraph (a) is hereby amended to read as follows:

*(a) Acquire or construct housing projects and, in connection with any such project, may
acquire land or any interest therein by purchase, lease or otherwise, or use land acquired
pursuant to any other provision of this Code. Such company may thereafter own, maintain,
Manage, collect or receive income from, or sell and convey, any land or interest therein so
acquired and any improvements thereon. The aggregate book value of the investments of any
such company in all such projects shall not exceed at the time of such investments twenty five
per centum of the total admitted assets of such company on the thirty-first day of December next
preceding; Provided, That the funds of the company for the payment of pending claims and
obligations shall not be used for such investments;”

SEC. 45. The old Section 203 of The Insurance Code, as amended, is hereby renumbered as
Section 207 and the sections subsequent thereto are accordingly renumbered until Section 207,
which shall be renumbered as Section 211

SEC. 46. Section 208 of The Insurance Code, as amended, is hereby renumbered as Section
212 and amended to read as follows:

"Sec. 212. (1) All bonds or other evidences of indebtedness having a fixed term and rate
of interest and held by any life insurance company authorized to do business in this country, if
amply secured and if not in default as to principal or interest, shall be valued based on their
amortized cost using effective interest method less impairment and unrecoverable amount based

14


on appropriate measurement methods which are generally accepted in the industry and accepted
by the Commission. The Commissioner shall have the power to determine the eligibility of any
‘such investments for valuation on the basis of amortization, and may by regulation prescribe or
limit the classes of securities so eligible for amortization. All bonds or other evidences of
indebtedness which in the judgment of the Commissioner are not amply secured shall not be
eligible for amortization and shall be valued in accordance with paragraph two. The
‘Commissioner may, if he finds that the interest of policy holders so permit or require, by official
regulation permit or require any class or classes of insurers, other than life insurance companies,
authorized to do business in this country, to value their bonds or other evidences of indebtedness
in accordance with the foregoing rule,

“(2) The investments of all insurers authorized to do business in this country, except
securities subject to amortization and except as otherwise provided in this chapter, shall be
valued, in the discretion of the Commissioner, at their market value at their amortized cost using
effective interest method less impairment and unrecoverable amount or at valuation representing
their fair market value. If the Commissioner finds that in view of the character of investments of
any insurer authorized to do business in this country it would be prudent for such insurer to
establish a special reserve for possible losses or fluctuations in the values of its investments, he
may require such insurer to establish such reserve, reasonable in amount, and include a report
thereon in any statement or report of the financial condition of such insurer. The Commissioner
may, in connection with any examination or required financial statement of an authorized insurer,
require such insurer to furnish him complete financial statements and audited report of the
financial condition of any corporation of which the securities are owned wholly or partly by such
insurer and may cause an examination to be made of any subsidiary or affiliate of such insurer as
appropriate to specific investments as provided in appropriate circulars issued by the
Commissioner.

"(3) The stock of an insurance company shall be valued as follows: a) listed stocks shall
be valued at market value and periodically adjusted to reflect market changes through a special
valuation account to reflect their realizable value when sold; b) unlisted stocks shall be valued at
book value based on the latest unqualified audited financial statements of the company which
issued such stocks; and c) stocks of a corporation under the control of the insurer shall be valued
using the equity method which is the cost plus or minus the share of the controlling company in
the earnings or losses of the controlled company after acquisition of such stocks.

“(4) The stock of an insurance company shall be valued at the lesser of its market value
or its book value as shown by its last approved audited financial statements or the last report on
examination, whichever is more recent. The book value of a share of common stock of an
insurance company shall be ascertained by dividing (a) the amount of its capital and surplus less
the value of all of its preferred stock, if any, outstanding, by (b) the number of shares of its
common stock issued and outstanding. Notwithstanding the foregoing provisions, an insurer
may, at its option, value its holdings of stock in a subsidiary insurance company in an amount not
less than acquisition cost if such acquisition cost is less than the value determined as
hereinbefore provided.

*(6) Real estate required by foreclosure or by deed in lieu thereof, in the absence of a
recent appraisal deemed by the Commissioner to be reliable, shall not be valued at an amount
greater than the unpaid principal of the defaulted loan at the date of such foreclosure or deed,
together with any taxes and expenses paid or incurred by such insurer at such time in connection
with such acquisition, and the cost of additions or improvements thereafter paid by such insurer
and any amount or amounts thereafter paid by such insurer on any assessments levied for
improvements in connection with the property.

15


“(6) Purchase money mortgages received on dispositions of real property held pursuant
to section [one hundred ninety-eight] shall be valued in an amount equivalent to ninety per
centum of the value of such real property. Purchase money mortgages received on disposition of
real property otherwise held shall be valued in an amount not exceeding ninety per centum of the
value of such real property as determined by an appraisal made by an appraiser at or about the
time of disposition of such real property.

“(7) The stock of a subsidiary of an insurer shall be valued on the basis of the greater of
(i) the value of only such subsidiary of the assets of such subsidiary as would constitute lawful
investments for the insurer if acquired or held directly by the insurer or (ji) such other value
determined pursuant to standards and cumulative limitations, contained in a regulation to be
promulgated by the Commissioner.

*(8) Notwithstanding any provision contained in this section or elsewhere in this chapter,
if the Commissioner find that the interests of policyholders so permit or require, he may permit or
require any class or classes of insurers authorized to do business in this country to value their
investments or any class or classes thereof as of any date heretofore or hereafter in accordance
with any applicable valuation or method.”

SEC, 47. The old Section 209 of The Insurance Code, as amended, is hereby renumbered as
Section 213.

SEC. 48. Section 210 of The Insurance Code, as amended, is hereby renumbered as Section
214 and amended to read as follows:

“Sec. 214. Every life insurance company, doing business in the Philippines, shall annually
make a valuation of all policies, additions thereto, unpaid dividends, and all other obligations
outstanding on the thirty-first day of December of the preceding year. All such valuations shall be
made according to the standard adopted by the company, as prescribed by the Commissioner in
accordance with internationally accepted actuarial standards, which standard shall be stated in its
annual report.

“Such standard of valuation shall be according to a standard table of mortality with
interest at not more than six per centum compound interest. When the preliminary term basis is
Used, the term insurance shall be limited to the first policy year.

“The results of such valuations shall be reported to the Commissioner on or before the
thirtieth day of April of each year accompanied by a swom statement of the company's actuary
certifying to the figures and stating upon what mortality table it is based, upon what rate of
interest the valuation is made, and the methods used in arriving at the result obtained.”

SEC. 49. The old Section 211 of The Insurance Code, as amended, is hereby renumbered as
‘Section 212 and the sections subsequent thereto are accordingly renumbered until Section 218,
which shall be renumbered as Section 222.

‘SEC. 60. Section 219 of The Insurance Code, as amended, is hereby renumbered as Section
223 and amended to read as follows:

“Sec. 223. Any insurance company doing business in the Philippines desiring to cede
their excess risks to foreign insurance or reinsurance companies not authorized to transact
business in the Philippines may do so under such terms and conditions which the Commissioner
may prescribe.

16


"Should any reinsurance agreement be for any reason cancelled or terminated, the
ceding company concemed shall inform the Commissioner in writing of such cancellation or
termination within thirty days from the date of such cancellation or termination of from the date
notice or information of such canceliation or termination is received by such company as the case
may be."

SEC. 1. Section 220 of The Insurance Code, as amended, is hereby renumbered as Section
224 and amended to read as follows:

"Sec, 224. Every insurance company authorized to do business in the Philippines shall
report to the Commissioner on forms prescribed by him the particulars of reinsurance treaties or
any new treaties or changes in existing treaties within six months from their effectivity.”

‘SEC. 52. The old Section 221 of The Insurance Code, as amended, is hereby renumbered as
Section 225 and the sections subsequent thereto are accordingly renumbered until Section 224,
which shall be renumbered as Section 228.

SEC. 53. Section 225 of The Insurance Code, as amended, is hereby renumbered as Section
229 and amended to read as follows:

“Sec. 229. Within thirty days after the approval of the Board of Directors, every insurance
company doing business in the Philippines shall publish in a newspaper of general circulation a
sypnosis of its audited annual financial statements showing fully the conditions of its business
and setting forth its resources and liabilities, in accordance with such form prescribed by the
Commissioner.”

SEC. 64. A new Section 230 of The Insurance Code, as amended, is hereby added to read as.
follows:

“Sec. 230. The Commissioner shall have the authority to make, amend, and rescind
such accounting rules and regulations as may be necessary to carry out the provisions of this
Code, and define accounting, technical and trade terms used in this Code, provided that such
shall be in accordance with internationally accepted accounting standards. Among other things,
the Commissioner may prescribe the form or forms in which required information shall be set
forth, the items or details to be shown in the balance sheet and income statement, and the
methods to be followed in the preparation of accounts, appraisal or valuation of assets and
liabilities, determination of recurring and nonrecurring income, differentiation of investment and
operating income, and in the preparation, where the Commissioner deems jt necessary or
desirable, of consolidated balance sheets or income accounts of any person directly or indirectly
controlling or controlled by the insurance company.”

SEC. 55. The old Section 226 of The Insurance Code, as amended, is hereby renumbered as
Section 231 and the sections subsequent thereto are accordingly renumbered until Section 227,
which shall be renumbered as Section 231

SEC. 56. Section 228 of The Insurance Code, as amended, is hereby renumbered as Section
232 and its paragraphs (g) and (i) are hereby amended to read as follows

*(g) A provision that the insurer will issue to the policyholder for delivery to each person
insured a statement as to the insurance protection to which he is entitled, to whom the insurance
benefits are payable, and the rights set forth in paragraphs (h), (i) and () following;” and

(i) A provision that if the group policy terminates or is amended so as to terminate the

insurance of any class of insured persons, every person insured thereunder at the date of such
termination whose insurance terminates and who has been so insured for five years prior to such

7


termination date shall be entitled to have issued to him by the insurer an individual policy of life
insurance subject to the same limitations as set forth in paragraph (h), except that the group
policy may provide that the amount of such individual policy shall not exceed the amount of the
person's life insurance protection ceasing.”

‘SEC. 57. The old Section 229 of The Insurance Code, as amended, is hereby renumbered as
Section 233 and the sections subsequent thereto are accordingly renumbered until Section 244,
which shall be renumbered as Section 248,

SEC. 58. Anew Section 249 of The Insurance Code, as amended, is hereby added to read as.
follows:

“Sec. 249. It is unlawful to: a) present or cause to be presented any false or fraudulent
claim for the payment of a loss under a contract of insurance; and b) prepare, make or subscribe
any writing with intent to present or use the same, or to allow it to be presented or used in support
of any such claim. Any person who violates this section shall be punished by a fine not
exceeding twice the amount claimed or imprisonment of five years or both at the discretion of the
Court.”

SEC. 59. The old Section 245 of The Insurance Code, as amended, is hereby renumbered as
Section 250 and the sections subsequent thereto are accordingly renumbered until Section 247,
which shall be renumbered as Section 252.

SEC. 60. Section 248 of The Insurance Code, as amended, is hereby renumbered as Section
253 and a new last paragraph is added to read as follows:

"No insurance company, life or non-life, or any professional reinsurer, ordered to be
liquidated by the Commissioner under the provisions hereunder may be rehabilitated or
authorized to transact anew, insurance or reinsurance business, as the case may be.”

SEC. 61. The old Section 249 of The Insurance Code, as amended, is hereby renumbered as
Section 254 and the sections subsequent thereto are accordingly renumbered until Section 270,
which shall be renumbered as Section 276.

SEC. 62. Section 271 of The Insurance Code, as amended, is hereby renumbered as Section
277 and its paragraphs (4) and (8) are amended to read as follows:

“(A) The presence in person or by proxy of five per centum of the members entitled to vote at any
meeting shall constitute a quorum for the transaction of business, including the amendment of the
Articles of Incorporation and/or the by-laws, unless otherwise provided by the by-laws.” and *

“(8) All insurers mutualized under the provisions of this chapter shall be subject to all other
applicable provisions of this Code. The provisions of the Corporation Code shall apply in a
suppletory manner.”

‘SEC. 63. The old Section 272 of The Insurance Code, as amended, is hereby renumbered as
Section 278,

‘SEC. 64. A new Section 279 of The Insurance Code, as amended, is hereby added to read as
follows:

“Sec. 279. A domestic mutual life insurance company doing business in the Philippines
may convert itself into an incorporated stock life insurance company by demutualization. To that
end, it may provide and carry out a pian for the conversion by complying with the requirements of
this Title.

18


“The conversion of a domestic mutual life insurance company to an incorporated stock
life insurance company shall be carried out pursuant to a conversion plan duly approved by the
Commissioner.

“The Commissioner shall promulgate such rules and regulations as he or she may deem
necessary to carry out the provisions of this Title, after due consultation with representatives of
the insurance industry.

“All converted insurers under the provisions of this Title shall be subject to all other
applicable provisions of Code. The provisions of the Corporation Code shall apply in a suppletory
manner.”

SEC. 65. The old Section 273 of The Insurance Code, as amended, is hereby renumbered as
Section 280 and the sections subsequent thereto are accordingly renumbered until Section 275,
which shall be renumbered as Section 282

SEC. 66. Section 276 of The Insurance Code, as amended, is hereby renumbered as Section
283 and amended to read as follows:

“Sec. 283. The Commissioner shall cause an examination of the books and records of
the withdrawing company, and if, upon such examination, the Commissioner finds that the insurer
has no outstanding liabilities to policyholders and creditors in the Philippines, and no policies
tuncancelled; or its primary liabilities have not been reinsured and assumed by another insurance
company authorized to transact business in the Philippines, as required in the preceding section,
it shall cancel the withdrawing company's certificate of authority, if unexpired, and shall permit the
insurer to withdraw. The cost and expenses of all such examination shall be paid as prescribed in
section {four hundred seventeen],”

SEC. 67. The old Section 277 of The Insurance Code, as amended, is hereby renumbered as
Section 264 and the sections subsequent thereto are accordingly renumbered until Section 279,
which shall be renumbered as Section 286

SEC. 68. Section 280 of The Insurance Code, as amended, is hereby renumbered as Section
287 and amended to read as follows:

“Sec. 287. Except as othenwise provided in this Code, no person, partnership, association
or corporation shall transact any business in the Philippines as a professional reinsurer until it
shall have obtained a certificate of authority for that purpose from the Commissioner upon the
application therefor and payment by such person, partnership, association or corporation of the
fees hereinafter prescribed, As used in this Code, the term ‘professional reinsurer” shall mean
‘any person, partnership, association or corporation that transacts solely and exclusively
reinsurance business in the Philippines.

“The Commissioner may refuse to issue a certificate of authority to any partnership,
association or corporation if, in his judgment, such refusal will best promote public interest. No
such certificate of authority shall be granted to any such partnership, association or corporation
unless and until the Commissioner shall have satisfied himself by such examination as he may
make and such evidence as he may require that such partnership, association or corporation is
qualified by the laws of the Philippines to transact business therein as a professional reinsurer.

“Before issuing such certificate of authority of the Commissioner must be satisfied that
the name of the applicant is not that of any other known company transacting insurance or


reinsurance business in the Philippines, or a name so similar as to be calculated to mislead the
public.

“The certificate of authority shall be valid unless sooner revoked or cancelled by the
Commissioner.

“Every such partnership, association, or corporation receiving such certificate of authority
shall be subject to the provisions of this Code and other related laws, and to the jurisdiction and
supervision of the Commissioner.”

‘SEC. 69. Section 261 of The Insurance Code, as amended, is hereby renumbered as Section
288 and amended to read as follows:

“Sec. 288. Any partnership, association, or corporation authorized to transact solely
reinsurance business must have a capitalization of at least two billion pesos, paid in cash, of
which at least fifty per centum consists of paid-up capital and the remaining portion thereof as
contributed surplus, which in no case shall be less than four hundred million pesos or such
capitalization as may be determined by the Secretary of Finance, upon the recommendation of
the Commissioner, Provided, That twenty-five per centum of the paid-up capital must be invested
in securities satisfactory to the Commissioner, consisting of bonds or other evidences of debt of
the Government of the Philippines or its ‘political subdivisions or instrumentalities, or of
government-owned or controlled corporations and entities, including the Bangko Sentral ng
Pilipinas, and deposited with the Commissioner, and the remaining seventy-five per centum in
such other securities as may be allowed and permitted by the Commissioner, which securities
shall at all times be maintained free from any lien or encumbrance: Provided, That the aforesaid
capital requirement is without prejudice to other requirements to be imposed under any risk-
based capital method that may be adopted by the Commissioner: Provided, Finally, That the
provisions of this chapter applicable to insurance companies shall so far as practicable be
likewise applicable to professional reinsurers.”

SEC. 70. The old Section 282 of The Insurance Code, as amended, is hereby renumbered as
Section 289 and the sections subsequent thereto are accordingly renumbered until Section 298,
which shall be renumbered as Section 305,

SEC. 71. Section 299 of The Insurance Code, as amended, is hereby renumbered as Section
306 and its second paragraph is amended to read as follows

“No insurance company doing business in the Philippines, nor any agent thereof, shall
pay any commission or other compensation to any person for services in obtaining insurance,
unless such person shall have first procured from the Commissioner a license to act as an
insurance agent of such company or as an insurance broker as hereinafter provided. An
insurance agent is an independent contractor and not an employee of the company represented.
“Insurance agent” includes agency leader, agency manager, or their equivalent.

“No person shall act as an insurance agent or as an insurance broker in the solicitation or
procurement of applications for insurance, or receive for services in obtaining insurance, any
‘commission or other compensation from any insurance company doing business in the
Philippines, or any agent thereof, without first procuring a license to act from the Commissioner,
which must be renewed every five years thereafter. Such license, which shall ipso facto expire
upon termination of the agent's agreement with the insurance company, shall be issued by the
Commissioner only upon the written application of the person desiring it, such application if for a
license to act as insurance agent, being approved and countersigned by the company such
Person desires to represent, and shall be upon a form prescribed by the Commissioner giving
such information as he may require, and upon payment of the corresponding fee hereinafter
prescribed. The Commissioner shall satisfy himseif as to competence and trustworthiness of the

20


applicant and shall have the right to refuse to issue or renew and to suspend or revoke any such
license in his discretion.”

SEC. 72. A new Section 299-A of The Insurance Code, as amended, is hereby added to read as
follows:

“The provisions of Sections 289 and 300 shall apply to an employee who shall be
engaged to sell insurance products by an insurance company.

“Since the insurance industry is imbued with public interest, the insurance companies
upon approval of the Commission may exercise wide latitude in supervising the activities of their
insurance agents to ensure the protection of the insuring public.”

SEC. 73. The old Section 300 of The Insurance Code, as amended, is hereby renumbered as
Section 307 and the sections subsequent thereto are accordingly renumbered until Section 316,
which shall be renumbered as Section 323.

SEC. 74. Section 317 of The Insurance Code, as amended, is hereby renumbered as Section
324 and its first paragraph is amended to read as follows:

“A certificate of registration issued to a resident agent shall expire on the thirtieth day of
June of the fifth year following its issuance unless it is renewed.”

‘SEC. 75. The old Section 318 of The Insurance Code, as amended, is hereby renumbered as
Section 325 and the sections subsequent thereto are accordingly renumbered until Section 327,
which shall be renumbered as Section 334

‘SEC. 76. Section 326 of The Insurance Code, as amended, is hereby renumbered as Section
335 and amended to read as follows:

“Sec, 335, Any adjuster's license issued hereunder shall be valid until after the thirtieth
day of June of the fifth year following the issuance of such license unless it is renewed; Provided
that, such license shall ipso facto expire upon termination of the independent ‘adjuster's
agreement with the insurance company, or of the public adjuster’s agreement with the insured, as
the case may be.” "

SEC. 77. The old Section 329 of The Insurance Code, as amended, is hereby renumbered as
Section 336 and the sections subsequent thereto are accordingly renumbered until Section 335,
which shall be renumbered as Section 342.

SEC. 78. Section 336 of The Insurance Code, as amended, is hereby renumbered as Section
343 and its second paragraph is amended to read as follows:

“No certificate of registration issued under this title shall be valid after the thirtieth day of
June of the fifth year following its issuance unless it is renewed.”

SEC. 79. The old Section 337 of The Insurance Code, as amended, is hereby renumbered as
Section 344 and the sections subsequent thereto are accordingly renumbered until Section 364,
which shall be renumbered as Section 371

SEC. 80. A new Section 372 of The Insurance Code, as amended, is hereby added to read as
follows:

“Sec. 372. The Commissioner, in consultation with the duly accredited associations
representing the insurance industry, shall adopt and promulgate a code of conduct to promote

2\


integrity, honesty and ethical business practices among insurance agents, distributors and other
intermediaries.”

‘SEC. 81. Anew Title on Bancassurance and Sections 373 to 375 of The Insurance Code, as
amended, are hereby added to read as follows:

“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 Pilipinas 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.

"Sec. 374. Personnel tasked to present and sell insurance products within the bank
premises shall be duly licensed by the Commission and shall be subject to the rules and
regulations of this Act.

"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. 82. Chapter of the Insurance Code, “Security Fund’, consisting of Sections 365 up to 372
is hereby deleted.

SEC. 83. The old Section 373 of the Insurance Code, as amended, is hereby renumbered as
Section 376 and the sections subsequent thereto are accordingly renumbered until Section 412,
which shall be renumbered as Section 415,

SEC. 84. Section 413 of The Insurance Code, as amended, is hereby renumbered as Section
424 and amended to read as follows:

“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. 85. 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. 86. 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 Vill
“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 Act,
‘such separate, distinct and duly authorized trust business shall be referred to as a trust entity.

"Sec. 419. A trust entity shall administer property under its custody with the diligence that
a prudent man would exercise in the conduct of an enterprise of a like character and with similar
aims. No trust entity shall, for the account of the trustor or the beneficiary of the trust, purchase or
acquire property from, or sell, transfer, assign or lend money or property to, or purchase debt
instruments of, any of the departments, directors, officers, stockholders, or employees of the trust
entity, relatives within the first degree of consanguinity or affinity, or the related interests, of such
directors, officers and stockholders, unless prior to the transaction, such transaction is specifically
authorized by the trustor and the relationship between the trustee and the other party involved in
the transaction is fully disclosed to the trustor or beneficiary of the trust. The Insurance
Commission shall promulgate such rules and regulations as may be necessary to regulate the
Conduct of trust business by insurance companies.

"Sec. 420, The trust business and alll funds, properties or securities received by any trust
entity as executor, administrator, trustee, receiver, or depositary shall be kept separate and
distinct from the general business of the insurance company, or allied: insurance company
including all other funds, properties, and assets of such trust entity, The accounts of all such
funds, properties, or securities shall likewise be kept separate and distinct from the accounts of
the general business of the trust entity,

“Sec. 421. Unless otherwise directed by the instrument creating the trust, the lending
and investment of funds and other assets acquired by a trust entity as executor, administrator, or
trustee, shall be limited to loans or investments as may be prescribed by law, and/or the
Insurance Commission.

“Sec. 422. No assets held by a trust entity in its capacity as trustee shall be subject to
any claims other than those of the parties interested in the specific trusts.”

SEC. 87. A new Chapter on Registration, Responsibilities and Oversight of Self-Regulatory
Organizations and Sections 423 to 429 of The Insurance Code, as amended, are hereby added
to read as follows:

“Chapter IX
“REGISTRATION, RESPONSIBILITIES AND OVERSIGHT OF SELF-REGULATORY
ORGANIZATIONS,

“Sec. 423. The Commissioner shall have the power to register as a self-regulatory
organization, or otherwise grant licenses, and to regulate, supervise, examine, suspend ot
otherwise discontinue, as a condition for the operation of organizations whose operations are
elated to or connected with the insurance market such as but not limited to associations of
insurance companies, whether life or non-life, reinsurers, actuaries, agents, brokers, dealers,
mutual benefit associations, trusts, rating agencies, and other persons regulated by the
Commissioner, which are engaged in the business regulated by this Code.

“The Commissioner may prescribe rules and regulations which are necessary or
appropriate in the public interest or for the protection of investors to govern self-regulatory


organizations and other organizations licensed or regulated pursuant to the authority granted in
hereunder, including but not limited to the requirement of cooperation within and among all
participants in the insurance market to ensure transparency and facilitate exchange of
information.

“Sec. 424. An association cannot be registered as a self-regulatory organization unless.
the Commissioner determines that:

“(a)___ The association is so organized and has the capacity to be able to carry out the
Purposes of this Code and to comply with, and to enforce compliance by its members and
Persons associated with its members, with the provisions of this Code, the rules and regulations
thereunder, and the rules of the association,

“(b) ‘The rules of the association, notwithstanding anything in the Corporation Code to
the contrary, provide that

() Any entity possessing the qualifications set out in the rules and none of the
disqualifications may become a member of the association;

(ii) 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 @ member shall himself be deemed to be a member for this.
purpose;

(i) The Board of Directors of the association includes in its composition: (a) the president of
the association and (b) at least 2 independent directors;

(iv) For the equitable allocation of reasonable dues, fees, and other charges among
members and other persons using any facility or system which the association operates,
or controls;

(v) 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;

(vi) That its members and persons associated with its members shall be appropriately
disciplined for violation of any provision of this Code, the rules or regulations thereunder,
or the rules of the association;

(vil) That a fair procedure for the disciplining of members and persons associated with
members, the denial of membership to any person seeking membership therein, the
barring of any person from becoming associated with a member thereof, and the
prohibition or limitation by the association of any person with respect to access to
services offered by the association or a member thereof.

“Sec. 425. A self-regulatory organization may examine and verify the qualifications of an
applicant to become a member in accordance with procedures established by the rules of the
association.

“A self-regulatory organization shall deny membership or condition the membership of, an
entity, if the entity:

(i) Does not meet the standards of financial responsibility, operational capability, training,
‘experience, or competence that are prescribed by the rules of the association: or


(i) Has engaged, and there is a reasonable likelihood it will again engage, in acts or
practices inconsistent with just and equitable principles of fair trade.

“A self-regulatory organization may deny membership to an entity not engaged in a type
of business in which the rules of the association require members to be engaged.

“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:

“(@) 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;
“(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 from 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 regulations 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 in 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 Code, any other law administered by the Commission, the rules or regulations thereunder, or
the rules of the self-regulatory organization. In any disciplinary proceeding by a self-regulatory
organization (other than a summary proceeding pursuant to paragraph (b) of this subsection) the
self-regulatory organization shall bring specific charges, provide notice to the person charged,
afford the person charged with an opportunity to defend against the charges, and keep a record
of the proceedings. A determination to impose a disciplinary sanction shall be supported by a
written statement of the offense, a summary of the evidence presented and a statement of the
sanction imposed.

*(b)  A:self-regulatory organization may summarily: (i) suspend a member, participant
or person associated with a member who has been or is expelled or suspended from any other
self-regulatory organization; or (i) suspend a member who the self-regulatory organization finds
to be in such financial or operating difficulty that the member or participant cannot be permitted to
continue to do business as a member with safety to investors, creditors, other members,
participants or the self-regulatory organization: Provided, That the self-regulatory organization
immediately notifies the Commission of the action taken. Any person aggrieved by a summary
action pursuant to this paragraph shall be promptly afforded an opportunity for a hearing by the
association in accordance with the provisions of paragraph (a) of this subsection. The
Commissioner, by order, may stay a summary action on its own motion or upon application by
any person aggrieved thereby, if the Commissioner determines summarily or after due notice and
hearing (which hearing may consist solely of the submission of affidavits or presentation of oral
arguments) that a stay is consistent with the public interest and the protection of the insuring
public.

"(c) A self-regulatory organization shall promptly notify the Commission of any disciplinary
‘sanction on any member thereof or participant therein, any denial of membership or participation
in such organization, or the imposition of any disciplinary sanction on a person associated with a
member or a bar of such person from becoming so associated. Within thirty (30) days after such
Notice, any aggrieved person may appeal to the Commissioner from, or the Commissioner on its


own motion within such period, may institute review of, the decision of the self-regulatory
‘organization, at the conclusion of which, after due notice and hearing (which may consist solely of
review of the record before the self-regulatory organization), the Commissioner shall affirm,
modify or set aside the sanction. In such proceeding the Commissioner shall determine whether
the aggrieved person has engaged or omitted to engage in the acts and practices as found by the
self-regulatory organization, whether such acts and practices constitute willful violations of this
Code, any other law administered by the Commission, the rules or regulations thereunder, or the
tules of the self-regulatory organization as. specified by such organization, whether such
provisions were applied in a manner consistent with the purposes of this Code, and whether, with
due regard for the public interest and the protection of investors the sanction is excessive or
oppressive.”

‘SEC. 88. A new Chapter on Confidentiality and a new Section 430 of The Insurance Code, as.
amended, are hereby added to read as follows

“Chapter X
“CONFIDENTIALITY

“Sec. 430. All life insurance companies doing business in the Philippines are hereby
required to inform persons applying for life insurance as well as persons proposed for insurance
that as part of the underwriting procedure, a report may be obtained by the insurance company
that will provide it with applicable and relevant information regarding the person's health, mode of
living, and other personal background as gathered from the person himself, from the results of
any required physical examination, from the reports obtained from physicians or other medical
personnel, institutions or facilities where the person had been attended, or, in general, from any
other sources,

“All these information in relation to the person's insurability shall be treated as
confidential and shall not be disclosed by the life insurance company, its directors, officers,
employees, agents, brokers, or other business partners, in any form or manner, unless otherwise
required by law, by lawful order of a Court of competent jurisdiction, or ‘upon the written
permission of the person himself, provided, however, that the insurance company may release
information in its file to other life insurance companies to whom the person may apply for life,
accident or health insurance, or to whom a claim for benefits may be submitted.”

‘SEC. 89. A new Chapter on Taxation and a new Section 431 of The Insurance Code, as
amended, are hereby added to read as follows:

“Chapter XI
“TAXATION

“Sec. 431. The death benefits received under a life insurance policy shall be exempt
from all taxes.”

SEC. 90. Chapter Vill on The Insurance Commissioner of The Insurance Code, as amended, is
hereby renumbered as Chapter XII

SEC. 91. 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 duties 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, to 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;

“b) Approve, reject, suspend revoke or require amendments to registration and licensing
applications provided for by this Code;

“c) Impose sanctions for the violation of laws and the rules, regulations and orders issued
pursuant thereto;

“d) Prepare, approve, amend or repeal rules, regulations and order, and issue opinions
and provide guidance on and supervise compliance with such rules, regulations and orders:

“e) Enlist and aid and support of and/or deputize any and all enforcement agencies of the
Government, civil or military as well as any private institution, corporation, firm, association or
person in the implementation of its powers and functions under this Code;

“f) Issue cease and desist orders to prevent fraud or injury to the insuring public;

“g) Punish for contempt of the Commission, both direct and indirect, in accordance with
the pertinent provisions of and penalliies prescribed by the Rules of Court,

“h) Compel the officers of any registered insurance corporation or association to call
meetings of stockholders or members thereof under its supervisions;

“i) Issue subpoena duces tecum and summon witnesses to appear in any proceedings of
the Commission and in appropriate cases, order the examination, search and seizure of all
documents, papers, files and records, tax returns, and books of accounts of any entity or person
under investigation as may be necessary for the proper disposition of the cases before it, subject
to the provision of existing laws;

'j) Suspend or revoke, after proper notice and hearing the license or certificate of
authority of any entity or person under its regulation, upon any of the grounds provided by law;

“k) Conduct of examination to determine compliance with laws and regulations if the
circumstances so warrant as determined by appropriate rules and regulations;

“1) Regular investigation which shall not be oftener than once a year from the last date of
examination to determine whether an institution is conducting its business on a safe an sound
basis; Provided, That, the deficiencies/irregularities found by or discovered by an audit shall be
immediately addressed;



“m) Inquire into the solvency and liquidity of the institutions under its supervision and
enforce prompt corrective action; and

“k) Exercise such other powers as may be provided by law as well as those which may
be implied from, or which are necessary or incidental to the carrying out of, the express powers
granted the Commission to achieve the objectives and purposes of these laws.”

SEC. 92. The old Section 415 of The Insurance Code, as amended, is hereby renumbered as
Section 433 and the sections subsequent thereto are accordingly renumbered until Section 424,
which shall be renumbered as Section 442,

‘SEC. 93. This Act shall also amend the section numbers referred to in The Insurance Code to
reflect the renumbering resulting from the amendments brought about by this Act.

SEC. 94. Separability Clause. If any provision or part hereof, is held invalid or unconstitutional,
the remainder of the law or the provision not otherwise affected shall remain. valid and subsisting,

SEC. 96. Repealing Clause. All laws, decrees, orders, rules and regulations or parts thereof,
inconsistent with this Act are hereby amended or modified accordingly.

SEC. 96. Effectivity. This Act shall take effect 15 days following its publication in a newspaper of
general circulation, provided that the tax incentives granted hereunder shall take effect on

Approved,