EIGHTEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES)
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez
6292

House Bill No.
EXPLANATORY NOTE

The insurance industry is one which greatly affects national interests and our
economy. Under Republic Act 10607 or the new Insurance Code, the Insurance
Commissioner is given a wide array of powers and duties which basically means that he is
the one regulating the entire insurance industry.

The law provides that, “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 238 hereof and to provide for the licensing of persons selling
such contracts, and to issue such reasonable rules and regulations governing the same.”

There is a need to create a collegial body to regulate the insurance industry as it will
bring stability in the Commission as its actions in setting policies and guidelines, as well as
the exercise of its administrative and adjudicatory powers, would now require a majority vote
of its members,

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

Rl B. RODRI


EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES }
First Regular Session

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez
6292

House Bill No.

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

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

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

“SECTION 437. THIS CODE SHALL BE ADMINISTERED BY THE
INSURANCE COMMISSION (HEREINAFTER REFERRED TO AS THE “COMMISSION")
AS A_COLLEGIAL BODY, COMPOSED OF A CHAIRPERSON AND (4)
COMMISSIONERS, APPOINTED BY THE PRESIDENT FOR A TERM OF (6) SIX YEARS
EACH AND WHO SHALL SERVES AS SUCH UNTIL THEIR SUCCESSOR SHALL HAVE
BEEN APPOINTED AND QUALIFIED. A COMMISSIONER APPOINTED TO FILL A
VACANCY OCCURRING PRIOR TO THE EXPIRATION OF THE TERM FOR WHICH
HIS/HER PREDECESSOR WAS APPOINTED, SHALL SERVE ONLY FOR THE
UNEXPIRED PORTION OF THEIR TERMS. UNLESS THE CONTEXT INDICATES
OTHERWISE, THE TERM "COMMISSIONER" INCLUDES THE CHAIRPERSON. ALL
PREVIOUS REFERENCES TO THE “INSURANCE COMMISSIONER” IN THE CODE
‘SHALL HEREBY REFER TO THE “COMMISSION”.

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

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

THE SALARY OF THE CHAIRPERSON AND THE COMMISSIONERS SHALL
BE FIXED BY THE PRESIDENT OF THE PHILIPPINES BASED ON THE OBJECTIVE
CLASSIFICATION SYSTEM AT A SUM COMMENSURATE IMPORTANCE AND
RESPONSIBILITIES ATTACHED TO THE POSITION.

THE COMMISSION SHALL HOLD MEETINGS AT LEAST ONCE A WEEK
FOR THE CONDUCT OF BUSINESS OR AS OFTEN AS MAY BE NECESSARY UPON
THE CALL OF THE CHAIRPERSON OR UPON THE REQUEST OF (3)
COMMISSIONERS. THE NOTICE OF THE MEETING SHALL BE GIVEN TO ALL
COMMISSIONERS AND THE PRESENCE OF THREE (3) COMMISSIONERS SHALL



CONSTITUTE A QUORUM. IN THE ABSENCE OF THE CHAIRPERSON, THE MOST
SENIOR COMMISSIONER SHALL ACT AS PRESIDING OFFICER OF THE MEETING.

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

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

SEC. 2. A new section, Section 437-A, is hereby inserted to Republic Act No. 10607 to read
as follows:

“Section 437-A. The COMMISSION shall have the duty to see that all laws relating to
insurance, insurance companies and other insurance matters, mutual benefit associations,
and trusts for charitable uses are faithfully executed and to perform the duties imposed by
this Code, and shall, notwithstanding any existing laws to the contrary, have sole and
exclusive authority to regulate the issuance and sale of variable contracts as defined in
Section 238 hereof and to provide for the licensing of persons selling such contracts, and to
issue such reasonable rules and regulations governing the same.

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

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

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

1K

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

2K

The Commission shall indemnify the COMMISSIONERS and other officials of
the Commission, including personnel performing supervision and examination functions, for
all costs and expenses reasonably incurred by such persons in connection with any civil or
criminal actions, suits or proceedings to which they may be made a party to by the reason of
the performance of their duties and functions, unless they are finally adjudged in such
actions, suits or proceedings to be liable for negligence or misconduct

2K

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

SEC. 3. Section 438 of Republic Act No. 10607 is hereby amended to read as follows
“Section 438. In addition to the administrative sanctions provided elsewhere in this
Code, the Insurance COMMISSION is hereby authorized, at ITS discretion, to impose upon
insurance companies, their directors and/or officers and/or agents, for any willful failure or
refusal to comply with, or violation of any provision of this Code, or any order, instruction,


regulation, or ruling of the Insurance COMMISSION, or any commission or irregularities,
and/or conducting business in an unsafe or unsound manner as may be determined by the
Insurance COMMISSION, the following:

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

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

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

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

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

"The authority to adjudicate granted to the COMMISSION under this section shall be
concurrent with that of the civil courts, but the filing of a complaint with the COMMISSION
shall preclude the civil courts from taking cognizance of a suit involving the same subject
matter.

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

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

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

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

SEC. 5. Separability Clause. — If any provision of this Act shall be held unconstitutional or
invalid, the other provisions not otherwise affected shall remain in full force and effect.

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


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

Approved,