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THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Section 1 T!is "ecree s!all #e $no%n as &T!

e Ins'rance Co"e( )a%s *overnin* ins'rance contracts 1 T!e Ins'rance Co"e + T!e NCC , General -rinci-les on ins'rance -revailin* in t!e US *overn ins'rance contracts . S-ecial )a%s Section + /!enever 'se" in t!is Co"e0 t!e 1ollo%in* ter2s s!all !ave t!e res-ective 2eanin*s !ereina1ter set 1ort! or in"icate"0 'nless t!e conte3t ot!er%ise re4'ires5 (1) A 6contract o1 ins'rance6 is an a*ree2ent %!ere#7 one 'n"erta$es 1or a consi"eration to in"e2ni17 anot!er a*ainst loss0 "a2a*e or lia#ilit7 arisin* 1ro2 an 'n$no%n or contin*ent event A contract o1 s'ret7s!i- s!all #e "ee2e" to #e an ins'rance contract0 %it!in t!e 2eanin* o1 t!is Co"e0 onl7 i1 2a"e #7 a s'ret7 %!o or %!ic!0 as s'c!0 is "oin* an ins'rance #'siness as !ereina1ter -rovi"e" (+) T!e ter2 6"oin* an ins'rance #'siness6 or 6transactin* an ins'rance #'siness60 %it!in t!e 2eanin* o1 t!is Co"e0 s!all incl'"e (a) 2a$in* or -ro-osin* to 2a$e0 as ins'rer0 an7 ins'rance contract8 (#) 2a$in* or -ro-osin* to 2a$e0 as s'ret70 an7 contract o1 s'ret7s!i- as a vocation an" not as 2erel7 inci"ental to an7 ot!er le*iti2ate #'siness or activit7 o1 t!e s'ret78 (c) "oin* an7 $in" o1 #'siness0 incl'"in* a reins'rance #'siness0 s-eci1icall7 reco*ni9e" as constit'tin* t!e "oin* o1 an ins'rance #'siness %it!in t!e 2eanin* o1 t!is Co"e8 (") "oin* or -ro-osin* to "o an7 #'siness in s'#stance e4'ivalent to an7 o1 t!e 1ore*oin* in a 2anner "esi*ne" to eva"e t!e -rovisions o1 t!is Co"e SPC )a% >atc! +?1. In t!e a--lication o1 t!e -rovisions o1 t!is Co"e t!e 1act t!at no -ro1it is "erive" 1ro2 t!e 2a$in* o1 ins'rance contracts0 a*ree2ents or transactions or t!at no se-arate or "irect consi"eration is receive" t!ere1or0 s!all not #e "ee2e" concl'sive to s!o% t!at t!e 2a$in* t!ereo1 "oes not constit'te t!e "oin* or transactin* o1 an ins'rance #'siness (,) As 'se" in t!is co"e0 t!e ter2 6Co22issioner6 2eans t!e 6Ins'rance Co22issioner6 Ele2ents o1 t!e contract o1 ins'rance 1 T!e ins're" -ossesses an interest o1 so2e $in" s'sce-ti#le o1 -ec'niar7 esti2ation0 $no%n as an ins'ra#le interest + T!e ins're" is s'#:ect to a ris$ o1 loss t!ro'*! t!e "estr'ction or i2-air2ent o1 t!at interest #7 t!e !a--enin* o1 "esi*nate" -erils , T!e ins'rance ass'2es t!e ris$ o1 loss . S'c! ass'2-tion is -art o1 a *eneral sc!e2e to "istri#'te act'al losses a2on* a lar*e *ro'- o1 -ersons #earin* so2e%!at si2ilar ris$s ; As consi"eration 1or t!e ins'rer<s -ro2ise0 t!e ins're" 2a$es a rata#le contri#'tion0 calle" a -re2i'20 to a *eneral ins'rance 1'n" = Ins'rance is a ris$-"istri#'tin* "evice A contract o1 ins'rance0 !o%ever0 is not a 2ere ris$-s!i1tin* "evice #'t is a ris$ "istri#'tin* "evice

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Nat're an" c!aracteristics o1 ins'rance contract 1 It is an aleator7 #'t not a %a*erin* contract + It is a contract o1 in"e2nit7 , Its is a -ersona contract . It is a 'nilateral contract ; It is a con"itional contract G'arant70 cre"it an" 1i"elit7 ins'rance Re4'isites 1or vali"it7 o1 ins'rance contract 1 Consent8 + O#:ect or s'#:ect 2atter8 , Ca'se8 . Pa72ent o1 -re2i'28 ; T!e contract 2'st not #e contrar7 to la%0 2orals0 *oo" c'sto2s0 -'#lic or"er0 or -'#lic -olic7 @in"s o1 Ins'rance Contracts 1 Aarine Ins'rance B an ins'rance a*ainst ris$s connecte" %it! navi*ation to %!ic! a s!i-0 car*o0 1rei*!ta*e0 -ro1its0 or ot!er ins'ra#le interest in 2ova#le -ro-ert7 2a7 #e e3-ose" "'rin* a certain vo7a*e or a 1i3e" -erio" o1 ti2e + Cire Ins'rance B ins'rance a*ainst loss or i2-air2ent o1 e3istin* or e3-ecte" -ro-ert7 interest "'e to 1ire Reins'rance B t!e Ins'rance Co"e "e1ines t!is ter2 as one #7 %!ic! an ins'rer -roc'res a t!ir" -erson to ins're !i2 a*ainst loss or lia#ilit7 #7 reason o1 s'c! ori*inal ins'rance , )i1e Ins'rance B ins'rance 2a"e -a7a#le on t!e "eat! o1 t!e -erson or on !is s'rvivin* a s-eci1ie" -erio"0 or ot!er%ise contin*entl7 on t!e contin'ance or cessation o1 li1e . Acci"ent Ins'rance B ins'rance a*ainst loss o1 earnin* -o%er "'e to acci"ent

1. G'arant7 ins'rance B one %!ic! -rotects t!e ins're" a*ainst loss


"'e to t!e non--er1or2ance o1 contracts to %!ic! !e is a -art7

2. Cre"it ins'rance B one %!ic! -rotects t!e ins're" a*ainst loss "'e
to t!e insolvenc7 o1 "e#tors

3. Ci"elit7 ins'rance B one %!ic! -rotects t!e ins'rance a*ainst loss


"'e to t!e "e1alcations o1 e2-lo7ees or a*ents Section , An7 contin*ent or 'n$no%n event0 %!et!er -ast or 1't're0 %!ic! 2a7 "a2ni17 a -erson !avin* an ins'ra#le interest0 or create a lia#ilit7 a*ainst !i20 2a7 #e ins're" a*ainst0 s'#:ect to t!e -rovisions o1 t!is c!a-ter T!e consent o1 t!e !'s#an" is not necessar7 1or t!e vali"it7 o1 an ins'rance -olic7 ta$en o't #7 a 2arrie" %o2an on !er li1e or t!at o1 !er c!il"ren

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) An7 2inor o1 t!e a*e o1 ei*!teen 7ears or 2ore0 2a70 not%it!stan"in* s'c! 2inorit70 contract 1or li1e0 !ealt! an" acci"ent ins'rance0 %it! an7 ins'rance co2-an7 "'l7 a't!ori9e" to "o #'siness in t!e P!ili--ines0 -rovi"e" t!e ins'rance is ta$en on !is o%n li1e an" t!e #ene1iciar7 a--ointe" is t!e 2inorDs estate or t!e 2inorDs 1at!er0 2ot!er0 !'s#an"0 %i1e0 c!il"0 #rot!er or sister T!e 2arrie" %o2an or t!e 2inor !erein allo%e" to ta$e o't an ins'rance -olic7 2a7 e3ercise all t!e ri*!ts an" -rivile*es o1 an o%ner 'n"er a -olic7 All ri*!ts0 title an" interest in t!e -olic7 o1 ins'rance ta$en o't #7 an ori*inal o%ner on t!e li1e or !ealt! o1 a 2inor s!all a'to2aticall7 vest in t!e 2inor '-on t!e "eat! o1 t!e ori*inal o%ner0 'nless ot!er%ise -rovi"e" 1or in t!e -olic7 @in"s o1 ins'ra#le ris$ B t!e ris$ t!at 2a7 #e ins're" a*ainst are an7 contin*ent or 'n$no%n event0 -ast or 1't're = T!is see2 to #e t!e sa2e as t!e ter2 &con"ition( in t!e Civil Co"e0 'n"er %!ic! a &con"ition( is a 1't're event t!at 2a7 or 2a7 not !a--en0 or a -ast event t!at is 'n$no%n to t!e -arties Section . T!e -rece"in* section "oes not a't!ori9e an ins'rance 1or or a*ainst t!e "ra%in* o1 an7 lotter70 or 1or or a*ainst an7 c!ance or tic$et in a lotter7 "ra%in* a -ri9e Section ; All $in"s o1 ins'rance are s'#:ect to t!e -rovisions o1 t!is c!a-ter so 1ar as t!e -rovisions can a--l7

Title + PARTIES TO THE CONTRACT Section 6 Ever7 -erson0 -artners!i-0 association0 or cor-oration "'l7 a't!ori9e" to transact ins'rance #'siness as else%!ere -rovi"e" in t!is co"e0 2a7 #e an ins'rer Section E An7one e3ce-t a -'#lic ene27 2a7 #e ins're" P'#lic Ene27 B "esi*nates a nation %it! %!o2 t!e P!ili--ines is at %ar0 an" incl'"es ever7 2e2#er o1 t!at nation Insane -ersons as t!e ins're" B in accor"ance %it! *eneral la% o1 contracts0 ins'rance contracts0 2a"e %it! insane -ersons are voi"a#le at t!e o-tion o1 t!e insane -art7 (2a7 invali"ate t!e contract at t!e o-tion o1 t!e insane -art7 ) Section F Unless t!e -olic7 ot!er%ise -rovi"es0 %!ere a 2ort*a*or o1 -ro-ert7 e11ects ins'rance in !is o%n na2e -rovi"in* t!at t!e loss s!all #e -a7a#le to t!e 2ort*a*ee0 or assi*ns a -olic7 o1 ins'rance to a 2ort*a*ee0 t!e ins'rance is "ee2e" to #e '-on t!e interest o1 t!e 2ort*a*or0 %!o "oes not cease to #e a -art7 to t!e ori*inal contract0 an" an7 act o1 !is0 -rior to t!e loss0 %!ic! %o'l" ot!er%ise avoi" t!e ins'rance0 %ill !ave t!e sa2e e11ect0 alt!o'*! t!e -ro-ert7 is in t!e !an"s o1 t!e 2ort*a*ee0 #'t an7 act %!ic!0 'n"er t!e contract o1 ins'rance0 is to #e -er1or2e" #7 t!e 2ort*a*or0 2a7 #e -er1or2e" #7 t!e 2ort*a*ee t!erein na2e"0 %it! t!e sa2e e11ect as i1 it !a" #een -er1or2e" #7 t!e 2ort*a*or ('- to t!e e3tent o1 t!e a2o'nt or val'e o1 t!e 2ort*a*e )

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) o1 a li1e nee" not !ave an7 le*al #asis %!atever + Ass'2in* t!at ins'ra#le interest e3ists0 t!ere is no li2it to t!e a2o'nt o1 ins'rance t!at 2a7 #e ta$en '-on li1e 'nless t!e ins'ra#le !as its ori*in in co22ercial relation s'c! as t!e ins'ra#le interest o1 a cre"itor in t!e li1e o1 !is "e#tor , It is eno'*! t!at t!e ins'ra#le interest e3ists at t!e ti2e %!en t!e contract is 2a"e #'t it nee" not e3ist at t!e ti2e o1 loss

Section G I1 an ins'rer assents to t!e trans1er o1 an ins'rance 1ro2 a 2ort*a*or to a 2ort*a*ee0 an"0 at t!e ti2e o1 !is assent0 i2-oses 1'rt!er o#li*ation on t!e assi*nee0 2a$in* a ne% contract %it! !i20 t!e act o1 t!e 2ort*a*or cannot a11ect t!e ri*!ts o1 sai" assi*nee Title , INSURA>)E INTEREST Section 1? Ever7 -erson !as an ins'ra#le interest in t!e li1e an" !ealt!5 (a) O1 !i2sel10 o1 !is s-o'se an" o1 !is c!il"ren8 (#) O1 an7 -erson on %!o2 !e "e-en"s %!oll7 or in -art 1or e"'cation or s'--ort0 or in %!o2 !e !as a -ec'niar7 interest8 (c) O1 an7 -erson 'n"er a le*al o#li*ation to !i2 1or t!e -a72ent o1 2one70 or res-ectin* -ro-ert7 or services0 o1 %!ic! "eat! or illness 2i*!t "ela7 or -revent t!e -er1or2ance8 an" (") O1 an7 -erson '-on %!ose li1e an7 estate or interest veste" in !i2 "e-en"s Distinction #et%een ins'ra#le interest in li1e an" -ro-ert7 ins'rance )ICE INSURANCE (Unli covera*e) PROPERTH INSURANCE (e4'ivalent to ins Covera*e) 1 T!e e3-ectation o1 #ene1it to #e 1 T!e e3-ectation o1 #ene1it 2'st "erive" 1ro2 t!e contin'e" e3istence !ave a le*al #asis SPC )a% >atc! +?1.

+ T!e act'al val'e o1 t!e interest t!ereon is t!e li2it o1 t!e ins'rance t!at can vali"l7 #e -lace" t!ereon

, An interest ins're" 2'st e3ist %!en t!e ins'rance ta$es e11ect an" %!en t!e loss occ'rs #'t nee" not e3ist in t!e 2eanti2e

= Aere relations!i- !o%ever close0 is not s'11icient alone to constit'te an ins'ra#le interest /!en ins'ra#le interest e3ists in li1e o1 ot!ers B 'n"er t!e la%0 ever7 -erson !as an ins'ra#le interest in t!e li1e5 1 O1 an7 -erson on %!o2 !e "e-en"s %!oll7 or in -art 1or e"'cation or s'--ort8 + O1 an7 -erson 'n"er a le*al o#li*ation to !i2 1or t!e -a72ent o1 2one7 or res-ectin* -ro-ert7 or services o1 %!ic! "eat! or illness 2i*!t "ela7 or -revent t!e -er1or2ance8 an" , O1 an7 -erson '-on %!ose li1e an7 estate or interest veste" in !i2 "e-en"s

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Section 11 T!e ins're" s!all !ave t!e ri*!t to c!an*e t!e #ene1iciar7 !e "esi*nate" in t!e -olic70 'nless !e !as e3-ressl7 %aive" t!is ri*!t in sai" -olic7 Section 1+ T!e interest o1 a #ene1iciar7 in a li1e ins'rance -olic7 s!all #e 1or1eite" %!en t!e #ene1iciar7 is t!e -rinci-al0 acco2-lice0 or accessor7 in %ill1'll7 #rin*in* a#o't t!e "eat! o1 t!e ins're"8 in %!ic! event0 t!e nearest relative o1 t!e ins're" s!all receive t!e -rocee"s o1 sai" ins'rance i1 not ot!er%ise "is4'ali1ie" Section 1, Ever7 interest in -ro-ert70 %!et!er real or -ersonal0 or an7 relation t!ereto0 or lia#ilit7 in res-ect t!ereo10 o1 s'c! nat're t!at a conte2-late" -eril 2i*!t "irectl7 "a2ni17 t!e ins're"0 is an ins'ra#le interest Classi1ication o1 ins'ra#le interest An ins'ra#le interest e3ists in t!e 1ollo%in* cases5 1 /!en t!e ins're" -ossesses a le*al title to t!e -ro-ert7 ins're"0 %!et!er veste" or conti*ent0 "e1easi#le or in"e1easi#le + /!en !e !as an e4'ita#le title o1 %!atever c!aracter an" in %!atever 2anner ac4'ire" , /!en !e -ossesses a 4'ali1ie" -ro-ert7 or -ossessor7 ri*!t in t!e s'#:ect o1 t!e ins'rance0 s'c! as t!at o1 a #ailee . /!en !e !as 2ere -ossession or ri*!t o1 -ossession ; /!en !e !as neit!er -ossession o1 t!e -ro-ert7 nor an7 ot!er le*al interest in it #'t stan"s in s'c! relation %it! res-ect to it t!at !e 2a7 s'11er 1ro2 its "estr'ction0 loss o1 a le*al ri*!t "e-en"ent '-on its contin'e" e3istence Section 1. An ins'ra#le interest in -ro-ert7 2a7 consist in5 a # c An e3istin* interest8 An inc!oate ri*!t 1o'n"e" on an e3istin* interest8 or An e3-ectanc7 co'-le" %it! an e3istin* interest in t!at o't o1 %!ic! t!e e3-ectanc7 arises

= As to e3-ectanc70 an a*ent !as an ins'ra#le interest in e3-ecte" co22issions8 a s!i-o%ner in e3-ecte" 1rei*!ta*e an" a 1ar2er in 1't're cro-s *ro%n on lan" o%ne" #7 !i2 Section 1; A carrier or "e-ositor7 o1 an7 $in" !as an ins'ra#le interest in a t!in* !el" #7 !i2 as s'c!0 to t!e e3tent o1 !is lia#ilit7 #'t not to e3cee" t!e val'e t!ereo1 Section 16 A 2ere contin*ent or e3-ectant interest in an7t!in*0 not 1o'n"e" on an act'al ri*!t to t!e t!in*0 nor '-on an7 vali" contract 1or it0 is not ins'ra#le (Ta$e Note) Section 1E T!e 2eas're o1 an ins'ra#le interest in -ro-ert7 is t!e e3tent to %!ic! t!e ins're" 2i*!t #e "a2ni1ie" #7 loss or in:'r7 t!ereo1 Section 1F No contract or -olic7 o1 ins'rance on -ro-ert7 s!all #e en1orcea#le e3ce-t 1or t!e #ene1it o1 so2e -erson !avin* an ins'ra#le interest in t!e -ro-ert7 ins're" Section 1G An interest in -ro-ert7 ins're" 2'st e3ist %!en t!e ins'rance ta$es e11ect0 an" %!en t!e loss occ'rs0 #'t not e3ist in t!e
5

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) 2eanti2e8 an" interest in t!e li1e or !ealt! o1 a -erson ins're" 2'st e3ist %!en t!e ins'rance ta$es e11ect0 #'t nee" not e3ist t!erea1ter or %!en t!e loss occ'rs (I2-ortant) Section +? E3ce-t in t!e cases s-eci1ie" in t!e ne3t 1o'r sections0 an" in t!e cases o1 li1e0 acci"ent0 an" !ealt! ins'rance0 a c!an*e o1 interest in an7 -art o1 a t!in* ins're" 'nacco2-anie" #7 a corres-on"in* c!an*e in interest in t!e ins'rance0 s's-en"s t!e ins'rance to an e4'ivalent e3tent0 'ntil t!e interest in t!e t!in* an" t!e interest in t!e ins'rance are veste" in t!e sa2e -erson Section +1 A c!an*e in interest in a t!in* ins're"0 a1ter t!e occ'rrence o1 an in:'r7 %!ic! res'lts in a loss0 "oes not a11ect t!e ri*!t o1 t!e ins're" to in"e2nit7 1or t!e loss Section ++ A c!an*e o1 interest in one or 2ore several "istinct t!in*s0 se-aratel7 ins're" #7 one -olic70 "oes not avoi" t!e ins'rance as to t!e ot!ers Section +, A c!an*e on interest0 #7 %ill or s'ccession0 on t!e "eat! o1 t!e ins're"0 "oes not avoi" an ins'rance8 an" !is interest in t!e ins'rance -asses to t!e -erson ta$in* !is interest in t!e t!in* ins're" Section +. A trans1er o1 interest #7 one o1 several -artners0 :oint o%ners0 or o%ners in co22on0 %!o are :ointl7 ins're"0 to t!e ot!ers0 "oes not avoi" an ins'rance even t!o'*! it !as #een a*ree" t!at t!e ins'rance s!all cease '-on an alienation o1 t!e t!in* ins're" Section +; Ever7 sti-'lation in a -olic7 o1 ins'rance 1or t!e -a72ent o1 loss %!et!er t!e -erson ins're" !as or !as not an7 interest in t!e -ro-ert7 ins're"0 or t!at t!e -olic7 s!all #e receive" as -roo1 o1 s'c! interest0 an" ever7 -olic7 e3ec'te" #7 %a7 o1 *a2in* or %a*erin*0 is voi"

Title . B CONCEA)AENT Section +6 A ne*lect to co22'nicate t!at %!ic! a -art7 $no%s an" o'*!t to co22'nicate0 is calle" a conceal2ent (Ta$e Note) Re4'isites to constit'te conceal2ent (Ta$e Note) 1 + , . T!e T!e T!e T!e -art7 concealin* 2'st !ave $no%le"*e o1 t!e 1act conceale" 1act conceale" 2'st #e 2aterial to t!e ris$ -art7 concealin* 2a$es no %arrant7 as to t!e 1act conceale" ot!er !as not t!e 2eans ascertainin*

Section +E A conceal2ent entitles t!e in:'re" -art7 to rescin" a contract o1 ins'rance (Ta$e Note) R'les in vario's :'ris"iction (Ta$e Note) 1 T!e En*lis! R'le B t!e ins're" is 'n"er o#li*ation to "isclose to t!e ins'rer ever7 2aterial 1act t!at is0 or0 in t!e co'rse o1 #'siness0 o'*!t to #e $no%n to t!e ins're" + T!e A2erican R'le B 'n"er t!e A2erican a't!orities0 t!e r'le 2a7 #e no% #e consi"ere" as %ell-settle" t!at t!e 1ail're on t!e -art o1 t!e ins're" to "isclose an7 1act0 t!o'*! clearl7 2aterial0 %ill not voi" a 1ire0 cas'alt70 or li1e -olic7 'nless s'c! non-"isclos're %as 1ra'"'lent an" a("r7( an" &inlan" 2arine( -olic7 li$e%ise is not s'#:ect to t!e strict r'le a--lica#le to 2arine ins'rance *enerall7 , T!e Cali1ornia R'le B 'n"er t!e Cali1ornia stat'te0 conceal2ent is "e1ine" as ne*lect to co22'nicate t!at %!ic! a -art7 $no%s an" o'*!t to &co22'nicate0( an" it is 1'rt!er -rovi"e" t!at conceal2ent0 %!et!er
6

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) intentional or 'nintentional0 entitles t!e in:'re" -art7 to rescin" Un"er t!is stat'te0 t!e ins'rer nee" not -rove 1ra'" in or"er to rescin" (R'le 1ollo%e" in t!e P!ili--ines ) Section +F Eac! -art7 to a contract o1 ins'rance 2'st co22'nicate" to t!e ot!er0 in *oo" 1ait!0 all 1acts %it!in !is $no%le"*e %!ic! are 2aterial to t!e contract an" as to %!ic! !e 2a$es no %arrant70 an" %!ic! t!e ot!er !as not t!e 2eans o1 ascertainin* = D't7 to "isclose B Contracts o1 ins'rance !ave #een "ee2e"0 #roa"l7 s-ea$in*0 to #e contracts '# erri2ae 1i"ei0 t!at is0 o1 t!e 't2ost *oo" 1ait!0 an" t!e a--licant 1or ins'rance is #o'n" to "eal 1airl7 %it! t!e ins'rer in t!e "isclos're o1 1acts 2aterial to t!e ris$ Section +G An intentional an" 1ra'"'lent o2ission0 on t!e -art o1 one ins're"0 to co22'nicate in1or2ation o1 2atters -rovin* or ten"in* to -rove t!e 1alsit7 o1 a %arrant70 entitles t!e ins'rer to rescin" Section ,? Neit!er -art7 to a contract o1 ins'rance is #o'n" to co22'nicate in1or2ation o1 t!e 2atters 1ollo%in*0 e3ce-t in ans%er to t!e in4'iries o1 t!e ot!er5 (a) T!ose %!ic! t!e ot!er $no%s8 (#) T!ose %!ic!0 in t!e e3ercise o1 or"inar7 care0 t!e ot!er o'*!t to $no%0 an" o1 %!ic! t!e 1or2er !as no reason to s'--ose !i2 i*norant8 (c) T!ose o1 %!ic! t!e ot!er %aives co22'nication8 la%-!i1 net (") T!ose %!ic! -rove or ten" to -rove t!e e3istence o1 a ris$ e3cl'"e" #7 a %arrant70 an" %!ic! are not ot!er%ise 2aterial8 an" SPC )a% >atc! +?1. Section ,6 A re-resentation 2a7 #e oral or %ritten (Ta$e Note) (e) T!ose %!ic! relate to a ris$ e3ce-te" 1ro2 t!e -olic7 an" %!ic! are not ot!er%ise 2aterial (Ta$e Note) Section ,1 Aaterialit7 is to #e "eter2ine" not #7 t!e event0 #'t solel7 #7 t!e -ro#a#le an" reasona#le in1l'ence o1 t!e 1acts '-on t!e -art7 to %!o2 t!e co22'nication is "'e0 in 1or2in* !is esti2ate o1 t!e "isa"vanta*es o1 t!e -ro-ose" contract0 or in 2a$in* !is in4'iries Section ,+ Eac! -art7 to a contract o1 ins'rance is #o'n" to $no% all t!e *eneral ca'ses %!ic! are o-en to !is in4'ir70 e4'all7 %it! t!at o1 t!e ot!er0 an" %!ic! 2a7 a11ect t!e -olitical or 2aterial -erils conte2-late"8 an" all *eneral 'sa*es o1 tra"e Section ,, T!e ri*!t to in1or2ation o1 2aterial 1acts 2a7 #e %aive"0 eit!er #7 t!e ter2s o1 t!e ins'rance or #7 ne*lect to 2a$e in4'ir7 as to s'c! 1acts0 %!ere t!e7 are "istinctl7 i2-lie" in ot!er 1acts o1 %!ic! in1or2ation is co22'nicate" Section ,. In1or2ation o1 t!e nat're or a2o'nt o1 t!e interest o1 one ins're" nee" not #e co22'nicate" 'nless in ans%er to an in4'ir70 e3ce-t as -rescri#e" #7 section 1i1t7-one Section ,; Neit!er -art7 to a contract o1 ins'rance is #o'n" to co22'nicate0 even '-on in4'ir70 in1or2ation o1 !is o%n :'"*2ent '-on t!e 2atters in 4'estion Title ; B REPRESENTATIONS

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Section ,E A re-resentation 2a7 #e 2a"e at t!e ti2e o10 or #e1ore0 iss'ance o1 t!e -olic7 (Ta$e Note) Re-resentation B state2ents 2a"e to *ive in1or2ation to t!e ins'rer an" ot!er%ise in"'ce !i2 to enter into t!e ins'rance contract Aisre-resentation B state2ent as a 1act o1 so2et!in* %!ic! is 'ntr'e an" %!ic! t!e ins're" states %it! t!e $no%le"*e t!at it is 'ntr'e an" %it! an intent to "eceive0 or %!ic! !e states -ositivel7 as tr'e %it!o't $no%in* it to #e tr'e an" %!ic! !as a ten"enc7 to 2islea"0 %!ere s'c! 1act in eit!er case is 2aterial to t!e ris$ Section ,F T!e lan*'a*e o1 a re-resentation is to #e inter-rete" #7 t!e sa2e r'les as t!e lan*'a*e o1 contracts in *eneral Section ,G A re-resentation as to t!e 1't're is to #e "ee2e" a -ro2ise0 'nless it a--ears t!at it %as 2erel7 a state2ent o1 #elie1 or e3-ectation Section .? A re-resentation cannot 4'ali17 an e3-ress -rovision in a contract o1 ins'rance0 #'t it 2a7 4'ali17 an i2-lie" %arrant7 Section .1 A re-resentation 2a7 #e altere" or %it!"ra%n #e1ore t!e ins'rance is e11ecte"0 #'t not a1ter%ar"s Section .+ A re-resentation 2'st #e -res'2e" to re1er to t!e "ate on %!ic! t!e contract *oes into e11ect Section ., /!en a -erson ins're" !as no -ersonal $no%le"*e o1 a 1act0 !e 2a7 nevert!eless re-eat in1or2ation %!ic! !e !as '-on t!e s'#:ect0 an" %!ic! !e #elieves to #e tr'e0 %it! t!e e3-lanation t!at !e "oes so on t!e in1or2ation o1 ot!ers8 or !e 2a7 s'#2it t!e in1or2ation0 in its %!ole e3tent0 SPC )a% >atc! +?1. to t!e ins'rer8 an" in neit!er case is !e res-onsi#le 1or its tr't!0 'nless it -rocee"s 1ro2 an a*ent o1 t!e ins're"0 %!ose "'t7 it is to *ive t!e in1or2ation Section .. A re-resentation is to #e "ee2e" 1alse %!en t!e 1acts 1ail to corres-on" %it! its assertions or sti-'lations Section .; I1 a re-resentation is 1alse in a 2aterial -oint0 %!et!er a11ir2ative or -ro2issor70 t!e in:'re" -art7 is entitle" to rescin" t!e contract 1ro2 t!e ti2e %!en t!e re-resentation #eco2es 1alse (Ta$e Note) Section .6 T!e 2aterialit7 o1 a re-resentation is "eter2ine" #7 t!e sa2e r'les as t!e 2aterialit7 o1 a conceal2ent Section .E T!e -rovisions o1 t!is c!a-ter a--l7 as %ell to a 2o"i1ication o1 a contract o1 ins'rance as to its ori*inal 1or2ation Section .F /!enever a ri*!t to rescin" a contract o1 ins'rance is *iven to t!e ins'rer #7 an7 -rovision o1 t!is c!a-ter0 s'c! ri*!t 2'st #e e3ercise" -revio's to t!e co22ence2ent o1 an action on t!e contract A1ter a -olic7 o1 li1e ins'rance 2a"e -a7a#le on t!e "eat! o1 t!e ins're" s!all !ave #een in 1orce "'rin* t!e li1eti2e o1 t!e ins're" 1or a -erio" o1 t%o 7ears 1ro2 t!e "ate o1 its iss'e or o1 its last reinstate2ent0 t!e ins'rer cannot -rove t!at t!e -olic7 is voi" a# initio or is rescin"i#le #7 reason o1 t!e 1ra'"'lent conceal2ent or 2isre-resentation o1 t!e ins're" or !is a*ent I2-ortant (A--lica#le onl7 to li1e ins'rance0 incontesta#ilit7 cla'se B 1or a -erio" o1 + 7ears ) = Not a--lica#le i1 ins're" "ies at t!e state o1 insanit7

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Re4'isites 1or incontesta#ilit7 (Ta$e Note) 1 T!e -olic7 2'st #e o1 a li1e ins'rance8 + It 2'st #e -a7a#le on t!e "eat! o1 t!e ins're"8 an" , It 2'st !ave #een in 1orce "'rin* t!e li1eti2e o1 t!e ins're" 1or a -erio" o1 t%o 7ears Incontesta#ilit7 B a1ter t!e re4'isites are s!o%n to e3ist0 t!e ins'rer cannot esca-e lia#ilit7 #7 -rovin* t!at5 1 T!e -olic7 is voi" a# initio8 + T!at it is rescin"i#le #7 reason o1 t!e 1ra'"'lent conceal2ent o1 t!e ins're" or !is a*ent8 , T!at it is rescin"a#le #7 reason o1 t!e 1ra'"'lent 2isre-resentation o1 t!e ins're" or !is a*ent Title 6 B THE PO)ICH Section .G T!e %ritten instr'2ent in %!ic! a contract o1 ins'rance is set 1ort!0 is calle" a -olic7 o1 ins'rance (Ta$e Note) Cor2 o1 contract o1 ins'rance B 2a7 #e oral or in %ritin* In1or2al %ritin*s 2a"e in evi"ence o1 t!e contract entere" into0 %!ic! 1all !al1%a7 #et%een t!e 1or2al %ritten -olic7 an" t!e oral contract5 1 >in"in* sli- B 2erel7 a %ritten 2e2oran"'2 in ai" o1 t!e oral contract0 containin* a state2ent o1 t!e i2-ortant ter2s o1 t!e a*ree2ent0 #'t not inten"e" as a 1or2al re-ositor7 o1 all t!e ter2s o1 t!e contract + A--lication8 , >in"in* recei-t Preli2inar7 contracts o1 ins'rance B t!e 2ost 1re4'entl7 occ'rrin* an" 2ost i2-ortant $in"s o1 oral ins'rance contracts are t!ose -reli2inar7 to t!e e3ec'tion o1 1or2al -olicies T!e e3i*encies o1 #'siness ren"er t!e2 !i*!l7 e3-e"ient It is 1re4'entl7 o1 t!e !i*!est i2-ortance t!at -ersons en*a*e" in co22erce vent'res s!all #e a#le to sec're i22e"iate -rotection a*ainst -ossi#le loss Contracts o1 ins'rance are contracts o1 a"!esion (Ta$e Note) B t!e co'rts ri*oro'sl7 a--l7 to ins'rance -olicies t!e r'le t!at t!e ter2s o1 t!e contract are to #e consi"ere" stron*l7 a*ainst t!e -art7 c!oosin* t!e2 an" t!is r'le can #etter #e 'n"erstoo" %!en it is re2e2#ere" t!at a -olic7 o1 ins'rance is a contract o1 a"!esion T!at is to sa70 t!e ter2s o1 t!e contract "o not res'lt 1or2 2't'al ne*otiation an" concessions o1 t!e -arties an" so "o not tr'l7 e3-ress an a*ree2ent at %!ic! t!e7 !ave arrive" T!e ins'rer 2a7 a"!ere i1 !e c!ooses #'t %!ic! !e cannot c!an*e T7-e" -rovisions -revaile" over -rinte" -rovisions B In case re-'*nance e3ists #et%een %ritten an" -rinte" -ortions o1 a -olic70 t!e %ritten -ortion -revails0 an" t!ere can #e no 4'estion t!at as 1ar as an7 inconsistenc7 e3ist0 a t7-e" &ri"er( -revails over t!e -rinte" cla'se it covers Section ;? T!e -olic7 s!all #e in -rinte" 1or2 %!ic! 2a7 contain #lan$ s-aces8 an" an7 %or"0 -!rase0 cla'se0 2ar$0 si*n0 s72#ol0 si*nat're0 n'2#er0 or %or" necessar7 to co2-lete t!e contract o1 ins'rance s!all #e %ritten on t!e #lan$ s-aces -rovi"e" t!erein (Ta$e Note) Section ;1 A -olic7 o1 ins'rance 2'st s-eci175 (Ta$e Note) (a) T!e -arties #et%een %!o2 t!e contract is 2a"e8

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (#) T!e a2o'nt to #e ins're" e3ce-t in t!e cases o1 o-en or r'nnin* -olicies8 (c) T!e -re2i'20 or i1 t!e ins'rance is o1 a c!aracter %!ere t!e e3act -re2i'2 is onl7 "eter2ina#le '-on t!e ter2ination o1 t!e contract0 a state2ent o1 t!e #asis an" rates '-on %!ic! t!e 1inal -re2i'2 is to #e "eter2ine"8 (") T!e -ro-ert7 or li1e ins're"8 (e) T!e interest o1 t!e ins're" in -ro-ert7 ins're"0 i1 !e is not t!e a#sol'te o%ner t!ereo18 (1) T!e ris$s ins're" a*ainst8 an" (*) T!e -erio" "'rin* %!ic! t!e ins'rance is to contin'e (Contents o1 -olic7 ins'rance) Section ;+ Cover notes 2a7 #e iss'e" to #in" ins'rance te2-oraril7 -en"in* t!e iss'ance o1 t!e -olic7 /it!in si3t7 "a7s a1ter t!e iss'e o1 t!e cover note0 a -olic7 s!all #e iss'e" in lie' t!ereo10 incl'"in* %it!in its ter2s t!e i"entical ins'rance #o'n" 'n"er t!e cover note an" t!e -re2i'2 t!ere1or Cover notes 2a7 #e e3ten"e" or rene%e" #e7on" s'c! si3t7 "a7s %it! t!e %ritten a--roval o1 t!e Co22issioner i1 !e "eter2ines t!at s'c! e3tension is not contrar7 to an" is not 1or t!e -'r-ose o1 violatin* an7 -rovisions o1 t!is Co"e T!e Co22issioner 2a7 -ro2'l*ate r'les an" re*'lations *overnin* s'c! e3tensions 1or t!e -'r-ose o1 -reventin* s'c! violations an" 2a7 #7 s'c! r'les an" re*'lations "is-ense %it! t!e re4'ire2ent o1 %ritten a--roval #7 !i2 in t!e case o1 e3tension in co2-liance %it! s'c! r'les an" re*'lations (Ta$e Note) Section ;; To ren"er an ins'rance e11ecte" #7 one -artner or -art-o%ner0 a--lica#le to t!e interest o1 !is co--artners or ot!er -art-o%ners0 it is necessar7 t!at t!e ter2s o1 t!e -olic7 s!o'l" #e s'c! as are a--lica#le to t!e :oint or co22on interest Section ;6 /!en t!e "escri-tion o1 t!e ins're" in a -olic7 is so *eneral t!at it 2a7 co2-re!en" an7 -erson or an7 class o1 -ersons0 onl7 !e %!o can s!o% t!at it %as inten"e" to incl'"e !i2 can clai2 t!e #ene1it o1 t!e -olic7 Polic7 -a7a#le to %i1e B /!ere t!e ins're" 2erel7 "esi*nates !is %i1e as #ene1iciar7 %it!o't na2in* !er0 !is le*al %i1e is entitle" to t!e -rocee"s >'t a li1e ins'rance -olic7 ta$en o't #7 a 2an in 1avo'r o1 !is -ara2o'r0 %it! %!o2 !e is ille*all7 livin* as !is %i1e0 2a7 #e collecte" #7 !er %!ere s'c! -ara2o'r is "esi*nate" #7 na2e0 alt!o'*! t!e %or"s &!is %i1e( are a""e" Section ;E A -olic7 2a7 #e so 1ra2e" t!at it %ill in're to t!e #ene1it o1 %!o2soever0 "'rin* t!e contin'ance o1 t!e ris$0 2a7 #eco2e t!e o%ner o1 t!e interest ins're" Section ;F T!e 2ere trans1er o1 a t!in* ins're" "oes not trans1er t!e -olic70 #'t s's-en"s it 'ntil t!e sa2e -erson #eco2es t!e o%ner o1 #ot! t!e -olic7 an" t!e t!in* ins're"
10

Section ;, T!e ins'rance -rocee"s s!all #e a--lie" e3cl'sivel7 to t!e -ro-er interest o1 t!e -erson in %!ose na2e or 1or %!ose #ene1it it is 2a"e 'nless ot!er%ise s-eci1ie" in t!e -olic7 Section ;. /!en an ins'rance contract is e3ec'te" %it! an a*ent or tr'stee as t!e ins're"0 t!e 1act t!at !is -rinci-al or #ene1iciar7 is t!e real -art7 in interest 2a7 #e in"icate" #7 "escri#in* t!e ins're" as a*ent or tr'stee0 or #7 ot!er *eneral %or"s in t!e -olic7

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Section ;G A -olic7 is eit!er o-en0 val'e" or r'nnin* Section 6? An o-en -olic7 is one in %!ic! t!e val'e o1 t!e t!in* ins're" is not a*ree" '-on0 #'t is le1t to #e ascertaine" in case o1 loss (Ta$e Note) Section 61 A val'e" -olic7 is one %!ic! e3-resses on its 1ace an a*ree2ent t!at t!e t!in* ins're" s!all #e val'e" at a s-eci1ic s'2 Section 6+ A r'nnin* -olic7 is one %!ic! conte2-lates s'ccessive ins'rances0 an" %!ic! -rovi"es t!at t!e o#:ect o1 t!e -olic7 2a7 #e 1ro2 ti2e to ti2e "e1ine"0 es-eciall7 as to t!e s'#:ects o1 ins'rance0 #7 a""itional state2ents or in"orse2ents R'nnin* or 1loatin* -olicies B Or"inaril70 t!e s'#:ect 2atter o1 ins'rance 2'st #e "esi*nate" %it! s'c! -artic'larit7 as %ill 2a$e its i"enti1ication certain0 7et in so2e cases t!e nat're o1 t!e -ro-ert7 ins're" or t!e circ'2stances o1 t!e *rantin* o1 t!e ins'rance are s'c! to 2a$e it i2-ossi#le to !ave s'c! certaint7 in t!e s'#:ect 2atter T!'s0 ins'rance 2a7 #e carrie" on a constantl7 c!an*in* o1 stoc$ o1 *oo"s or on *rain t!at is #ein* carrie" to an" 1ro2 in t!e !ar#o'r on li*!ts (Ot!er na2es a--lica#le5 o-en an" #lan$et ) E3a2-le5 Car S-are Parts S!oSection 6, A con"ition0 sti-'lation0 or a*ree2ent in an7 -olic7 o1 ins'rance0 li2itin* t!e ti2e 1or co22encin* an action t!ere'n"er to a -erio" o1 less t!an one 7ear 1ro2 t!e ti2e %!en t!e ca'se o1 action accr'es0 is voi" Section 6. No -olic7 o1 ins'rance ot!er t!an li1e s!all #e cancelle" #7 t!e ins'rer e3ce-t '-on -rior notice t!ereo1 to t!e ins're"0 an" no notice o1 cancellation s!all #e e11ective 'nless it is #ase" on t!e SPC )a% >atc! +?1. occ'rrence0 a1ter t!e e11ective "ate o1 t!e -olic70 o1 one or 2ore o1 t!e 1ollo%in*5 (a) non--a72ent o1 -re2i'28 (#) conviction o1 a cri2e arisin* o't o1 acts increasin* t!e !a9ar" ins're" a*ainst8 (c) "iscover7 o1 1ra'" or 2aterial 2isre-resentation8 la%-!i1 net (") "iscover7 o1 %ill1'l or rec$less acts or o2issions increasin* t!e !a9ar" ins're" a*ainst8 (e) -!7sical c!an*es in t!e -ro-ert7 ins're" %!ic! res'lt in t!e -ro-ert7 #eco2in* 'nins'ra#le8 or (1) a "eter2ination #7 t!e Co22issioner t!at t!e contin'ation o1 t!e -olic7 %o'l" violate or %o'l" -lace t!e ins'rer in violation o1 t!is Co"e Ta$e Note (A--lica#le to non-li1e ins'rance ) Section 6; All notices o1 cancellation 2entione" in t!e -rece"in* section s!all #e in %ritin*0 2aile" or "elivere" to t!e na2e" ins're" at t!e a""ress s!o%n in t!e -olic70 an" s!all state (a) %!ic! o1 t!e *ro'n"s set 1ort! in section si3t7-1o'r is relie" '-on an" (#) t!at0 '-on %ritten re4'est o1 t!e na2e" ins're"0 t!e ins'rer %ill 1'rnis! t!e 1acts on %!ic! t!e cancellation is #ase" Section 66 In case o1 ins'rance ot!er t!an li1e0 'nless t!e ins'rer at least 1ort7-1ive "a7s in a"vance o1 t!e en" o1 t!e -olic7 -erio" 2ails or "elivers to t!e na2e" ins're" at t!e a""ress s!o%n in t!e -olic7 notice o1 its intention not to rene% t!e -olic7 or to con"ition its rene%al '-on re"'ction o1 li2its or eli2ination o1 covera*es0 t!e na2e" ins're" s!all #e entitle" to rene% t!e -olic7 '-on -a72ent o1 t!e -re2i'2 "'e on t!e e11ective "ate o1 t!e
11

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) rene%al An7 -olic7 %ritten 1or a ter2 o1 less t!an one 7ear s!all #e consi"ere" as i1 %ritten 1or a ter2 o1 one 7ear An7 -olic7 %ritten 1or a ter2 lon*er t!an one 7ear or an7 -olic7 %it! no 1i3e" e3-iration "ate s!all #e consi"ere" as i1 %ritten 1or s'ccessive -olic7 -erio"s or ter2s o1 one 7ear Title E /ARRANTIES Sec 6E A %arrant7 is eit!er e3-resse" or i2-lie" Sec 6F A %arrant7 2a7 relate to t!e -ast0 t!e -resent0 t!e 1't're0 or to an7 or all o1 t!ese Sec 6G No -artic'lar 1or2 o1 %or"s is necessar7 to create a %arrant7 Sec E? /it!o't -re:'"ice to section 1i1t7-one0 ever7 e3-ress %arrant70 2a"e at or #e1ore t!e e3ec'tion o1 a -olic70 2'st #e containe" in t!e -olic7 itsel10 or in anot!er instr'2ent si*ne" #7 t!e ins're" an" re1erre" to in t!e -olic7 as 2a$in* a -art o1 it Sec E1 A state2ent in a -olic7 o1 2atter relatin* to t!e -erson or t!in* ins're"0 or to t!e ris$0 as a 1act0 is an e3-ress %arrant7 t!ereo1 Sec E+ A state2ent in a -olic7 %!ic! i2-arts t!at it is inten"e" to "o or not to "o a t!in* %!ic! 2ateriall7 a11ects t!e ris$0 is a %arrant7 t!at s'c! act or o2ission s!all ta$e -lace Sec E, /!en0 #e1ore t!e ti2e arrives 1or t!e -er1or2ance o1 a %arrant7 relatin* to t!e 1't're0 a loss ins're" a*ainst !a--ens0 or -er1or2ance #eco2es 'nla%1'l at t!e -lace o1 t!e contract0 or i2-ossi#le0 t!e o2ission to 1'l1ill t!e %arrant7 "oes not avoi" t!e -olic7 Sec E. T!e violation o1 a 2aterial %arrant70 or ot!er 2aterial -rovision o1 a -olic70 on t!e -art o1 eit!er -art7 t!ereto0 entitles t!e ot!er to rescin" Sec E; A -olic7 2a7 "eclare t!at a violation o1 s-eci1ie" -rovisions t!ereo1 s!all avoi" it0 ot!er%ise t!e #reac! o1 an i22aterial -rovision "oes not avoi" t!e -olic7 Sec E6 A #reac! o1 %arrant7 %it!o't 1ra'" 2erel7 e3onerates an ins'rer 1ro2 t!e ti2e t!at it occ'rs0 or %!ere it is #ro$en in its ince-tion0 -revents t!e -olic7 1ro2 attac!in* to t!e ris$ Title F PREAIUA Sec EE An ins'rer is entitle" to -a72ent o1 t!e -re2i'2 as soon as t!e t!in* ins're" is e3-ose" to t!e -eril ins're" a*ainst Not%it!stan"in* an7 a*ree2ent to t!e contrar70 no -olic7 or contract o1 ins'rance iss'e" #7 an ins'rance co2-an7 is vali" an" #in"in* 'nless an" 'ntil t!e -re2i'2 t!ereo1 !as #een -ai"0 e3ce-t in t!e case o1 a li1e or an in"'strial li1e -olic7 %!enever t!e *race -erio" -rovision a--lies (Ta$e Note) Pre2i'2 B t!e val'e *iven #7 t!e ins're" to t!e ins'rer0 's'all7 in t!e 1or2 o1 2one70 in consi"eration 1or t!e ins'rer<s -ro2ise to in"e2ni17 = In li1e ins'rance0 -a72ent o1 s'#se4'ent -re2i'2s not o#li*ation 'n"er stan"ar" -rovision T!e 1act t!at it is -a7a#le ann'all7 or se2i-ann'all7 or at an7 ot!er sti-'late" ti2e0 "oes not o1 itsel1 constit'te a -ro2ise to -a70 eit!er e3-ress or i2-lie" In case o1 non--a72ent0 t!e -olic7 is 1or1eite"0 e3ce-t so 1ar as t!e 1or1eit're 2a7 #e save" #75

SPC )a% >atc! +?1.

12

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) 1 + , . a*ree2ent8 -re2i'28 esto--el8 stat'te , . ; 6 E3tension o1 t!e ins'rance 1or a certain -erio"8 Grantin* -ai"-'- ins'rance 1or a certain a2o'nt8 T!e a'to2atic loan cla'se8 an" Reinstate2ent o1 la-se" -olicies

= I1 t!e -re2i'2 1alls "'e on a S'n"a70 or t!e *race -erio" e3-ires on S'n"a70 t!e ins're" !as t!e %!ole o1 t!e ne3t "a7 in %!ic! to 2a$e -a72ent 'nless o1 co'rse0 it %as "'e at noon on S'n"a70 %!en -a72ent %o'l" #e 2a"e at or #e1ore noon on Aon"a7 = /!en -re2i'2 1alls "'e on le*al !oli"a70 t!e act 2a7 #e "one on t!e ne3t s'ccee"in* #'siness "a7 = T!e ins're" is entitle" to a -erio" o1 *race eit!er o1 t!irt7 "a7s or o1 one 2ont! %it!in %!ic! t!e -a72ent o1 an7 -re2i'2 a1ter t!e 1irst 7ear 2a7 #e 2a"e T!e ins'rer cannot0 o1 co'rse0 1or1eit t!e -olic7 "'rin* t!e -erio" o1 *race = Pre2i'2s 2'st #e -ai" in cas! T!e -re2i'2 is c'sto2aril7 -a7a#le in le*al ten"er 2one7 an" t!e ins'rer can "ecline to acce-t an7t!in* else in -a72ent = /!en ot!er 2o"es o1 -a72ent 2a7 #e allo%e" - Pa72ent ot!er t!at in cas! 2a7 #eco2e e11ective #7 consent0 esto--el0 or rati1ication Relie1 1ro2 !ars!ness o1 1or1eit're cla'ses (Ta$e Note) In or"er to relieve t!e ins're" %!o !as 1aile" to -a7 !is -re2i'2 1ro2 t!e !ars! o-eration o1 1or1eit're cla'ses res'ltin* in loss o1 all ri*!ts0 t!e la% !as i2-ose" t!e 'se o1 t!e 1ollo%in* savin* "evices5 1 + Perio" o1 *race8 Pa72ent o1 t!e cas! s'rren"er val'e8

Ho% cas! s'rren"er val'e arises T!e s'rren"er val'e o1 a -olic7 arises 1ro2 t!e 1act t!at t!e 1i3e" ann'al -re2i'2 is 2'c! in e3cess o1 t!e ann'al ris$ "'rin* t!e earlier 7ears o1 t!e -olic70 an e3cess 2a"e necessar7 in or"er to #alance t!e "e1icienc7 o1 t!e sa2e -re2i'2 to 2eet t!e ann'al ris$ "'rin* t!e latter 7ears o1 t!e -olic7 Pai"-'- Ins'rance B a 'nilateral contract e3ec'tor7 as to t!e ins'rer #'t %!oll7 e3ec'te" as to t!e ins're" E3c'ses 1or Non--a72ent o1 Pre2i'25 (Ta$e Note) 1 /ar0 in so2e :'ris"iction8 (In o'r :'ris"iction %ar is not an e3c'se ) + Insolvenc7 o1 t!e ins'rer8 (onl7 %!en #'siness is alrea"7 s's-en"e" ) , Re1'sal o1 ten"ere" -re2i'28 (%ill necessaril7 esto- t!e ins'rer 1ro2 clai2in* a 1or1eit're 1or non--a72ent ) . An7 %ron*1'l act o1 ins'rer -reventin* -a72ent8 ; /ant o1 notice8 (A#sence o1 notice t!at ins'rance is "'e ) 6 /aiver o1 -ro2-t -a72ent8 or E Insanit7 %!ere -roo1 o1 s'c! %o'l" entitle ins're" to !ave -re2i'2s %aive"0 accor"in* to so2e co'rts Sec EF An ac$no%le"*2ent in a -olic7 or contract o1 ins'rance or t!e recei-t o1 -re2i'2 is concl'sive evi"ence o1 its -a72ent0 so 1ar as to 2a$e t!e -olic7 #in"in*0 not%it!stan"in* an7 sti-'lation t!erein t!at it s!all not #e #in"in* 'ntil t!e -re2i'2 is act'all7 -ai"

SPC )a% >atc! +?1.

13

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Sec EG A -erson ins're" is entitle" to a ret'rn o1 -re2i'20 as 1ollo%s5 (Ta$e Note) (a) To t!e %!ole -re2i'2 i1 no -art o1 !is interest in t!e t!in* ins're" #e e3-ose" to an7 o1 t!e -erils ins're" a*ainst8 (#) /!ere t!e ins'rance is 2a"e 1or a "e1inite -erio" o1 ti2e an" t!e ins're" s'rren"ers !is -olic70 to s'c! -ortion o1 t!e -re2i'2 as corres-on"s %it! t!e 'ne3-ire" ti2e0 at a -ro rata rate0 'nless a s!ort -erio" rate !as #een a*ree" '-on an" a--ears on t!e 1ace o1 t!e -olic70 a1ter "e"'ctin* 1ro2 t!e %!ole -re2i'2 an7 clai2 1or loss or "a2a*e 'n"er t!e -olic7 %!ic! !as -revio'sl7 accr'e"8 Provi"e"0 T!at no !ol"er o1 a li1e ins'rance -olic7 2a7 avail !i2sel1 o1 t!e -rivile*es o1 t!is -ara*ra-! %it!o't s'11icient ca'se as ot!er%ise -rovi"e" #7 la% Sec F? I1 a -eril ins're" a*ainst !as e3iste"0 an" t!e ins'rer !as #een lia#le 1or an7 -erio"0 !o%ever s!ort0 t!e ins're" is not entitle" to ret'rn o1 -re2i'2s0 so 1ar as t!at -artic'lar ris$ is concerne" Sec F1 A -erson ins're" is entitle" to ret'rn o1 t!e -re2i'2 %!en t!e contract is voi"a#le0 on acco'nt o1 1ra'" or 2isre-resentation o1 t!e ins'rer0 or o1 !is a*ent0 or on acco'nt o1 1acts0 t!e e3istence o1 %!ic! t!e ins're" %as i*norant %it!o't !is 1a'lt8 or %!en #7 an7 "e1a'lt o1 t!e ins're" ot!er t!an act'al 1ra'"0 t!e ins'rer never inc'rre" an7 lia#ilit7 'n"er t!e -olic7 Sec F+ In case o1 an over-ins'rance #7 several ins'rers0 t!e ins're" is entitle" to a rata#le ret'rn o1 t!e -re2i'20 -ro-ortione" to t!e a2o'nt #7 %!ic! t!e a**re*ate s'2 ins're" in all t!e -olicies e3cee"s t!e ins'ra#le val'e o1 t!e t!in* at ris$ /!en -re2i'2s not recovera#le5

1 /!en t!e ris$ !as alrea"7 attac!e" an" t!e ris$ is entire an" in"ivisi#le8 + In li1e -olicies8 , /!en t!e contract is ren"ere" voi" a# initio #7 t!e 1ra'" o1 t!e ins're"8 an" /!en t!e contract is ille*al an" t!e -arties are in -ari "elicto Title G )OSS Sec F, An a*ree2ent not to trans1er t!e clai2 o1 t!e ins're" a*ainst t!e ins'rer a1ter t!e loss !as !a--ene"0 is voi" i1 2a"e #e1ore t!e loss e3ce-t as ot!er%ise -rovi"e" in t!e case o1 li1e ins'rance Sec F. Unless ot!er%ise -rovi"e" #7 t!e -olic70 an ins'rer is lia#le 1or a loss o1 %!ic! a -eril ins're" a*ainst %as t!e -ro3i2ate ca'se0 alt!o'*! a -eril not conte2-late" #7 t!e contract 2a7 !ave #een a re2ote ca'se o1 t!e loss8 #'t !e is not lia#le 1or a loss %!ic! t!e -eril ins're" a*ainst %as onl7 a re2ote ca'se )oss B e2#races in:'r7 or "a2a*e in ins'rance la% It re1ers to t!e in:'r7 or "a2a*e s'staine" #7 t!e ins're" in conse4'ence o1 t!e !a--enin* o1 one or 2ore o1 t!e acci"ents or 2is1ort'nates a*ainst %!ic! t!e ins'rer0 in consi"eration o1 t!e -re2i'2 !as 'n"erta$en to in"e2ni17 t!e ins're" Pro3i2ate Ca'se B t!at %!ic!0 in a nat'ral an"s contin'o's se4'ence0 'n#ro$en #7 an7 ne%0 in"e-en"ent ca'se0 -ro"'ces t!at event an" %it!o't %!ic! t!at event %o'l" not !ave occ'rre" Sec F; An ins'rer is lia#le %!ere t!e t!in* ins're" is resc'e" 1ro2 a -eril ins're" a*ainst t!at %o'l" ot!er%ise !ave ca'se" a loss0 i10 in t!e co'rse o1 s'c! resc'e0 t!e t!in* is e3-ose" to a -eril not ins're" a*ainst0 %!ic! -er2anentl7 "e-rives t!e ins're" o1 its -ossession0 in %!ole or in -art8 or
14

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) %!ere a loss is ca'se" #7 e11orts to resc'e t!e t!in* ins're" 1ro2 a -eril ins're" a*ainst Sec F6 /!ere a -eril is es-eciall7 e3ce-te" in a contract o1 ins'rance0 a loss0 %!ic! %o'l" not !ave occ'rre" #'t 1or s'c! -eril0 is t!ere#7 e3ce-te" alt!o'*! t!e i22e"iate ca'se o1 t!e loss %as a -eril %!ic! %as not e3ce-te" Sec FE An ins'rer is not lia#le 1or a loss ca'se" #7 t!e %ill1'l act or t!ro'*! t!e connivance o1 t!e ins're"8 #'t !e is not e3onerate" #7 t!e ne*li*ence o1 t!e ins're"0 or o1 t!e ins'rance a*ents or ot!ers (Ta$e Note) )oses 1or %!ic! ins'rer is not lia#le5 1 )oss ca'se" #7 t!e connivance o1 t!e ins're"8 + )oss ca'se" #7 t!e %il1'l act o1 t!e ins're"8 , )oss ca'se" #7 t!e ins're"<s ne*li*ence0 i1 it a2o'nts to #a" 1ait!8 . )oss i1 t!e -ro3i2ate ca'se o1 %!ic! is an e3ce-te" -eril even t!o'*! t!e i22e"iate ca'se t!ereo1 is a -eril ins're" a*ainst Title 1? NOTICE OC )OSS Sec FF In case o1 loss '-on an ins'rance a*ainst 1ire0 an ins'rer is e3onerate"0 i1 notice t!ereo1 #e not *iven to !i2 #7 an ins're"0 or so2e -erson entitle" to t!e #ene1it o1 t!e ins'rance0 %it!o't 'nnecessar7 "ela7 Sec FG /!en a -reli2inar7 -roo1 o1 loss is re4'ire" #7 a -olic70 t!e ins're" is not #o'n" to *ive s'c! -roo1 as %o'l" #e necessar7 in a co'rt o1 :'stice8 #'t it is s'11icient 1or !i2 to *ive t!e #est evi"ence %!ic! !e !as in !is -o%er at t!e ti2e Sec G? All "e1ects in a notice o1 loss0 or in -reli2inar7 -roo1 t!ereo10 %!ic! t!e ins're" 2i*!t re2e"70 an" %!ic! t!e ins'rer o2its to s-eci17 to !i20 %it!o't 'nnecessar7 "ela70 as *ro'n"s o1 o#:ection0 are %aive" Sec G1 Dela7 in t!e -resentation to an ins'rer o1 notice or -roo1 o1 loss is %aive" i1 ca'se" #7 an7 act o1 !i20 or i1 !e o2its to ta$e o#:ection -ro2-tl7 an" s-eci1icall7 '-on t!at *ro'n" Sec G+ I1 t!e -olic7 re4'ires0 #7 %a7 o1 -reli2inar7 -roo1 o1 loss (initial assess2ent o1 "a2a*e)0 t!e certi1icate or testi2on7 o1 a -erson ot!er t!an t!e ins're" ("isintereste" -erson)0 it is s'11icient 1or t!e ins're" to 'se reasona#le "ili*ence to -roc're it0 an" in case o1 t!e re1'sal o1 s'c! -erson to *ive it0 t!en to 1'rnis! reasona#le evi"ence to t!e ins'rer t!at s'c! re1'sal %as not in"'ce" #7 an7 :'st *ro'n"s o1 "is#elie1 in t!e 1acts necessar7 to #e certi1ie" or testi1ie" Title 11 DOU>)E INSURANCE Sec G, A "o'#le ins'rance e3ists %!ere t!e sa2e -erson is ins're" #7 several ins'rers se-aratel7 in res-ect to t!e sa2e s'#:ect an" interest (Ta$e Note) Re4'isites o1 "o'#le ins'rance5 1 + , . T!e -erson ins're" 2'st #e t!e sa2e8 T!ere 2'st #e several ins'rer8 T!e s'#:ect 2atter ins're" 2'st #e t!e sa2e8 T!e interest ins're" 2'st also #e t!e sa2e8 an"
15

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) ; T!e ris$ ins're" a*ainst 2'st li$e%ise #e t!e sa2e Do'#le ins'rance "istin*'is!e" 1ro2 over-ins'rance5 In over-ins'rance0 t!e ins're" ta$es an ins'rance #e7on" t!e val'e o1 !is ins'ra#le interest Ins'rance -olicies o1ten -ro!i#it "o'#le ins'rance %it!o't t!e consent o1 t!e ins'rer or %it!o't notice to !i2 Ot!er Ins'rance Cla'se B An7 ins'rance in 1orce '-on all or -art o1 t!e t!in*s ins're" 2'st #e "eclare" in %ritin* #7 t!e ins're" an" !e s!o'l" ca'se t!e co2-an7 to insert or 2ention it in t!e -olic70 an" %it!o't s'c! re4'isite0 sai" -olic7 %ill #e re*ar"e" as n'll an" voi"0 an" t!e ass're" "e-rive" o1 all t!e ri*!ts o1 in"e2nit7 in case o1 loss P'r-ose o1 ot!er ins'rance cla'se B to -revent over-ins'rances To *ive t!e ins'rer control o1 t!e 2oral !a9ar" involve" in t!e ris$ ass'2e" Sec G. /!ere t!e ins're" is overins're" #7 "o'#le ins'rance5 (a) T!e ins're"0 'nless t!e -olic7 ot!er%ise -rovi"es0 2a7 clai2 -a72ent 1ro2 t!e ins'rers in s'c! or"er as !e 2a7 select0 '- to t!e a2o'nt 1or %!ic! t!e ins'rers are severall7 lia#le 'n"er t!eir res-ective contracts8 (#) /!ere t!e -olic7 'n"er %!ic! t!e ins're" clai2s is a val'e" -olic70 t!e ins're" 2'st *ive cre"it as a*ainst t!e val'ation 1or an7 s'2 receive" #7 !i2 'n"er an7 ot!er -olic7 %it!o't re*ar" to t!e act'al val'e o1 t!e s'#:ect 2atter ins're"8 (c) /!ere t!e -olic7 'n"er %!ic! t!e ins're" clai2s is an 'nval'e" -olic7 !e 2'st *ive cre"it0 as a*ainst t!e 1'll ins'ra#le val'e0 1or an7 s'2 receive" #7 !i2 'n"er an7 -olic78 (") /!ere t!e ins're" receives an7 s'2 in e3cess o1 t!e val'ation in t!e case o1 val'e" -olicies0 or o1 t!e ins'ra#le val'e in t!e case o1 'nval'e" -olicies0 !e 2'st !ol" s'c! s'2 in tr'st 1or t!e ins'rers0 accor"in* to t!eir ri*!t o1 contri#'tion a2on* t!e2selves8 (e) Eac! ins'rer is #o'n"0 as #et%een !i2sel1 an" t!e ot!er ins'rers0 to contri#'te rata#l7 to t!e loss in -ro-ortion to t!e a2o'nt 1or %!ic! !e is lia#le 'n"er !is contract Title 1+ REINSURANCE Sec G; A contract o1 reins'rance is one #7 %!ic! an ins'rer -roc'res a t!ir" -erson to ins're !i2 a*ainst loss or lia#ilit7 #7 reason o1 s'c! ori*inal ins'rance (Ta$e Note) B "e1inition o1 reins'rance Sec G6 /!ere an ins'rer o#tains reins'rance0 e3ce-t 'n"er a'to2atic reins'rance treaties0 !e 2'st co22'nicate all t!e re-resentations o1 t!e ori*inal ins're"0 an" also all t!e $no%le"*e an" in1or2ation !e -ossesses0 %!et!er -revio'sl7 or s'#se4'entl7 ac4'ire"0 %!ic! are 2aterial to t!e ris$ Sec GE A reins'rance is -res'2e" to #e a contract o1 in"e2nit7 a*ainst lia#ilit70 an" not 2erel7 a*ainst "a2a*e Sec GF T!e ori*inal ins're" !as no interest in a contract o1 reins'rance C!a-ter II C)ASSES OC INSURANCE Title I AARINE INSURANCE S'#-Title 1- A DECINITION
16

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (+) 6Aarine -rotection an" in"e2nit7 ins'rance06 2eanin* ins'rance a*ainst0 or a*ainst le*al lia#ilit7 o1 t!e ins're" 1or loss0 "a2a*e0 or e3-ense inci"ent to o%ners!i-0 o-eration0 c!arterin*0 2aintenance0 'se0 re-air0 or constr'ction o1 an7 vessel0 cra1t or instr'2entalit7 in 'se o1 ocean or inlan" %ater%a7s0 incl'"in* lia#ilit7 o1 t!e ins're" 1or -ersonal in:'r70 illness or "eat! or 1or loss o1 or "a2a*e to t!e -ro-ert7 o1 anot!er -erson Perils o1 t!e sea B incl'"es onl7 t!ose cas'alties "'e to t!e 'n's'al violence or e3traor"inar7 action o1 %in" an" %ave or to ot!er e3traor"inar7 ca'ses connecte" %it! navi*ation Perils o1 t!e s!i- B A loss %!ic!0 in t!e or"inar7 co'rse o1 events0 res'lts 1ro2 t!e nat'ral an" inevita#le action o1 t!e sea0 1ro2 or"inar7 %ear an" tear o1 t!e s!i-0 or 1ro2 t!e ne*li*ent 1ail're o1 t!e s!i-<s o%ner to -rovi"e t!e vessel %it! -ro-er e4'i-2ent to conve7 t!e car*o 'n"er or"inar7 con"itions = Ins'rer ins'res a*ainst -eril o1 t!e sea0 not a*ainst -erils o1 t!e s!i= >arratr7 as -eril ins're" a*ainst An7 %il1'l 2iscon"'ct on t!e -art o1 2asters or cre%0 in -'rs'ance o1 so2e 'nla%1'l or 1ra'"'lent -'r-ose0 %it!o't t!e consent o1 t!e o%ners0 an" to t!e -re:'"ice o1 t!e o%ners interest E3a2-les5 1 + , . Sellin* or r'nnin* a%a7 %it! t!e s!i-8 >'rnin* or sc'ttlin* t!e s!i-8 Unla%1'll7 sellin* t!e car*o8 an" Aa$in* a%a7 %it! t!e -rocee"s o1 t!e car*o

Sec GG Aarine Ins'rance incl'"es5c!anro#lesvirt'alla%li#rar7 (1) Ins'rance a*ainst loss o1 or "a2a*e to5 (Ta$e Note) (a) Iessels0 cra1t0 aircra1t0 ve!icles0 *oo"s0 1rei*!ts0 car*oes0 2erc!an"ise0 e11ects0 "is#'rse2ents0 -ro1its0 2one7s0 sec'rities0 c!oses in action0 evi"ences o1 "e#ts0 val'a#le -a-ers0 #otto2r70 an" res-on"entia interests an" all ot!er $in"s o1 -ro-ert7 an" interests t!erein0 in res-ect to0 a--ertainin* to or in connection %it! an7 an" all ris$s or -erils o1 navi*ation0 transit or trans-ortation0 or %!ile #ein* asse2#le"0 -ac$e"0 crate"0 #ale"0 co2-resse" or si2ilarl7 -re-are" 1or s!i-2ent or %!ile a%aitin* s!i-2ent0 or "'rin* an7 "ela7s0 stora*e0 trans!i-2ent0 or res!i-2ent inci"ent t!ereto0 incl'"in* %ar ris$s0 2arine #'il"erDs ris$s0 an" all -ersonal -ro-ert7 1loater ris$s8 (#) Person or -ro-ert7 in connection %it! or a--ertainin* to a 2arine0 inlan" 2arine0 transit or trans-ortation ins'rance0 incl'"in* lia#ilit7 1or loss o1 or "a2a*e arisin* o't o1 or in connection %it! t!e constr'ction0 re-air0 o-eration0 2aintenance or 'se o1 t!e s'#:ect 2atter o1 s'c! ins'rance (#'t not incl'"in* li1e ins'rance or s'ret7 #on"s nor ins'rance a*ainst loss #7 reason o1 #o"il7 in:'r7 to an7 -erson arisin* o't o1 o%ners!i-0 2aintenance0 or 'se o1 a'to2o#iles)8 (c) Precio's stones0 :e%els0 :e%elr70 -recio's 2etals0 %!et!er in co'rse o1 trans-ortation or ot!er%ise8 (") >ri"*es0 t'nnels an" ot!er instr'2entalities o1 trans-ortation an" co22'nication (e3cl'"in* #'il"in*s0 t!eir 1'rnit're an" 1'rnis!in*s0 1i3e" contents an" s'--lies !el" in stora*e)8 -iers0 %!arves0 "oc$s an" sli-s0 an" ot!er ai"s to navi*ation an" trans-ortation0 incl'"in* "r7 "oc$s an" 2arine rail%a7s0 "a2s an" a--'rtenant 1acilities 1or t!e control o1 %ater%a7s

= T!e1t as -eril ins're" a*ainst

SPC )a% >atc! +?1.

17

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) = Jettison as -eril ins're" a*ainst T!e intentional castin* over#oar" o1 an7 -art o1 a vent're e3-ose" to -eril0 %!et!er it #e o1 t!e car*o0 or o1 t!e s!i-<s 1'rnit're or tac$le0 in t!e !o-e o1 savin* t!e rest o1 t!e vent're S'#-Title 1-> INSURA>)E INTEREST Sec 1?? T!e o%ner o1 a s!i- !as in all cases an ins'ra#le interest in it0 even %!en it !as #een c!artere" #7 one %!o covenants to -a7 !i2 its val'e in case o1 loss5 Provi"e"0 T!at in t!is case t!e ins'rer s!all #e lia#le 1or onl7 t!at -art o1 t!e loss %!ic! t!e ins're" cannot recover 1ro2 t!e c!arterer Sec 1?1 T!e ins'ra#le interest o1 t!e o%ner o1 t!e s!i- !7-ot!ecate" #7 #otto2r7 is onl7 t!e e3cess o1 its val'e over t!e a2o'nt sec're" #7 #otto2r7 (Ta$e Note) )oan o1 >otto2r7 B a contract in t!e nat're o1 a 2ort*a*e0 #7 %!ic! t!e o%ner o1 a s!i- #orro%s 2one7 1or t!e 'se0 e4'i-2ent or re-air o1 t!e vessel0 an" 1or a "e1inite ter20 an" -le"*es t!e s!i- (or t!e $eel an" #otto2 o1 t!e s!i-) as a sec'rit7 1or its re-a72ent )oan on Res-on"entia B One 2a"e on t!e *oo"s la"en on #oar" t!e s!i-0 an %!ic! are to #e sol" or e3c!an*e" in t!e co'rse o1 t!e vo7a*e0 t!e #orro%er<s -ersonal res-onsi#ilit7 #ein* "ee2e" t!e -rinci-al sec'rit7 1or t!e -er1or2ance o1 t!e contract0 %!ic! is t!ere1ore calle" res-on"entia Sec 1?+ Crei*!ta*e0 in t!e sense o1 a -olic7 o1 2arine ins'rance0 si*ni1ies all t!e #ene1its "erive" #7 t!e o%ner0 eit!er 1ro2 t!e c!arterin* o1 t!e s!i- or its e2-lo72ent 1or t!e carria*e o1 !is o%n *oo"s or t!ose o1 ot!ers Sec 1?, T!e o%ner o1 a s!i- !as an ins'ra#le interest in e3-ecte" 1rei*!ta*e %!ic! accor"in* to t!e or"inar7 an" -ro#a#le co'rse o1 t!in*s !e %o'l" !ave earne" #'t 1or t!e intervention o1 a -eril ins're" a*ainst or ot!er -eril inci"ent to t!e vo7a*e Sec 1?. T!e interest 2entione" in t!e last section e3ists0 in case o1 a c!arter -art70 %!en t!e s!i- !as #ro$en *ro'n" on t!e c!artere" vo7a*e I1 a -rice is to #e -ai" 1or t!e carria*e o1 *oo"s it e3ists %!en t!e7 are act'all7 on #oar"0 or t!ere is so2e contract 1or -'ttin* t!e2 on #oar"0 an" #ot! s!ian" *oo"s are rea"7 1or t!e s-eci1ie" vo7a*e Sec 1?; One %!o !as an interest in t!e t!in* 1ro2 %!ic! -ro1its are e3-ecte" to -rocee" !as an ins'ra#le interest in t!e -ro1its Sec 1?6 T!e c!arterer o1 a s!i- !as an ins'ra#le interest in it0 to t!e e3tent t!at !e is lia#le to #e "a2ni1ie" #7 its loss S'#-Title 1-C CONCEA)AENT Sec 1?E In 2arine ins'rance eac! -art7 is #o'n" to co22'nicate0 in a""ition to %!at is re4'ire" #7 section t%ent7-ei*!t0 all t!e in1or2ation %!ic! !e -ossesses0 2aterial to t!e ris$0 e3ce-t s'c! as is 2entione" in Section t!irt70 an" to state t!e e3act an" %!ole tr't! in relation to all 2atters t!at !e re-resents0 or '-on in4'ir7 "iscloses or ass'2es to "isclose Sec 1?F In 2arine ins'rance0 in1or2ation o1 t!e #elie1 or e3-ectation o1 a t!ir" -erson0 in re1erence to a 2aterial 1act0 is 2aterial Sec 1?G A -erson ins're" #7 a contract o1 2arine ins'rance is -res'2e" to !ave $no%le"*e0 at t!e ti2e o1 ins'rin*0 o1 a -rior loss0 i1 t!e in1or2ation
18

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) 2i*!t -ossi#l7 !ave reac!e" !i2 in t!e 's'al 2o"e o1 trans2ission an" at t!e 's'al rate o1 co22'nication Sec 11? A conceal2ent in a 2arine ins'rance0 in res-ect to an7 o1 t!e 1ollo%in* 2atters0 "oes not vitiate t!e entire contract0 #'t 2erel7 e3onerates t!e ins'rer 1ro2 a loss res'ltin* 1ro2 t!e ris$ conceale"5 (a) T!e national c!aracter o1 t!e ins're"8 (#) T!e lia#ilit7 o1 t!e t!in* ins're" to ca-t're an" "etention8 (c) T!e lia#ilit7 to sei9're 1ro2 #reac! o1 1orei*n la%s o1 tra"e8 (") T!e %ant o1 necessar7 "oc'2ents8 (e) T!e 'se o1 1alse an" si2'late" -a-ers S'#-Title 1-D REPRESENTATION Sec 111 I1 a re-resentation #7 a -erson ins're" #7 a contract o1 2arine ins'rance0 is intentionall7 1alse in an7 2aterial res-ect0 or in res-ect o1 an7 1act on %!ic! t!e c!aracter an" nat're o1 t!e ris$ "e-en"s0 t!e ins'rer 2a7 rescin" t!e entire contract Sec 11+ T!e event'al 1alsit7 o1 a re-resentation as to e3-ectation "oes not0 in t!e a#sence o1 1ra'"0 avoi" a contract o1 2arine ins'rance S'#-Title 1-E IAP)IED /ARRANTIES Sec 11, In ever7 2arine ins'rance '-on a s!i- or 1rei*!t0 or 1rei*!ta*e0 or '-on an7 t!in* %!ic! is t!e s'#:ect o1 2arine ins'rance0 a %arrant7 is i2-lie" t!at t!e s!i- is sea%ort!7 Sec 11. A s!i- is sea%ort!7 %!en reasona#l7 1it to -er1or2 t!e service an" to enco'nter t!e or"inar7 -erils o1 t!e vo7a*e conte2-late" #7 t!e -arties to t!e -olic7 Sec 11; An i2-lie" %arrant7 o1 sea%ort!iness is co2-lie" %it! i1 t!e s!i#e sea%ort!7 at t!e ti2e o1 t!e o1 co22ence2ent o1 t!e ris$0 e3ce-t in t!e 1ollo%in* cases5 (a) /!en t!e ins'rance is 2a"e 1or a s-eci1ie" len*t! o1 ti2e0 t!e i2-lie" %arrant7 is not co2-lie" %it! 'nless t!e s!i- #e sea%ort!7 at t!e co22ence2ent o1 ever7 vo7a*e it 'n"erta$es "'rin* t!at ti2e8 (#) /!en t!e ins'rance is '-on t!e car*o %!ic!0 #7 t!e ter2s o1 t!e -olic70 "escri-tion o1 t!e vo7a*e0 or esta#lis!e" c'sto2 o1 t!e tra"e0 is to #e trans!i--e" at an inter2e"iate -ort0 t!e i2-lie" %arrant7 is not co2-lie" %it! 'nless eac! vessel '-on %!ic! t!e car*o is s!i--e"0 or trans!i--e"0 #e sea%ort!7 at t!e co22ence2ent o1 eac! -artic'lar vo7a*e Sec 116 A %arrant7 o1 sea%ort!iness e3ten"s not onl7 to t!e con"ition o1 t!e str'ct're o1 t!e s!i- itsel10 #'t re4'ires t!at it #e -ro-erl7 la"en0 an" -rovi"e" %it! a co2-etent 2aster0 a s'11icient n'2#er o1 co2-etent o11icers an" sea2en0 an" t!e re4'isite a--'rtenances an" e4'i-2ent0 s'c! as #allasts0 ca#les an" anc!ors0 cor"a*e an" sails0 1oo"0 %ater0 1'el an" li*!ts0 an" ot!er necessar7 or -ro-er stores an" i2-le2ents 1or t!e vo7a*e Sec 11E /!ere "i11erent -ortions o1 t!e vo7a*e conte2-late" #7 a -olic7 "i11er in res-ect to t!e t!in*s re4'isite to 2a$e t!e s!i- sea%ort!7 t!ere1or0 a %arrant7 o1 sea%ort!iness is co2-lie" %it! i10 at t!e co22ence2ent o1 eac! -ortion0 t!e s!i- is sea%ort!7 %it! re1erence to t!at -ortion Sec 11F /!en t!e s!i- #eco2es 'nsea%ort!7 "'rin* t!e vo7a*e to %!ic! an ins'rance relates0 an 'nreasona#le "ela7 in re-airin* t!e "e1ect e3onerates t!e ins'rer on s!i- or s!i-o%nerDs interest 1ro2 lia#ilit7 1ro2 an7 loss arisin* t!ere1ro2
19

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) + An 'nreasona#le "ela7 in -'rs'in* t!e vo7a*e0 an" , T!e co22ence2ent o1 an entirel7 "i11erent vo7a*e Sec 1+. A "eviation is -ro-er5 (a) /!en ca'se" #7 circ'2stances over %!ic! neit!er t!e 2aster nor t!e o%ner o1 t!e s!i- !as an7 control8 (#) /!en necessar7 to co2-l7 %it! a %arrant70 or to avoi" a -eril0 %!et!er or not t!e -eril is ins're" a*ainst8 (c) /!en 2a"e in *oo" 1ait!0 an" '-on reasona#le *ro'n"s o1 #elie1 in its necessit7 to avoi" a -eril8 or (") /!en 2a"e in *oo" 1ait!0 1or t!e -'r-ose o1 savin* !'2an li1e or relievin* anot!er vessel in "istress Sec 1+; Ever7 "eviation not s-eci1ie" in t!e last section is i2-ro-er Sec 1+6 An ins'rer is not lia#le 1or an7 loss !a--enin* to t!e t!in* ins're" s'#se4'ent to an i2-ro-er "eviation S'#-Title 1-G )OSS Sec 1+E A loss 2a7 #e eit!er total or -artial Sec 1+F Ever7 loss %!ic! is not total is -artial Sec 1+G A total loss 2a7 #e eit!er act'al or constr'ctive Sec 1,? An act'al total loss is ca'se #75 Deviation is not 2erel75 (a) A total "estr'ction o1 t!e t!in* ins're"8 1 A "e-art're 1ro2 t!e co'rse o1 t!e vo7a*e ins're" #'t also
20

Sec 11G A s!i- %!ic! is sea%ort!7 1or t!e -'r-ose o1 an ins'rance '-on t!e s!i- 2a70 nevert!eless0 #7 reason o1 #ein* 'n1itte" to receive t!e car*o0 #e 'nsea%ort!7 1or t!e -'r-ose o1 t!e ins'rance '-on t!e car*o Sec 1+? /!ere t!e nationalit7 or ne'tralit7 o1 a s!i- or car*o is e3-ressl7 %arrante"0 it is i2-lie" t!at t!e s!i- %ill carr7 t!e re4'isite "oc'2ents to s!o% s'c! nationalit7 or ne'tralit7 an" t!at it %ill not carr7 an7 "oc'2ents %!ic! cast reasona#le s's-icion t!ereon S'#-Title 1-C THE IOHAGE AND DEIIATION Sec 1+1 /!en t!e vo7a*e conte2-late" #7 a 2arine ins'rance -olic7 is "escri#e" #7 t!e -laces o1 #e*innin* an" en"in*0 t!e vo7a*e ins're" in one %!ic! con1or2s to t!e co'rse o1 sailin* 1i3e" #7 2ercantile 'sa*e #et%een t!ose -laces (Ta$e Note) Sec 1++ I1 t!e co'rse o1 sailin* is not 1i3e" #7 2ercantile 'sa*e0 t!e vo7a*e ins're" #7 a 2arine ins'rance -olic7 is t!at %a7 #et%een t!e -laces s-eci1ie"0 %!ic! to a 2aster o1 or"inar7 s$ill an" "iscretion0 %o'l" 2ean t!e 2ost nat'ral0 "irect an" a"vanta*eo's (Ta$e Note) Sec 1+, Deviation is a "e-art're 1ro2 t!e co'rse o1 t!e vo7a*e ins're"0 2entione" in t!e last t%o sections0 or an 'nreasona#le "ela7 in -'rs'in* t!e vo7a*e or t!e co22ence2ent o1 an entirel7 "i11erent vo7a*e (Ta$e Note) Deviation B an 'nnecessar7 or 'ne3c'se" "e-art're 1ro2 t!e 's'al or *eneral 2o"e o1 carr7in* on t!e vo7a*e ins're"

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (#) T!e irretrieva#le loss o1 t!e t!in* #7 sin$in*0 or #7 #ein* #ro$en '-8 (c) An7 "a2a*e to t!e t!in* %!ic! ren"ers it val'eless to t!e o%ner 1or t!e -'r-ose 1or %!ic! !e !el" it8 or (") An7 ot!er event %!ic! e11ectivel7 "e-rives t!e o%ner o1 t!e -ossession0 at t!e -ort o1 "estination0 o1 t!e t!in* ins're" Sec 1,1 A constr'ctive total loss is one %!ic! *ives to a -erson ins're" a ri*!t to a#an"on0 'n"er Section one !'n"re" t!irt7-nine Sec 1,+ An act'al loss 2a7 #e -res'2e" 1ro2 t!e contin'e" a#sence o1 a s!i- %it!o't #ein* !ear" o1 T!e len*t! o1 ti2e %!ic! is s'11icient to raise t!is -res'2-tion "e-en"s on t!e circ'2stances o1 t!e case Sec 1,, /!en a s!i- is -revente"0 at an inter2e"iate -ort0 1ro2 co2-letin* t!e vo7a*e0 #7 t!e -erils ins're" a*ainst0 t!e lia#ilit7 o1 a 2arine ins'rer on t!e car*o contin'es a1ter t!e7 are t!'s res!i--e" Not!in* in t!is section s!all -revent an ins'rer 1ro2 re4'irin* an a""itional -re2i'2 i1 t!e !a9ar" #e increase" #7 t!is e3tension o1 lia#ilit7 Sec 1,. In a""ition to t!e lia#ilit7 2entione" in t!e last section0 a 2arine ins'rer is #o'n" 1or "a2a*es0 e3-enses o1 "isc!ar*in*0 stora*e0 res!i-2ent0 e3tra 1rei*!ta*e0 an" all ot!er e3-enses inc'rre" in savin* car*o res!i--e" -'rs'ant to t!e last section0 '- to t!e a2o'nt ins're" Not!in* in t!is or in t!e -rece"in* section s!all ren"er a 2arine ins'rer lia#le 1or an7 a2o'nt in e3cess o1 t!e ins're" val'e or0 i1 t!ere #e none0 o1 t!e ins'ra#le val'e Sec 1,; U-on an act'al total loss0 a -erson ins're" is entitle" to -a72ent %it!o't notice o1 a#an"on2ent Sec 1,6 /!ere it !as #een a*ree" t!at an ins'rance '-on a -artic'lar t!in*0 or class o1 t!in*s0 s!all #e 1ree 1ro2 -artic'lar avera*e0 a 2arine ins'rer is not lia#le 1or an7 -artic'lar avera*e loss not "e-rivin* t!e ins're" o1 t!e -ossession0 at t!e -ort o1 "estination0 o1 t!e %!ole o1 s'c! t!in*0 or class o1 t!in*s0 even t!o'*! it #eco2es entirel7 %ort!less8 #'t s'c! ins'rer is lia#le 1or !is -ro-ortion o1 all *eneral avera*e loss assesse" '-on t!e t!in* ins're" (Ta$e Note) General Avera*e B it is an e3-ense or "a2a*e s'11ere" "eli#eratel7 in or"er to save t!e vessel0 its car*o0 or #ot! 1ro2 a real an" $no%n ris$ Sec 1,E An ins'rance con1ine" in ter2s to an act'al loss "oes not cover a constr'ctive total loss0 #'t covers an7 loss0 %!ic! necessaril7 res'lts in "e-rivin* t!e ins're" o1 t!e -ossession0 at t!e -ort o1 "estination0 o1 t!e entire t!in* ins're" S'#-Title 1-H A>ANDONAENT Sec 1,F A#an"on2ent0 in 2arine ins'rance0 is t!e act o1 t!e ins're" #7 %!ic!0 a1ter a constr'ctive total loss0 !e "eclares t!e relin4'is!2ent to t!e ins'rer o1 !is interest in t!e t!in* ins're" (Ta$e Note) Sec 1,G A -erson ins're" #7 a contract o1 2arine ins'rance 2a7 a#an"on t!e t!in* ins're"0 or an7 -artic'lar -ortion t!ereo1 se-aratel7 val'e" #7 t!e -olic70 or ot!er%ise se-aratel7 ins're"0 an" recover 1or a total loss t!ereo10 %!en t!e ca'se o1 t!e loss is a -eril ins're" a*ainst5 (a) I1 2ore t!an t!ree-1o'rt!s t!ereo1 in val'e is act'all7 lost0 or %o'l" !ave to #e e3-en"e" to recover it 1ro2 t!e -eril8 (#) I1 it is in:'re" to s'c! an e3tent as to re"'ce its val'e 2ore t!an t!ree-1o'rt!s8
21

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (c) I1 t!e t!in* ins're" is a s!i-0 an" t!e conte2-late" vo7a*e cannot #e la%1'll7 -er1or2e" %it!o't inc'rrin* eit!er an e3-ense to t!e ins're" o1 2ore t!an t!ree-1o'rt!s t!e val'e o1 t!e t!in* a#an"one" or a ris$ %!ic! a -r'"ent 2an %o'l" not ta$e 'n"er t!e circ'2stances8 or (") I1 t!e t!in* ins're"0 #ein* car*o or 1rei*!ta*e0 an" t!e vo7a*e cannot #e -er1or2e"0 nor anot!er s!i- -roc're" #7 t!e 2aster0 %it!in a reasona#le ti2e an" %it! reasona#le "ili*ence0 to 1or%ar" t!e car*o0 %it!o't inc'rrin* t!e li$e e3-ense or ris$ 2entione" in t!e -rece"in* s'#--ara*ra-! >'t 1rei*!ta*e cannot in an7 case #e a#an"one" 'nless t!e s!i- is also a#an"one" Sec 1.? An a#an"on2ent 2'st #e neit!er -artial nor con"itional = A#an"on2ent 2'st #e total an" a#sol'te Sec 1.1 An a#an"on2ent 2'st #e 2a"e %it!in a reasona#le ti2e a1ter recei-t o1 relia#le in1or2ation o1 t!e loss0 #'t %!ere t!e in1or2ation is o1 a "o'#t1'l c!aracter0 t!e ins're" is entitle" to a reasona#le ti2e to 2a$e in4'ir7 Sec 1.+ /!ere t!e in1or2ation '-on %!ic! an a#an"on2ent !as #een 2a"e -roves incorrect0 or t!e t!in* ins're" %as so 1ar restore" %!en t!e a#an"on2ent %as 2a"e t!at t!ere %as t!en in 1act no total loss0 t!e a#an"on2ent #eco2es ine11ect'al Sec 1., A#an"on2ent is 2a"e #7 *ivin* notice t!ereo1 to t!e ins'rer0 %!ic! 2a7 #e "one orall70 or in %ritin*8 Provi"e"0 T!at i1 t!e notice #e "one orall70 a %ritten notice o1 s'c! a#an"on2ent s!all #e s'#2itte" %it!in seven "a7s 1ro2 s'c! oral notice Sec 1.. A notice o1 a#an"on2ent 2'st #e e3-licit0 an" 2'st s-eci17 t!e -artic'lar ca'se o1 t!e a#an"on2ent0 #'t nee" state onl7 eno'*! to s!o% t!at t!ere is -ro#a#le ca'se t!ere1or0 an" nee" not #e acco2-anie" %it! -roo1 o1 interest or o1 loss Sec 1.; An a#an"on2ent can #e s'staine" onl7 '-on t!e ca'se s-eci1ie" in t!e notice t!ereo1 Sec 1.6 An a#an"on2ent is e4'ivalent to a trans1er #7 t!e ins're" o1 !is interest to t!e ins'rer0 %it! all t!e c!ances o1 recover7 an" in"e2nit7 Sec 1.E I1 a 2arine ins'rer -a7s 1or a loss as i1 it %ere an act'al total loss0 !e is entitle" to %!atever 2a7 re2ain o1 t!e t!in* ins're"0 or its -rocee"s or salva*e0 as i1 t!ere !a" #een a 1or2al a#an"on2ent Sec 1.F U-on an a#an"on2ent0 acts "one in *oo" 1ait! #7 t!ose %!o %ere a*ents o1 t!e ins're" in res-ect to t!e t!in* ins're"0 s'#se4'ent to t!e loss0 are at t!e ris$ o1 t!e ins'rer an" 1or !is #ene1it Sec 1.G /!ere notice o1 a#an"on2ent is -ro-erl7 *iven0 t!e ri*!ts o1 t!e ins're" are not -re:'"ice" #7 t!e 1act t!at t!e ins'rer re1'ses to acce-t t!e a#an"on2ent Sec 1;? T!e acce-tance o1 an a#an"on2ent 2a7 #e eit!er e3-ress or i2-lie" 1ro2 t!e con"'ct o1 t!e ins'rer T!e 2ere silence o1 t!e ins'rer 1or an 'nreasona#le len*t! o1 ti2e a1ter notice s!all #e constr'e" as an acce-tance Sec 1;1 T!e acce-tance o1 an a#an"on2ent0 %!et!er e3-ress or i2-lie"0 is concl'sive '-on t!e -arties0 an" a"2its t!e loss an" t!e s'11icienc7 o1 t!e a#an"on2ent Sec 1;+ An a#an"on2ent once 2a"e an" acce-te" is irrevoca#le0 'nless t!e *ro'n" '-on %!ic! it %as 2a"e -roves to #e 'n1o'n"e"
22

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Sec 1;G In case o1 a val'e" -olic7 o1 2arine ins'rance on 1rei*!ta*e or car*o0 i1 a -art onl7 o1 t!e s'#:ect is e3-ose" to t!e ris$0 t!e eval'ation a--lies onl7 in -ro-ortion to s'c! -art Sec 16? /!en -ro1its are val'e" an" ins're" #7 a contract o1 2arine ins'rance0 a loss o1 t!e2 is concl'sivel7 -res'2e" 1ro2 a loss o1 t!e -ro-ert7 o't o1 %!ic! t!e7 are e3-ecte" to arise0 an" t!e val'ation 1i3es t!eir a2o'nt Sec 161 In esti2atin* a loss 'n"er an o-en -olic7 o1 2arine ins'rance t!e 1ollo%in* r'les are to #e o#serve"5 (a) T!e val'e o1 a s!i- is its val'e at t!e #e*innin* o1 t!e ris$0 incl'"in* all articles or c!ar*es %!ic! a"" to its -er2anent val'e or %!ic! are necessar7 to -re-are it 1or t!e vo7a*e ins're"8 (#) T!e val'e o1 t!e car*o is its act'al cost to t!e ins're"0 %!en la"en on #oar"0 or %!ere t!e cost cannot #e ascertaine"0 its 2ar$et val'e at t!e ti2e an" -lace o1 la"in*0 a""in* t!e c!ar*es inc'rre" in -'rc!asin* an" -lacin* it on #oar"0 #'t %it!o't re1erence to an7 loss inc'rre" in raisin* 2one7 1or its -'rc!ase0 or to an7 "ra%#ac$ on its e3-ortation0 or to t!e 1l'ct'ation o1 t!e 2ar$et at t!e -ort o1 "estination0 or to e3-enses inc'rre" on t!e %a7 or on arrival8 (c) T!e val'e o1 1rei*!ta*e is t!e *ross 1rei*!ta*e0 e3cl'sive o1 -ri2a*e0 %it!o't re1erence to t!e cost o1 earnin* it8 an" (") T!e cost o1 ins'rance is in eac! case to #e a""e" to t!e val'e t!'s esti2ate" Pri2a*e B a s2all allo%ance or co2-ensation -a7a#le to t!e 2aster an" 2ariners o1 a s!i- or vessel to t!e 1or2er0 1or t!e 'se o1 !is ca#les an" ro-es to "isc!ar*e t!e *oo"s o1 t!e 2erc!ant8 to t!e latter0 1or la"in* an" 'nla"in* in an7 -ort or !aven

Sec 1;, On an acce-te" a#an"on2ent o1 a s!i-0 1rei*!ta*e earne" -revio's to t!e loss #elon*s to t!e ins'rer o1 sai" 1rei*!ta*e8 #'t 1rei*!ta*e s'#se4'entl7 earne" #elon*s to t!e ins'rer o1 t!e s!iSec 1;. I1 an ins'rer re1'ses to acce-t a vali" a#an"on2ent0 !e is lia#le as '-on act'al total loss0 "e"'ctin* 1ro2 t!e a2o'nt an7 -rocee"s o1 t!e t!in* ins're" %!ic! 2a7 !ave co2e to t!e !an"s o1 t!e ins're" Sec 1;; I1 a -erson ins're" o2its to a#an"on0 !e 2a7 nevert!eless recover !is act'al loss S'#-Title 1-I AEASURE OC INDEANITH Sec 1;6 A val'ation in a -olic7 o1 2arine ins'rance in concl'sive #et%een t!e -arties t!ereto in t!e a":'st2ent o1 eit!er a -artial or total loss0 i1 t!e ins're" !as so2e interest at ris$0 an" t!ere is no 1ra'" on !is -art8 e3ce-t t!at %!en a t!in* !as #een !7-ot!ecate" #7 #otto2r7 or res-on"entia0 #e1ore its ins'rance0 an" %it!o't t!e $no%le"*e o1 t!e -erson act'all7 -roc'rin* t!e ins'rance0 !e 2a7 s!o% t!e real val'e >'t a val'ation 1ra'"'lent in 1act0 entitles t!e ins'rer to rescin" t!e contract Sec 1;E A 2arine ins'rer is lia#le '-on a -artial loss0 onl7 1or s'c! -ro-ortion o1 t!e a2o'nt ins're" #7 !i2 as t!e loss #ears to t!e val'e o1 t!e %!ole interest o1 t!e ins're" in t!e -ro-ert7 ins're" Sec 1;F /!ere -ro1its are se-aratel7 ins're" in a contract o1 2arine ins'rance0 t!e ins're" is entitle" to recover0 in case o1 loss0 a -ro-ortion o1 s'c! -ro1its e4'ivalent to t!e -ro-ortion %!ic! t!e val'e o1 t!e -ro-ert7 lost #ears to t!e val'e o1 t!e %!ole

SPC )a% >atc! +?1.

23

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Dra%#ac$ B an allo%ance 2a"e #7 t!e *overn2ent '-on t!e "'ties "'e on i2-orte" 2erc!an"ise %!en t!e i2-orter0 instea" o1 sellin* it !ere0 ree3-orts it8 or t!e re1'n"in* o1 s'c! "'ties i1 alrea"7 -ai" Sec 16+ I1 car*o ins're" a*ainst -artial loss arrives at t!e -ort o1 "estination in a "a2a*e" con"ition0 t!e loss o1 t!e ins're" is "ee2e" to #e t!e sa2e -ro-ortion o1 t!e val'e %!ic! t!e 2ar$et -rice at t!at -ort0 o1 t!e t!in* so "a2a*e"0 #ears to t!e 2ar$et -rice it %o'l" !ave #ro'*!t i1 so'n" Sec 16, A 2arine ins'rer is lia#le 1or all t!e e3-enses atten"ant '-on a loss %!ic! 1orces t!e s!i- into -ort to #e re-aire"8 an" %!ere it is sti-'late" in t!e -olic7 t!at t!e ins're" s!all la#or 1or t!e recover7 o1 t!e -ro-ert70 t!e ins'rer is lia#le 1or t!e e3-ense inc'rre" t!ere#70 s'c! e3-ense0 in eit!er case0 #ein* in a""ition to a total loss0 i1 t!at a1ter%ar"s occ'rs Sec 16. A 2arine ins'rer is lia#le 1or a loss 1allin* '-on t!e ins're"0 t!ro'*! a contri#'tion in res-ect to t!e t!in* ins're"0 re4'ire" to #e 2a"e #7 !i2 to%ar"s a *eneral avera*e loss calle" 1or #7 a -eril ins're" a*ainst8 -rovi"e"0 t!at t!e lia#ilit7 o1 t!e ins'rer s!all #e li2ite" to t!e -ro-ortion o1 contri#'tion attac!in* to !is -olic7 val'e %!ere t!is is less t!an t!e contri#'tin* val'e o1 t!e t!in* ins're" Sec 16; /!en a -erson ins're" #7 a contract o1 2arine ins'rance !as a "e2an" a*ainst ot!ers 1or contri#'tion0 !e 2a7 clai2 t!e %!ole loss 1ro2 t!e ins'rer0 s'#ro*atin* !i2 to !is o%n ri*!t to contri#'tion >'t no s'c! clai2 can #e 2a"e '-on t!e ins'rer a1ter t!e se-aration o1 t!e interests lia#le to t!e contri#'tion0 nor %!en t!e ins're"0 !avin* t!e ri*!t an" o--ort'nit7 to en1orce t!e contri#'tion 1ro2 ot!ers0 !as ne*lecte" or %aive" t!e e3ercise o1 t!at ri*!t Sec 166 In t!e case o1 a -artial loss o1 s!i- or its e4'i-2ent0 t!e ol" 2aterials are to #e a--lie" to%ar"s -a72ent 1or t!e ne% Unless
24

ot!er%ise sti-'late" in t!e -olic70 a 2arine ins'rer is lia#le 1or onl7 t%o-t!ir"s o1 t!e re2ainin* cost o1 re-airs a1ter s'c! "e"'ction0 e3ce-t t!at anc!ors 2'st #e -ai" in 1'll (Ta$e Note) Title + CIRE INSURANCE Sec 16E As 'se" in t!is Co"e0 t!e ter2 61ire ins'rance6 s!all incl'"e ins'rance a*ainst loss #7 1ire0 li*!tnin*0 %in"stor20 torna"o or eart!4'a$e an" ot!er allie" ris$s0 %!en s'c! ris$s are covere" #7 e3tension to 1ire ins'rance -olicies or 'n"er se-arate -olicies Sec 16F An alteration in t!e 'se or con"ition o1 a t!in* ins're" 1ro2 t!at to %!ic! it is li2ite" #7 t!e -olic7 2a"e %it!o't t!e consent o1 t!e ins'rer0 #7 2eans %it!in t!e control o1 t!e ins're"0 an" increasin* t!e ris$s0 entitles an ins'rer to rescin" a contract o1 1ire ins'rance Sec 16G An alteration in t!e 'se or con"ition o1 a t!in* ins're" 1ro2 t!at to %!ic! it is li2ite" #7 t!e -olic70 %!ic! "oes not increase t!e ris$0 "oes not a11ect a contract o1 1ire ins'rance Sec 1E? A contract o1 1ire ins'rance is not a11ecte" #7 an7 act o1 t!e ins're" s'#se4'ent to t!e e3ec'tion o1 t!e -olic70 %!ic! "oes not violate its -rovisions0 even t!o'*! it increases t!e ris$ an" is t!e ca'se o1 t!e loss Crien"l7 1ire B one t!at #'rns in a -lace %!ere it %as inten"e" to #'rn an" o'*!t to #e0 s'c! as 1ire #'rnin* in a 1'rnace Hostile 1ire B one t!at esca-es 1ro2 t!e -lace %!ere it %as inten"e" to #'rn an" o'*!t to #e

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) = A 1rien"l7 1ire 2a7 #eco2e !ostile 1ire #7 esca-in* 1ro2 t!e -lace %!ere it o'*!t to #e to so2e -lace in %!ic! it o'*!t not to #e Sec 1E1 I1 t!ere is no val'ation in t!e -olic70 t!e 2eas're o1 in"e2nit7 in an ins'rance a*ainst 1ire is t!e e3-ense it %o'l" #e to t!e ins're" at t!e ti2e o1 t!e co22ence2ent o1 t!e 1ire to re-lace t!e t!in* lost or in:'re" in t!e con"ition in %!ic! at t!e ti2e o1 t!e in:'r78 #'t i1 t!ere is a val'ation in a -olic7 o1 1ire ins'rance0 t!e e11ect s!all #e t!e sa2e as in a -olic7 o1 2arine ins'rance Sec 1E+ /!enever t!e ins're" "esires to !ave a val'ation na2e" in !is -olic70 ins'rin* an7 #'il"in* or str'ct're a*ainst 1ire0 !e 2a7 re4'ire s'c! #'il"in* or str'ct're to #e e3a2ine" #7 an in"e-en"ent a--raiser an" t!e val'e o1 t!e ins're"Ds interest t!erein 2a7 t!en #e 1i3e" as #et%een t!e ins'rer an" t!e ins're" T!e cost o1 s'c! e3a2ination s!all #e -ai" 1or #7 t!e ins're" A cla'se s!all #e inserte" in s'c! -olic7 statin* s'#stantiall7 t!at t!e val'e o1 t!e ins're"Ds interest in s'c! #'il"in* or str'ct're !as #een t!'s 1i3e" In t!e a#sence o1 an7 c!an*e increasin* t!e ris$ %it!o't t!e consent o1 t!e ins'rer or o1 1ra'" on t!e -art o1 t!e ins're"0 t!en in case o1 a total loss 'n"er s'c! -olic70 t!e %!ole a2o'nt so ins're" '-on t!e ins're"Ds interest in s'c! #'il"in* or str'ct're0 as state" in t!e -olic7 '-on %!ic! t!e ins'rers !ave receive" a -re2i'20 s!all #e -ai"0 an" in case o1 a -artial loss t!e 1'll a2o'nt o1 t!e -artial loss s!all #e so -ai"0 an" in case t!ere are t%o or 2ore -olicies coverin* t!e ins're"Ds interest t!erein0 eac! -olic7 s!all contri#'te -ro rata to t!e -a72ent o1 s'c! %!ole or -artial loss >'t in no case s!all t!e ins'rer #e re4'ire" to -a7 2ore t!an t!e a2o'nt t!'s state" in s'c! -olic7 T!is section s!all not -revent t!e -arties 1ro2 sti-'latin* in s'c! -olicies concernin* t!e re-airin*0 re#'il"in* or re-lacin* o1 #'il"in*s or str'ct'res %!oll7 or -artiall7 "a2a*e" or "estro7e" O-tion to re#'il" cla'se B o-tion o1 t!e ins'rer to re-air0 re#'ilt %!oll7 or -artiall7 %!at !as #een "a2a*e" or "estro7e"

Reason 1or o-tion to re#'il" cla'se B T!e ins'rer is also a-t at ti2es to s'11er 1ro2 t!e -erverte" val'ation 2a"e #7 a--raisers 1rien"l7 to t!e ins're"0 or #7 t!e a%ar" ren"ere" #7 a -ac$e" #oar" o1 ar#itrators = In 1ire ins'rance0 t!ere is no i2-lie" co-ins'rance Unless t!ere is a contrar7 sti-'lation0 t!e ins're" is not a co-ins'rer o1 t!e t!in* ins're" Co-ins'rance Cla'se B a -rovision in a 1ire -olic7 %!ic! re4'ires t!e ins're" to 2aintain ins'rance to an a2o'nt e4'al to a s-eci1ie" -ercenta*e o1 t!e val'e o1 t!e ins're" -ro-ert7 'n"er -enalt7 o1 #eco2in* co-ins'rer to t!e e3tent o1 s'c! "e1icienc7 A""itional ins'rance cla'se B (a--lica#le to r'nnin* -olic7) B T!e vali"it7 o1 a cla'se in a 1ire ins'rance -olic7 to t!e e11ect t!at t!e -roc're2ent o1 a""itional ins'rance %it!o't t!e consent o1 t!e ins'rer ren"ers i-so 1acto t!e -olic7 voi" is %ell settle" P'r-ose is to -revent over-ins'rance an" t!'s avert t!e -er-et'ation o1 1ra'" Sec 1E, No -olic7 o1 1ire ins'rance s!all #e -le"*e"0 !7-ot!ecate"0 or trans1erre" to an7 -erson0 1ir2 or co2-an7 %!o acts as a*ent 1or or ot!er%ise re-resents t!e iss'in* co2-an70 an" an7 s'c! -le"*e0 !7-ot!ecation0 or trans1er !erea1ter 2a"e s!all #e voi" an" o1 no e11ect inso1ar as it 2a7 a11ect ot!er cre"itors o1 t!e ins're" (/!7K It 2a7 in"'ce t!e co22ission o1 a cri2e ) Title , CASUA)TH INSURANCE Sec 1E. Cas'alt7 ins'rance is ins'rance coverin* loss or lia#ilit7 arisin* 1ro2 acci"ent or 2is!a-0 e3cl'"in* certain t7-es o1 loss %!ic! #7 la% or c'sto2 are consi"ere" as 1allin* e3cl'sivel7 %it!in t!e sco-e o1 ot!er t7-es o1 ins'rance s'c! as 1ire or 2arine It incl'"es0 #'t is
25

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) not li2ite" to0 e2-lo7erDs lia#ilit7 ins'rance0 2otor ve!icle lia#ilit7 ins'rance0 -late *lass ins'rance0 #'r*lar7 an" t!e1t ins'rance0 -ersonal acci"ent an" !ealt! ins'rance as %ritten #7 non-li1e ins'rance co2-anies0 an" ot!er s'#stantiall7 si2ilar $in"s o1 ins'rance Title . SURETHSHIP Sec 1E; A contract o1 s'ret7s!i- is an a*ree2ent %!ere#7 a -art7 calle" t!e s'ret7 *'arantees t!e -er1or2ance #7 anot!er -art7 calle" t!e -rinci-al or o#li*or o1 an o#li*ation or 'n"erta$in* in 1avor o1 a t!ir" -art7 calle" t!e o#li*ee It incl'"es o11icial reco*ni9ances0 sti-'lations0 #on"s or 'n"erta$in*s iss'e" #7 an7 co2-an7 #7 virt'e o1 an" 'n"er t!e -rovisions o1 Act No ;,60 as a2en"e" #7 Act No ++?6 Sec 1E6 T!e lia#ilit7 o1 t!e s'ret7 or s'reties s!all #e :oint an" several %it! t!e o#li*or an" s!all #e li2ite" to t!e a2o'nt o1 t!e #on" It is "eter2ine" strictl7 #7 t!e ter2s o1 t!e contract o1 s'ret7s!i- in relation to t!e -rinci-al contract #et%een t!e o#li*or an" t!e o#li*ee (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec 1EE T!e s'ret7 is entitle" to -a72ent o1 t!e -re2i'2 as soon as t!e contract o1 s'ret7s!i- or #on" is -er1ecte" an" "elivere" to t!e o#li*or No contract o1 s'ret7s!i- or #on"in* s!all #e vali" an" #in"in* 'nless an" 'ntil t!e -re2i'2 t!ere1or !as #een -ai"0 e3ce-t %!ere t!e o#li*ee !as acce-te" t!e #on"0 in %!ic! case t!e #on" #eco2es vali" an" en1orcea#le irres-ective o1 %!et!er or not t!e -re2i'2 !as #een -ai" #7 t!e o#li*or to t!e s'ret75 Provi"e"0 T!at i1 t!e contract o1 s'ret7s!i- or #on" is not acce-te" #70 or 1ile" %it! t!e o#li*ee0 t!e s'ret7 s!all collect onl7 reasona#le a2o'nt0 not e3cee"in* 1i1t7 -er cent'2 o1 t!e -re2i'2 "'e t!ereon as service 1ee -l's t!e cost o1 sta2-s or ot!er ta3es i2-ose" 1or t!e iss'ance o1 t!e contract or #on"5 Provi"e"0 !o%ever0 T!at i1 t!e non-acce-tance o1 t!e #on" #e "'e to t!e 1a'lt or ne*li*ence o1 t!e s'ret70 no s'c! service 1ee0 sta2-s or ta3es s!all #e collecte" In t!e case o1 a contin'in* #on"0 t!e o#li*or s!all -a7 t!e s'#se4'ent ann'al -re2i'2 as it 1alls "'e 'ntil t!e contract o1 s'ret7s!i- is cancelle" #7 t!e o#li*ee or #7 t!e Co22issioner or #7 a co'rt o1 co2-etent :'ris"iction0 as t!e case 2a7 #e (Ta$e Note) Sec 1EF Pertinent -rovisions o1 t!e Civil Co"e o1 t!e P!ili--ines s!all #e a--lie" in a s'--letor7 c!aracter %!enever necessar7 in inter-retin* t!e -rovisions o1 a contract o1 s'ret7s!iTitle ; )ICE INSURANCE Sec 1EG )i1e ins'rance is ins'rance on !'2an lives an" ins'rance a--ertainin* t!ereto or connecte" t!ere%it! (Ta$e Note) Sec 1F? An ins'rance '-on li1e 2a7 #e 2a"e -a7a#le on t!e "eat! o1 t!e -erson0 or on !is s'rvivin* a s-eci1ie" -erio"0 or ot!er%ise contin*entl7 on t!e contin'ance or cessation o1 li1e Ever7 contract or -le"*e 1or t!e -a72ent o1 en"o%2ents or ann'ities s!all #e consi"ere" a li1e ins'rance contract 1or -'r-ose o1 t!is Co"e In t!e a#sence o1 a :'"icial *'ar"ian0 t!e 1at!er0 or in t!e latterDs a#sence or inca-acit70 t!e 2ot!er0 or an7 2inor0 %!o is an ins're" or a #ene1iciar7 'n"er a contract o1 li1e0 !ealt! or acci"ent ins'rance0 2a7 e3ercise0 in #e!al1 o1 sai" 2inor0 an7 ri*!t 'n"er t!e -olic70 %it!o't necessit7 o1 co'rt a't!orit7 or t!e *ivin* o1 a #on"0 %!ere t!e interest o1 t!e 2inor in t!e -artic'lar act involve" "oes not e3cee" t%ent7 t!o'san" -esos S'c! ri*!t 2a7 incl'"e0 #'t s!all not #e li2ite" to0 o#tainin* a -olic7 loan0 s'rren"erin* t!e -olic70 receivin* t!e -rocee"s o1 t!e -olic70 an" *ivin* t!e 2inorDs consent to an7 transaction on t!e -olic7 (S'rvivors!i- Cla'se B -olic7 t!at is o'tlive" )

SPC )a% >atc! +?1.

26

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Sec 1F?-A T!e ins'rer in a li1e ins'rance contract s!all #e lia#le in case o1 s'ici"es onl7 %!en it is co22itte" a1ter t!e -olic7 !as #een in 1orce 1or a -erio" o1 t%o 7ears 1ro2 t!e "ate o1 its iss'e or o1 its last reinstate2ent0 'nless t!e -olic7 -rovi"es a s!orter -erio"5 Provi"e"0 !o%ever0 T!at s'ici"e co22itte" in t!e state o1 insanit7 s!all #e co2-ensa#le re*ar"less o1 t!e "ate o1 co22ission (As a2en"e" #7 >atasan* Pa2#ansa >l* FE.) (Ier7 I2-ortant) @in"s o1 )i1e Policies5 1 Or"inar7 )i1e Polic7 B one 'n"er t!e ter2s o1 %!ic! t!e ins're" is re4'ire" to -a7 a certain 1i3e" -re2i'2 ann'all7 or at 2ore 1re4'ent intervals t!ro'*!o't li1e0 an" t!e #ene1iciar7 is entitle" to receive -a72ent 'n"er t!e -olic7 onl7 '-on t!e "eat! o1 t!e ins're" + )i2ite" -a72ent li1e -olicies B li$e or"inar7 -olicies0 in t!at t!e7 are -a7a#le onl7 at t!e "eat! o1 t!e ins're"8 #'t t!e7 "i11er in t!at -re2i'2s are -a7a#le onl7 "'rin* a li2ite" -erio" o1 7ears0 's'all7 ten or 1i1teen or t%ent7 7ears0 -rovi"e" t!e ins're" so lon* lives , Partici-atin* Polic7 B one %!ic! *ives to t!e !ol"er a ri*!t to -artici-ate in s'c! "ivi"en"s as 2a7 #e "eclare" in !is class 1ro2 savin*s "'e to 1avo'ra#le 2ortalit7 an" invest2ent e3-erience or to e3-enses less t!an antici-ate" . Non--artici-atin* Polic7 B is one %!ic! carries no "ivi"en"s It re4'ires 'ni1or2 -a72ents0 or"inaril7 at a lo%er rate t!an -artici-atin* -olicies0 t!ro'*!o't t!e -erio" o1 c'rrenc7 >ene1iciar7 B onl7 t!ose -ersons %!o0 t!o'*! not -arties to t!e contract o1 ins'rance0 are 2entione" in it as t!e reci-ients o1 t!e -rocee"s o1 t!e ins'rance Sec 1F1 A -olic7 o1 ins'rance '-on li1e or !ealt! 2a7 -ass #7 trans1er0 %ill or s'ccession to an7 -erson0 %!et!er !e !as an ins'ra#le interest or not0 an" s'c! -erson 2a7 recover '-on it %!atever t!e ins're" 2i*!t !ave recovere" Sec 1F+ Notice to an ins'rer o1 a trans1er or #e4'est t!ereo1 is not necessar7 to -reserve t!e vali"it7 o1 a -olic7 o1 ins'rance '-on li1e or !ealt!0 'nless t!ere#7 e3-ressl7 re4'ire" Sec 1F, Unless t!e interest o1 a -erson ins're" is s'sce-ti#le o1 e3act -ec'niar7 2eas're2ent0 t!e 2eas're o1 in"e2nit7 'n"er a -olic7 o1 ins'rance '-on li1e or !ealt! is t!e s'2 1i3e" in t!e -olic7 Acci"ental "eat! #ene1it cla'se B also calle" t!e "o'#le in"e2nit7 cla'se T!e -olic7 -rovi"es 1or t!e -a72ent o1 an a""itional s'2 '-on -roo1 t!at t!e "eat! o1 t!e ins're" res'lte" "irectl7 1ro2 #o"il7 in:'r7 e11ecte" t!ro'*! e3ternal an" silent 2eans s'staine" in an acci"ent an" in"e-en"entl7 o1 all ot!er ca'ses C!a-ter III THE >USINESS OC INSURANCE Title 1 INSURANCE COAPANIES0 ORGANILATION0 CAPITA)ILATION AND AUTHORILATION
27

/!o 2a7 #e a #ene1iciar75 1 T!e -erson ins're" !i2sel1 or !is -ersonal re-resentative8 + A -erson ot!er t!an t!e ins're" /!en #ene1iciar7 -re"eceases t!e ins're" B t!e estate o1 t!e ins're" is entitle" to t!e ins'rance -rocee"s0 to t!e e3cl'sion o1 t!e #ene1iciar7 (Ta$e Note)

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Ever7 -erson0 -artners!i-0 or association receivin* an7 s'c! certi1icate o1 a't!orit7 s!all #e s'#:ect to t!e ins'rance la%s o1 t!e P!ili--ines an" to t!e :'ris"iction an" s'-ervision o1 t!e Co22issioner in t!e sa2e 2anner as i1 an ins'rance cor-oration a't!ori9e" #7 t!e la%s o1 t!e P!ili--ines to en*a*e in t!e #'siness o1 ins'rance s-eci1ie" in t!e certi1icate Sec 1FE No ins'rance co2-an7 s!all transact an7 ins'rance #'siness in t!e P!ili--ines 'ntil a1ter it s!all !ave o#taine" a certi1icate o1 a't!orit7 1or t!at -'r-ose 1ro2 t!e Co22issioner '-on a--lication t!ere1or an" -a72ent #7 t!e co2-an7 concerne" o1 t!e 1ees !ereina1ter -rescri#e" T!e Co22issioner 2a7 re1'se to iss'e a certi1icate o1 a't!orit7 to an7 ins'rance co2-an7 i10 in !is :'"*2ent0 s'c! re1'sal %ill #est -ro2ote t!e interest o1 t!e -eo-le o1 t!is co'ntr7 No s'c! certi1icate o1 a't!orit7 s!all #e *rante" to an7 s'c! co2-an7 'ntil t!e Co22issioner s!all !ave satis1ie" !i2sel1 #7 s'c! e3a2ination as !e 2a7 2a$e an" s'c! evi"ence as !e 2a7 re4'ire t!at s'c! co2-an7 is 4'ali1ie" #7 t!e la%s o1 t!e P!ili--ines to transact #'siness t!erein0 t!at t!e *rant o1 s'c! a't!orit7 a--ears to #e :'sti1ie" in t!e li*!t o1 econo2ic re4'ire2ents0 an" t!at t!e "irection an" a"2inistration0 as %ell as t!e inte*rit7 an" res-onsi#ilit7 o1 t!e or*ani9ers an" a"2inistrators0 t!e 1inancial or*ani9ation an" t!e a2o'nt o1 ca-ital0 not%it!stan"in* t!e -rovisions o1 section one !'n"re" ei*!t7-ei*!t0 reasona#l7 ass're t!e sa1et7 o1 t!e interests o1 t!e -olic7!ol"ers an" t!e -'#lic In or"er to 2aintain t!e 4'alit7 o1 t!e 2ana*e2ent o1 t!e ins'rance co2-anies an" a11or" #etter -rotection to -olic7!ol"ers an" t!e -'#lic in *eneral0 an7 -erson o1 *oo" 2oral c!aracter0 'n4'estione" inte*rit7 an" reco*ni9e" co2-etence 2a7 #e electe" or a--ointe" "irector or o11icer o1 ins'rance co2-anies T!e Co22issioner s!all -rescri#e t!e 4'ali1ications o1 t!e e3ec'tive o11icers an" ot!er $e7 o11icials o1 ins'rance co2-anies 1or -'r-oses o1 t!is section

Sec 1F. Cor -'r-oses o1 t!is Co"e0 t!e ter2 6ins'rer6 or 6ins'rance co2-an76 s!all incl'"e all in"ivi"'als0 -artners!i-s0 associations0 or cor-orations0 incl'"in* *overn2ent-o%ne" or controlle" cor-orations or entities0 en*a*e" as -rinci-als in t!e ins'rance #'siness0 e3ce-tin* 2't'al #ene1it associations Unless t!e conte3t ot!er%ise re4'ires0 t!e ter2s s!all also incl'"e -ro1essional reins'rers "e1ine" in section t%o !'n"re" ei*!t7 6Do2estic co2-an76 s!all incl'"e co2-anies 1or2e"0 or*ani9e" or e3istin* 'n"er t!e la%s o1 t!e P!ili--ines 6Corei*n co2-an76 %!en 'se" %it!o't li2itation s!all incl'"e co2-anies 1or2e"0 or*ani9e"0 or e3istin* 'n"er an7 la%s ot!er t!an t!ose o1 t!e P!ili--ines Sec 1F; Cor-orations 1or2e" or or*ani9e" to save an7 -erson or -ersons or ot!er cor-orations !ar2less 1ro2 loss0 "a2a*e0 or lia#ilit7 arisin* 1ro2 an7 'n$no%n or 1't're or contin*ent event0 or to in"e2ni17 or to co2-ensate an7 -erson or -ersons or ot!er cor-orations 1or an7 s'c! loss0 "a2a*e0 or lia#ilit70 or to *'arantee t!e -er1or2ance o1 or co2-liance %it! contract'al o#li*ations or t!e -a72ent o1 "e#t o1 ot!ers s!all #e $no%n as 6ins'rance cor-orations6 T!e -rovisions o1 t!e Cor-oration )a% s!all a--l7 to all ins'rance cor-orations no% or !erea1ter en*a*e" in #'siness in t!e P!ili--ines inso1ar as t!e7 "o not con1lict %it! t!e -rovisions o1 t!is c!a-ter Sec 1F6 No -erson0 -artners!i-0 or association o1 -ersons s!all transact an7 ins'rance #'siness in t!e P!ili--ines e3ce-t as a*ent o1 a -erson or cor-oration a't!ori9e" to "o t!e #'siness o1 ins'rance in t!e P!ili--ines0 'nless -ossesse" o1 t!e ca-ital an" assets re4'ire" o1 an ins'rance cor-oration "oin* t!e sa2e $in" o1 #'siness in t!e P!ili--ines an" investe" in t!e sa2e 2anner8 nor 'nless t!e Co22issioner s!all !ave *rante" to !i2 or t!e2 a certi1icate to t!e e11ect t!at !e or t!e7 !ave co2-lie" %it! all t!e -rovisions o1 la% %!ic! an ins'rance cor-oration "oin* #'siness in t!e P!ili--ines is re4'ire" to o#serve

SPC )a% >atc! +?1.

28

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) No -erson s!all conc'rrentl7 #e a "irector an"Mor o11icer o1 an ins'rance co2-an7 an" an a":'st2ent co2-an7 Inc'2#ent "irectors an"Mor o11icers a11ecte" #7 t!e a#ove -rovisions are !ere#7 allo%e" to !ol" on to t!eir -ositions 'ntil t!e en" o1 t!eir ter2s or t%o 7ears 1ro2 t!e e11ectivit7 o1 t!is "ecree0 %!ic!ever is s!orter >e1ore iss'in* s'c! certi1icate o1 a't!orit70 t!e Co22issioner 2'st #e satis1ie" t!at t!e na2e o1 t!e co2-an7 is not t!at o1 an7 ot!er $no%n co2-an7 transactin* a si2ilar #'siness in t!e P!ili--ines0 or a na2e so si2ilar as to #e calc'late" to 2islea" t!e -'#lic S'c! certi1icate o1 a't!orit7 s!all e3-ire on t!e last "a7 o1 J'ne o1 eac! 7ear an" s!all #e rene%e" ann'all7 i1 t!e co2-an7 is contin'in* to co2-l7 %it! t!e -rovisions o1 t!is Co"e or t!e circ'lars0 instr'ctions0 r'lin*s or "ecisions o1 t!e Co22issioner Ever7 co2-an7 receivin* an7 s'c! certi1icates o1 a't!orit7 s!all #e s'#:ect to t!e -rovisions o1 t!is Co"e an" ot!er relate" la%s an" to t!e :'ris"iction an" s'-ervision o1 t!e Co22issioner No ins'rance co2-an7 2a7 #e a't!ori9e" to transact in t!e P!ili--ines t!e #'siness o1 li1e an" non-li1e ins'rance conc'rrentl7 'nless s-eci1icall7 a't!ori9e" to "o so5 Provi"e"0 T!at t!e ter2s 6li1e6 an" 6non-li1e6 ins'rance s!all #e "ee2e" to incl'"e !ealt!0 acci"ent an" "isa#ilit7 ins'rance No ins'rance co2-an7 s!all !ave e4'it7 in an a":'st2ent co2-an7 an" neit!er s!all an a":'st2ent co2-an7 !ave an e4'it7 in an ins'rance co2-an7 Ins'rance co2-anies an" a":'st2ent co2-anies -resentl7 a11ecte" #7 t!e a#ove -rovision s!all !ave t%o 7ears 1ro2 t!e e11ectivit7 o1 t!is Decree %it!in %!ic! to "ivest o1 t!eir stoc$!ol"in*s (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec 1FF E3ce-t as -rovi"e" in section t%o !'n"re" ei*!t7-one0 no "o2estic ins'rance co2-an7 s!all0 in a stoc$ cor-oration0 en*a*e in #'siness in t!e P!ili--ines 'nless -ossesse" o1 a -ai"-'- ca-ital stoc$ e4'al to at least 1ive 2illion -esos5 Provi"e"0 T!at a "o2estic ins'rance co2-an7 alrea"7 "oin* #'siness in t!e P!ili--ines %it! a -ai"-'- ca-ital stoc$ %!ic! is less t!an 1ive 2illion -esos s!all !ave a -ai"-'- ca-ital stoc$ o1 at least t!ree 2illion -esos #7 Dece2#er t!irt7-one0 nineteen !'n"re" sevent7-ei*!t0 1o'r 2illion -esos #7 Dece2#er t!irt7-one0 nineteen !'n"re" sevent7-nine an" 1ive 2illion -esos #7 Dece2#er t!irt7-one0 nineteen !'n"re" ei*!t75 Provi"e"0 1'rt!er0 t!at t!e Secretar7 o1 Cinance 2a70 '-on reco22en"ation o1 t!e Ins'rance Co22issioner0 increase s'c! 2ini2'2 -ai"-'- ca-ital stoc$ re4'ire2ent0 'n"er s'c! ter2s an" con"itions as !e 2a7 i2-ose0 to an a2o'nt %!ic!0 in !is o-inion0 %o'l" reasona#l7 ass're t!e sa1et7 o1 t!e interests o1 t!e -olic7!ol"ers an" t!e -'#lic T!e Co22issioner 2a70 as a -re-licensin* re4'ire2ent o1 a ne% ins'rance co2-an70 in a""ition to t!e -ai"-'- ca-ital stoc$0 re4'ire t!e stoc$!ol"ers to -a7 in cas! to t!e co2-an7 in -ro-ortion to t!eir s'#scri-tion interests a contri#'te" s'r-l's 1'n" o1 not less t!an one 2illion -esos0 in t!e case o1 a li1e ins'rance co2-an70 or not less t!an 1ive !'n"re" t!o'san" -esos0 in t!e case o1 an ins'rance co2-an7 ot!er t!an li1e He 2a7 also re4'ire s'c! co2-an7 to s'#2it to !i2 a #'siness -lan s!o%in* t!e co2-an7Ds esti2ate" recei-ts an" "is#'rse2ents0 as %ell as t!e #asis t!ere1or0 1or t!e ne3t s'ccee"in* t!ree 7ears I1 or*ani9e" as a 2't'al co2-an70 in lie' o1 s'c! ca-ital stoc$0 it 2'st !ave availa#le cas! assets o1 at least 1ive 2illion -esos a#ove all lia#ilities 1or losses re-orte"0 e3-enses0 ta3es0 le*al reserve0 an" reins'rance o1 all o'tstan"in* ris$s0 an" t!e contri#'te" s'r-l's 1'n" e4'al to t!e a2o'nts re4'ire" o1 stoc$ cor-orations A stoc$ ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines 2a70 s'#:ect to t!e -ertinent la% an" re*'lations %!ic! no% are o1 !erea1ter 2a7 #e in 1orce0 alter its or*ani9ation an" trans1or2 itsel1 into a 2't'al ins'rance co2-an7 (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec 1FG Ever7 co2-an7 2'st0 #e1ore en*a*in* in t!e #'siness o1 ins'rance in t!e P!ili--ines0 1ile %it! t!e Co22issioner t!e 1ollo%in*5

SPC )a% >atc! +?1.

29

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (a) A certi1ie" co-7 o1 t!e last ann'al state2ent or a veri1ie" 1inancial state2ent e3!i#itin* t!e con"ition an" a11airs o1 s'c! co2-an78 (#) I1 incor-orate" 'n"er t!e la%s o1 t!e P!ili--ines0 a co-7 o1 t!e articles o1 incor-oration an" #7-la%s0 an" an7 a2en"2ents to eit!er0 certi1ie" #7 t!e Sec'rities an" E3c!an*e Co22ission to #e a co-7 o1 t!at %!ic! is 1ile" in its O11ice8 (c) I1 incor-orate" 'n"er an7 la%s ot!er t!an t!ose o1 t!e P!ili--ines0 a certi1icate 1ro2 t!e Sec'rities an" E3c!an*e Co22ission s!o%in* t!at it is "'l7 re*istere" in t!e 2ercantile re*istr7 o1 t!at Co22ission in accor"ance %it! t!e Cor-oration )a% A co-7 o1 t!e articles o1 incor-oration an" #7-la%s0 an" an7 a2en"2ents to eit!er0 i1 or*ani9e" or 1or2e" 'n"er an7 la% re4'irin* s'c! to #e 1ile"0 "'l7 certi1ie" #7 t!e o11icer !avin* t!e c'sto"7 o1 sa2e0 or i1 not so or*ani9e"0 a co-7 o1 t!e la%0 c!arter or "ee" o1 settle2ent 'n"er %!ic! t!e "ee" o1 or*ani9ation is 2a"e0 "'l7 certi1ie" #7 t!e -ro-er c'sto"ian t!ereo10 or -rove" #7 a11i"avit to #e a co-78 also0 a certi1icate 'n"er t!e !an" an" seal o1 t!e -ro-er o11icer o1 s'c! state or co'ntr7 !avin* s'-ervision o1 ins'rance #'siness t!erein0 i1 an7 t!ere #e0 t!at s'c! cor-oration or co2-an7 is or*ani9e" 'n"er t!e la%s o1 s'c! state or co'ntr70 %it! t!e a2o'nt o1 ca-ital stoc$ or assets an" le*al reserve re4'ire" #7 t!is Co"e8 (") I1 not incor-orate" an" o1 1orei*n "o2icile0 asi"e 1ro2 t!e certi1icate 2entione" in -ara*ra-! (c) o1 t!is section0 a certi1icate settin* 1ort! t!e nat're an" c!aracter o1 t!e #'siness0 t!e location o1 t!e -rinci-al o11ice0 t!e na2e o1 t!e in"ivi"'al or na2es o1 t!e -ersons co2-osin* t!e -artners!i- or association0 t!e a2o'nt o1 act'al ca-ital e2-lo7e" or to #e e2-lo7e" t!erein an" t!e na2es o1 all o11icers an" -ersons #7 %!o2 t!e #'siness is or 2a7 #e 2ana*e" T!e certi1icate 2'st #e veri1ie" #7 t!e a11i"avit o1 t!e c!ie1 o11icer0 secretar70 a*ent0 or 2ana*er o1 t!e co2-an78 an" i1 t!ere are an7 %ritten articles o1 a*ree2ent o1 t!e co2-an70 a co-7 t!ereo1 2'st #e acco2-an7 s'c! certi1icate Sec 1G? T!e Co22issioner 2'st re4'ire as a con"ition -rece"ent to t!e transaction o1 ins'rance #'siness in t!e P!ili--ines #7 an7 1orei*n ins'rance co2-an70 t!at s'c! co2-an7 1ile in !is o11ice a %ritten -o%er o1 attorne7 "esi*natin* so2e -erson %!o s!all #e a resi"ent o1 t!e P!ili--ines as its *eneral a*ent0 on %!o2 an7 notice -rovi"e" #7 la% or #7 an7 ins'rance -olic70 -roo1 o1 loss0 s'22ons an" ot!er le*al -rocesses 2a7 #e serve" in all actions or ot!er le*al -rocee"in*s a*ainst s'c! co2-an70 an" consentin* t!at service '-on s'c! *eneral a*ent s!all #e a"2itte" an" !el" as vali" as i1 serve" '-on t!e 1orei*n co2-an7 at its !o2e o11ice An7 s'c! 1orei*n co2-an7 s!all0 as 1'rt!er con"ition -rece"ent to t!e transaction o1 ins'rance #'siness in t!e P!ili--ines0 2a$e an" 1ile %it! t!e Co22issioner an a*ree2ent or sti-'lation0 e3ec'te" #7 t!e -ro-er a't!orities o1 sai" co2-an7 in 1or2 an" s'#stance as 1ollo%s5 6T!e (na2e o1 co2-an7) "oes !ere#7 sti-'late an" a*ree in consi"eration o1 t!e -er2ission *rante" #7 t!e Ins'rance Co22issioner to transact #'siness in t!e P!ili--ines0 t!at i1 at an7 ti2e sai" co2-an7 s!all leave t!e P!ili--ines0 or cease to transact #'siness t!erein0 or s!all #e %it!o't an7 a*ent in t!e P!ili--ines on %!o2 an7 notice0 -roo1 o1 loss0 s'22ons0 or le*al -rocess 2a7 #e serve"0 t!en in an7 action or -rocee"in* arisin* o't an7 #'siness or transaction %!ic! occ'rre" in t!e P!ili--ines0 service o1 an7 notice -rovi"e" #7 la%0 or ins'rance -olic70 -roo1 o1 loss0 s'22ons0 or ot!er le*al -rocess 2a7 #e 2a"e '-on t!e Ins'rance Co22issioner s!all !ave t!e sa2e 1orce an" e11ect as i1 2a"e '-on t!e co2-an7 6 /!enever s'c! service o1 notice0 -roo1 o1 loss0 s'22ons0 or ot!er le*al -rocess s!all #e 2a"e '-on t!e Co22ission0 !e 2'st0 %it!in ten "a7s t!erea1ter0 trans2it #7 2ail0 -osta*e -ai"0 a co-7 o1 s'c! notice0 -roo1 o1 loss0 s'22ons0 or ot!er le*al -rocess to t!e co2-an7 at its !o2e or -rinci-al o11ice T!e sen"in* o1 s'c! co-7 #7 t!e Co22issioner s!all #e a necessar7 -art o1 t!e service o1 t!e notice0 -roo1 o1 loss0 or ot!er le*al -rocess Sec 1G1 No ins'rance co2-an7 or*ani9e" or e3istin* 'n"er t!e *overn2ent or la%s ot!er t!an t!ose o1 t!e P!ili--ines s!all en*a*e in #'siness in t!e
30

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) P!ili--ines 'nless -ossesse" o1 -ai"-'- 'ni2-aire" ca-ital or assets an" reserve not less t!an t!at !erein re4'ire" o1 "o2estic ins'rance co2-anies0 nor 'ntil it s!all !ave "e-osite" %it! t!e Co22issioner 1or t!e #ene1it an" sec'rit7 o1 t!e -olic7!ol"ers an" cre"itors o1 s'c! co2-an7 in t!e P!ili--ines0 sec'rities satis1actor7 to t!e Co22issioner consistin* o1 *oo" sec'rities o1 t!e P!ili--ines0 incl'"in* ne% iss'es o1 stoc$ o1 6re*istere" enter-rises60 as t!is ter2 is "e1ine" in Re-'#lic Act No ;1F60 ot!er%ise $no%n as t!e Invest2ent Incentives Act0 as a2en"e"0 to t!e act'al 2ar$et val'e o1 not less t!an t!e 2ini2'2 -ai"-'- ca-ital re4'ire" o1 "o2estic ins'rance co2-anies5 Provi"e"0 T!at at least 1i1t7 -er cent'2 o1 s'c! sec'rities s!all consist o1 #on"s or ot!er evi"ences o1 "e#t o1 t!e Govern2ent o1 t!e P!ili--ines0 its -olitical s'#"ivisions an" instr'2entalities0 or o1 *overn2ento%ne" or controlle" cor-orations an" entities0 incl'"in* t!e Central >an$ T!e total invest2ent o1 a 1orei*n ins'rance co2-an7 in an7 re*istere" enter-rise s!all not e3cee" t%ent7 -er cent'2 o1 t!e net %ort! o1 sai" 1orei*n ins'rance co2-an7 nor t%ent7 -er cent'2 o1 t!e ca-ital o1 t!e re*istere" enter-rise0 'nless -revio'sl7 a't!ori9e" in %ritin* #7 t!e Co22issioner Cor -'r-oses o1 t!is Co"e0 t!e net %ort! o1 a 1orei*n ins'rance co2-an7 s!all re1er onl7 to its net %ort! in t!e P!ili--ines Sec 1G+ T!e Co22issioner s!all !ol" t!e sec'rities0 "e-osite" as a1oresai"0 1or t!e #ene1it an" sec'rit7 o1 all t!e -olic7!ol"ers o1 t!e co2-an7 "e-ositin* t!e sa2e0 #'t s!all as lon* as t!e co2-an7 is solvent0 -er2it t!e co2-an7 to collect t!e interest or "ivi"en"s on t!e sec'rities so "e-osite"0 an"0 1ro2 ti2e to ti2e0 %it! !is assent0 to %it!"ra% an7 o1 s'c! sec'rities0 '-on "e-ositin* %it! sai" Co22issioner ot!er li$e sec'rities0 t!e 2ar$et val'e o1 %!ic! s!all #e e4'al to t!e 2ar$et val'e o1 s'c! as 2a7 #e %it!"ra%n In t!e event o1 an7 co2-an7 ceasin* to "o #'siness in t!e P!ili--ines t!e sec'rities "e-osite" as a1oresai" s!all #e ret'rne" '-on t!e co2-an7Ds 2a$in* a--lication t!ere1or an" -rovin* to t!e satis1action o1 t!e Co22issioner t!at it !as no 1'rt!er lia#ilit7 'n"er an7 o1 its -olicies in t!e P!ili--ines

Sec 1G, Ever7 1orei*n co2-an7 "oin* #'siness in t!e P!ili--ines s!all set asi"e an a2o'nt corres-on"in* to t!e le*al reserves o1 t!e -olicies %ritten in t!e P!ili--ines an" invest an" $ee- t!e sa2e t!erein in accor"ance %it! t!e -rovisions o1 t!is section T!e le*al reserve t!erein re4'ire" to #e set asi"e s!all #e investe" onl7 in t!e classes o1 t!e P!ili--ine sec'rities "escri#e" in section t%o !'n"re"5 Provi"e"0 !o%ever0 T!at no invest2ent in stoc$s or #on"s o1 an7 sin*le entit7 s!all0 in t!e a**re*ate e3cee" t%ent7 -er cent'2 o1 t!e net %ort! o1 t!e investin* co2-an7 or t%ent7 -er cent'2 o1 t!e ca-ital o1 t!e iss'in* co2-an70 %!ic!ever is t!e lesser 'nless ot!er%ise a--rove" in %ritin* #7 t!e Co22issioner T!e sec'rities -'rc!ase" an" $e-t in t!e P!ili--ines 'n"er t!is section0 s!all not #e sent o't o1 t!e territorial :'ris"iction o1 t!e P!ili--ines %it!o't t!e %ritten consent o1 t!e Co22issioner Title + AARGIN OC INSO)IENCH Sec 1G. An ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines s!all at all ti2es 2aintain a 2ar*in o1 solvenc7 %!ic! s!all #e an e3cess o1 t!e val'e o1 its a"2itte" assets e3cl'sive o1 its -ai"-'- ca-ital0 in t!e case o1 a "o2estic co2-an70 or an e3cess o1 t!e val'e o1 its a"2itte" assets in t!e P!ili--ines0 e3cl'sive o1 its sec'rit7 "e-osits0 in t!e case o1 a 1orei*n co2-an70 over t!e a2o'nt o1 its lia#ilities0 'nearne" -re2i'2 an" reins'rance reserves in t!e P!ili--ines o1 at least t%o -er 2ille o1 t!e total a2o'nt o1 its ins'rance in 1orce as o1 t!e -rece"in* calen"ar 7ear on all -olicies0 e3ce-t ter2 ins'rance0 in t!e case o1 a li1e ins'rance co2-an70 or o1 at least ten -er cent'2 o1 t!e total a2o'nt o1 its net -re2i'2 %ritten "'rin* t!e -rece"in* calen"ar 7ear0 in t!e case o1 a co2-an7 ot!er t!an a li1e ins'rance co2-an75 Provi"e"0 T!at in eit!er case0 s'c! 2ar*in s!all in no event #e less t!an 1ive !'n"re" t!o'san" -esos5 an" Provi"e"0 1'rt!er0 T!at t!e ter2 6-ai"-'- ca-ital6 s!all not incl'"e contri#'te" s'r-l's an" ca-ital -ai" in e3cess o1 -ar val'e S'c! assets0 lia#ilities an" reserves s!all e3cl'"e assets0 lia#ilities an" reserves
31

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) incl'"e" in se-arate acco'nts esta#lis!e" in accor"ance %it! section t%o !'n"re" t!irt7-seven /!enever t!e a1ore2entione" 2ar*in #e 1o'n" to #e less t!an t!at !erein re4'ire" to #e 2aintaine"0 t!e Co22issioner s!all 1ort!%it! "irect t!e co2-an7 to 2a$e *oo" an7 s'c! "e1icienc7 #7 cas!0 to #e contri#'te" #7 all stoc$!ol"ers o1 recor" in -ro-ortion to t!eir res-ective interest0 an" -ai" to t!e treas'rer o1 t!e co2-an70 %it!in 1i1teen "a7s 1ro2 recei-t o1 t!e or"er5 Provi"e"0 T!at t!e co2-an7 in t!e interi2 s!all not #e -er2itte" to ta$e an7 ne% ris$ o1 an7 $in" or c!aracter 'nless an" 'ntil it 2a$e *oo" an7 s'c! "e1icienc75 Provi"e"0 1'rt!er0 t!at a stoc$!ol"er %!o asi"e 1ro2 -a7in* t!e contri#'tion "'e 1ro2 !i20 -a7s t!e contri#'tion "'e 1ro2 t!e anot!er stoc$!ol"er #7 reason o1 t!e 1ail're or re1'sal o1 t!e latter to "o so0 s!all !ave a lien on t!e certi1icates o1 stoc$ o1 t!e ins'rance co2-an7 concerne" a--earin* in its #oo$s in t!e na2e o1 t!e "e1a'ltin* stoc$!ol"er on t!e "ate o1 "e1a'lt0 as %ell as on an7 interests or "ivi"en"s t!at !ave accr'e" or %ill accr'e to t!e sai" certi1icates o1 stoc$0 'ntil t!e corres-on"in* -a72ent or rei2#'rse2ent is 2a"e #7 t!e "e1a'ltin* stoc$!ol"er (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec 1G; No "o2estic ins'rance cor-oration s!all "eclare or "istri#'te an7 "ivi"en" on its o'tstan"in* stoc$s e3ce-t 1ro2 -ro1its atteste" in a s%orn state2ent to t!e Co22issioner #7 t!e -resi"ent or treas'rer o1 t!e cor-oration to #e re2ainin* on !an" a1ter retainin* 'ni2-aire"5 (a) T!e entire -ai"-'- ca-ital stoc$8 (#) T!e 2ar*in o1 solvenc7 re4'ire" #7 section one !'n"re" ninet7-1o'r8 (c) In t!e case o1 li1e ins'rance cor-oration0 t!e le*al reserve 1'n" re4'ire" #7 section t%o !'n"re" eleven8 (") In t!e case o1 cor-orations ot!er t!an li1e0 t!e le*al reserve 1'n" re4'ire" #7 section t%o !'n"re" t!irteen8 (e) A s'2 s'11icient to -a7 all net losses re-orte"0 or in t!e co'rse o1 settle2ent0 an" all lia#ilities 1or e3-enses an" ta3es An7 "ivi"en" "eclare" or "istri#'te" 'n"er t!e -rece"in* -ara*ra-! s!all #e re-orte" to t!e Co22issioner %it!in t!irt7 "a7s a1ter s'c! "eclaration or "istri#'tion I1 t!e Co22issioner 1in"s t!at an7 s'c! cor-oration !as "eclare" or "istri#'te" an7 s'c! "ivi"en" in violation o1 t!is section0 !e 2a7 or"er s'c! cor-oration to cease an" "esist 1ro2 "oin* #'siness 'ntil t!e a2o'nt o1 s'c! "ivi"en" or t!e -ortion t!ereo1 in e3cess o1 t!e a2o'nt allo%e" 'n"er t!is section !as #een restore" to sai" cor-oration Title , ASSETS Sec 1G6 In an7 "eter2ination o1 t!e 1inancial con"ition o1 an7 ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines0 t!ere s!all #e allo%e" an" a"2itte" as assets onl7 s'c! assets o%ne" #7 t!e ins'rance co2-an7 concerne" an" %!ic! consist o15 1 Cas! in t!e -ossession o1 t!e ins'rance co2-an7 or in transit 'n"er its control0 an" t!e tr'e an" "'l7 veri1ie" #alance o1 an7 "e-osit o1 s'c! co2-an7 in a 1inanciall7 so'n" co22ercial #an$ or tr'st co2-an7 + Invest2ents in sec'rities0 incl'"in* 2one7 2ar$et instr'2ents0 an" in real -ro-ert7 ac4'ire" or !el" in accor"ance %it! an" s'#:ect to t!e a--lica#le -rovisions o1 t!is Co"e an" t!e inco2e reali9e" t!ere1ro2 or accr'e" t!ereon , )oans *rante" #7 t!e ins'rance co2-an7 concerne" to t!e e3tent o1 t!at -ortion t!ereo1 a"e4'atel7 sec're" #7 non-s-ec'lative assets %it! rea"il7 reali9a#le val'es in accor"ance %it! an" s'#:ect to t!e li2itations i2-ose" #7 a--lica#le -rovisions o1 t!is Co"e . Polic7 loans an" ot!er -olic7 assets an" liens on -olicies0 contracts or certi1icates o1 a li1e ins'rance co2-an70 in an a2o'nt not e3cee"in* le*al reserves an" ot!er -olic7 lia#ilities carrie" on eac! in"ivi"'al li1e ins'rance -olic70 contract or certi1icate ; T!e net a2o'nt o1 'ncollecte" an" "e1erre" -re2i'2s an" ann'it7 consi"erations in t!e case o1 a li1e ins'rance co2-an7 %!ic! carries t!e 1'll 2ean ta#'lar reserve lia#ilit7 6 Reins'rance recovera#le #7 t!e ce"in* ins'rer5c!anro#lesvirt'alla%li#rar7
32

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) a"2itte" assets o1 an ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines0 in an7 "eter2ination o1 its 1inancial con"ition5 1 Goo"%ill0 tra"e na2es0 an" ot!er li$e intan*i#le assets + Pre-ai" or "e1erre" c!ar*es 1or e3-enses an" co22issions -ai" #7 s'c! ins'rance co2-an7 , A"vances to o11icers (ot!er t!an -olic7 loans)0 %!ic! are not a"e4'atel7 sec're" an" %!ic! are not -revio'sl7 a't!ori9e" #7 t!e Co22issioner0 as %ell as a"vances to e2-lo7ees0 a*ents0 an" ot!er -ersons on 2ere -ersonal sec'rit7 . S!ares o1 stoc$ o1 s'c! ins'rance co2-an70 o%ne" #7 it0 or an7 e4'it7 t!erein as %ell as loans sec're" t!ere#70 or an7 -ro-ortionate interest in s'c! s!ares o1 stoc$ t!ro'*! t!e o%ners!i- #7 s'c! ins'rance co2-an7 o1 an interest in anot!er cor-oration or #'siness 'nit ; C'rnit're0 1'rnis!in*0 1i3t'res0 sa1es0 e4'i-2ent0 li#rar70 stationer70 literat're0 an" s'--lies 6 Ite2s o1 #an$ cre"its re-resentin* c!ec$s0 "ra1ts or notes ret'rne" 'n-ai" a1ter t!e "ate o1 state2ent E T!e a2o'nt0 i1 an70 #7 %!ic! t!e a**re*ate val'e o1 invest2ents as carrie" in t!e le"*er assets o1 s'c! ins'rance co2-an7 e3cee"s t!e a**re*ate val'e t!ereo1 as "eter2ine" in accor"ance %it! t!e -rovisions o1 t!is Co"e an"Mor t!e r'les o1 t!e Co22issioner All non-a"2itte" assets an" all ot!er assets o1 "o'#t1'l val'e or c!aracter incl'"e" as le"*er or non-le"*er assets in an7 state2ent s'#2itte" #7 an ins'rance co2-an7 to t!e Co22issioner0 or in an7 ins'rance e3a2inerDs re-ort to !i20 s!all also #e re-orte"0 to t!e e3tent o1 t!e val'e "isallo%e" as "e"'ctions 1ro2 t!e *ross assets o1 s'c! ins'rance co2-an70 e3ce-t %!ere t!e Co22issioner -er2its a reserve to #e carrie" a2on* t!e lia#ilities o1 s'c! ins'rance co2-an7 in lie' o1 an7 s'c! "e"'ction Title . INIESTAENTS

(a) 1ro2 an ins'rer a't!ori9e" to transact #'siness in t!is co'ntr70 t!e 1'll a2o'nt t!ereo18 or (#) 1ro2 an ins'rer not a't!ori9e" in t!is co'ntr70 in an a2o'nt not e3cee"in* t!e lia#ilities carrie" #7 t!e ce"in* ins'rer 1or a2o'nts %it!!el" 'n"er a reins'rance treat7 %it! s'c! 'na't!ori9e" ins'rer as sec'rit7 1or t!e -a72ent o1 o#li*ations t!ere'n"er i1 s'c! 1'n"s are !el" s'#:ect to %it!"ra%al #70 an" 'n"er t!e control o10 t!e ce"in* ins'rer T!e Co22issioner 2a7 -rescri#e t!e con"itions 'n"er %!ic! a ce"in* ins'rer 2a7 #e allo%e" cre"it0 as an asset or as a "e"'ction 1ro2 loss an" 'nearne" -re2i'2 reserves0 1or reins'rance recovera#le 1ro2 an ins'rer not a't!ori9e" in t!is co'ntr7 #'t %!ic! -resents satis1actor7 evi"ence t!at it 2eets t!e a--lica#le stan"ar"s o1 solvenc7 re4'ire" in t!is co'ntr7 E C'n"s %it!!el" #7 a ce"in* ins'rer 'n"er a reins'rance treat70 -rovi"e" reserves 1or 'n-ai" losses an" 'nearne" -re2i'2s are a"e4'atel7 -rovi"e" F De-osits or a2o'nts recovera#le 1ro2 'n"er%ritin* associations0 s7n"icates an" reins'rance 1'n"s0 or 1ro2 an7 s's-en"e" #an$in* instit'tion0 to t!e e3tent "ee2e" #7 t!e Co22issioner to #e availa#le 1or t!e -a72ent o1 losses an" clai2s an" val'es to #e "eter2ine" #7 !i2 G Electronic "ata -rocessin* 2ac!ines0 as 2a7 #e a't!ori9e" #7 t!e Co22issioner to #e ac4'ire" #7 t!e ins'rance co2-an7 concerne"0 t!e ac4'isition cost o1 %!ic! to #e a2orti9e" in e4'al ann'al a2o'nts %it!in a -erio" o1 1ive 7ears 1ro2 t!e "ate o1 ac4'isition t!ereo1 1? Ot!er assets0 not inconsistent %it! t!e -rovisions o1 -ara*ra-!s 1 to G !ereo10 %!ic! are "ee2e" #7 t!e Co22issioner to #e rea"il7 reali9a#le an" availa#le 1or t!e -a72ent o1 losses an" clai2s at val'es to #e "eter2ine" #7 !i2 Sec 1GE In a""ition to s'c! assets as t!e Co22issioner 2a7 1ro2 ti2e to ti2e "eter2ine to #e non-a"2itte" assets o1 ins'rance co2-anies "oin* #'siness in t!e P!ili--ines0 t!e 1ollo%in* assets s!all in no case #e allo%e" as

SPC )a% >atc! +?1.

33

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Sec 1GF No ins'rance co2-an7 s!all loan an7 o1 its 2one7 or "e-osits to an7 -erson0 cor-oration or association0 e3ce-t '-on 1irst 2ort*a*e or "ee"s o1 tr'st o1 'nenc'2#ere"0 i2-rove" or 'ni2-rove" real estate0 incl'"in* con"o2ini'2s0 in cities an" centers o1 -o-'lation o1 2'nici-alities in t!e P!ili--ines %!en t!e a2o'nt o1 s'c! loan is not in e3cess o1 sevent7 -er cent'2 o1 t!e 2ar$et val'e o1 s'c! real estate8 or '-on t!e sec'rit7 o1 1irst 2ort*a*es or "ee"s o1 tr'st o1 act'all7 c'ltivate"0 i2-rove" an" 'nenc'2#ere" a*ric'lt'ral lan"s in t!e P!ili--ines %!en t!e a2o'nt o1 s'c! loan is not in e3cess o1 1ort7 -er cent'2 o1 t!e 2ar$et val'e o1 s'c! lan"8 or '-on t!e -'rc!ase 2one7 2ort*a*es or li$e sec'rities receive" #7 it '-on t!e sale or e3c!an*e o1 real -ro-ert7 ac4'ire" -'rs'ant to sections t%o !'n"re" an" t%o !'n"re" t%o8 or '-on #on"s or ot!er evi"ences o1 "e#t o1 t!e Govern2ent o1 t!e P!ili--ines or its -olitical s'#"ivisions a't!ori9e" #7 la% to iss'e #on"s0 or '-on #on"s or ot!er evi"ences o1 "e#t o1 *overn2ento%ne" or controlle" cor-orations an" instr'2entalities incl'"in* t!e Central >an$ or '-on o#li*ations iss'e" or *'arantee" #7 t!e International >an$ 1or Reconstr'ction an" Develo-2ent8 or '-on stoc$s0 #on"s or ot!er evi"ences o1 "e#t as are s-eci1ie" in section t%o !'n"re" A li1e ins'rance co2-an70 !o%ever0 2a7 len" to an7 o1 its -olic7!ol"ers '-on t!e sec'rit7 o1 t!e val'e o1 its -olic7 s'c! s'2 as 2a7 #e "eter2ine" -'rs'ant to t!e -rovisions o1 t!e -olic7 )oans *rante" '-on t!e sec'rit7 o1 real estate 1or a -erio" lon*er t!an 1ive 7ears s!all #e a2orti9e" in 2ont!l70 4'arterl70 se2i-ann'al or ann'al install2ents8 Provi"e"0 T!at no s'c! loans s!all !ave a 2at'rit7 in e3cess o1 t%ent7 7ears T!e -!rase 6i2-rove" real estate6 'se" a#ove is !ere#7 "e1ine" to 2ean lan" %it! -er2anent #'il"in* or #'il"in*s erecte" or #ein* erecte" t!ereon E3ce-t as ot!er%ise a--rove" #7 t!e Co22issioner0 in case t!e #'il"in* or #'il"in*s on lan" "o not #elon* to t!e o%ner o1 t!e latter0 no loan s!all #e *rante" on t!e sec'rit7 o1 t!e real estate in 4'estion 'nless #ot! t!e o%ner o1 t!e #'il"in* or #'il"in*s an" t!e o%ner o1 t!e lan" si*n t!e "ee" o1 2ort*a*e0 an" 'nless t!e o%ner o1 t!e lan" is t!e Govern2ent o1 t!e P!ili--ines or one o1 its -olitical s'#"ivisions0 in %!ic! event t!e o%ner is not re4'ire" to si*n t!e "ee" o1 2ort*a*e Sec 1GG No loan #7 an7 ins'rance co2-an7 on t!e sec'rit7 o1 real estate s!all #e 2a"e 'nless t!e title to s'c! real estate s!all !ave 1irst #een re*istere" in accor"ance %it! t!e e3istin* )an" Re*istration Act0 or s!all #e a tit'lo real "'l7 re*istere"0 or !ave #een -revio'sl7 re*istere" 'n"er t!e -rovisions o1 t!e e3istin* Aort*a*e )a% Sec +?? (1) An ins'rance co2-an7 2a7 -'rc!ase0 !ol"0 o%n an" conve7 s'c! -ro-ert70 real an" -ersonal0 as 2a7 !ave #een 2ort*a*e"0 -le"*e"0 or conve7e" to it in *oo" 1ait! in tr'st 1or its #ene1it #7 reason o1 2one7 loane" #7 it in -'rs'ance o1 t!e re*'lar #'siness o1 t!e co2-an70 an" s'c! real or -ersonal -ro-ert7 as 2a7 !ave #een -'rc!ase" #7 it at sales 'n"er -le"*es0 2ort*a*es or "ee"s o1 tr'st 1or its #ene1it on acco'nt o1 2one7 loane" #7 it8 an" s'c! real an" -ersonal -ro-ert7 as 2a7 !ave #een conve7e" to it #7 #orro%ers in satis1action an" "isc!ar*e o1 loans 2a"e #7 t!e co2-an7 to t!e25 Provi"e"0 !o%ever0 T!at an7 real estate -'rc!ase" #7 an ins'rance co2-an7 in -a72ent or #7 reason o1 an7 loan 2a"e #7 it s!all #e sol" #7 t!e co2-an7 %it!in t%ent7 7ears a1ter t!e title t!ereto !as #een veste" in it (+) An ins'rance co2-an7 2a7 -'rc!ase0 !ol"0 o%n an" conve7 real an" -ersonal -ro-ert7 as 1ollo%s5 (a) T!e lot %it! #'il"in* t!ereon in %!ic! t!e co2-an7 con"'cts an" carries on its #'siness (#) >on"s or ot!er evi"ences o1 "e#t o1 t!e Govern2ent o1 t!e P!ili--ines or its -olitical s'#"ivisions a't!ori9e" #7 la% to iss'e #on"s at t!e reasona#le 2ar$et val'e t!ereo1 (c) >on"s or ot!er evi"ences o1 "e#t o1 t!e *overn2ent-o%ne" or controlle" cor-orations an" entities0 incl'"in* t!e Central >an$ (") >on"s0 "e#ent'res or ot!er evi"ences o1 in"e#te"ness o1 an7 solvent cor-orations or instit'tion create" or e3istin* 'n"er t!e la%s o1 t!e P!ili--ines5 Provi"e"0 !o%ever0 T!at t!e iss'in*0 ass'2in* or *'aranteein* entit7 or its -re"ecessors s!all not !ave "e1a'lte" in t!e -a72ent o1 interest on an7 o1 its sec'rities an" t!at "'rin* eac! o1 an7 t!ree incl'"in* t!e last
34

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) t%o o1 t!e 1ive 1iscal 7ears ne3t -rece"in* t!e "ate o1 ac4'isition #7 s'c! ins'rance co2-an7 o1 s'c! #on"s0 "e#ent'res0 or ot!er evi"ences o1 in"e#te"ness0 t!e net earnin*s o1 t!e iss'in*0 ass'2in* or *'aranteein* instit'tion availa#le 1or its 1i3e" c!ar*es0 as !ereina1ter "e1ine"0 s!all !ave #een not less t!an one an" one-4'arter ti2es t!e total o1 its 1i3e" c!ar*es 1or s'c! 7ear8 an" Provi"e"0 1'rt!er0 t!at no li1e ins'rance co2-an7 s!all invest in or loan '-on t!e o#li*ations o1 an7 one instit'tion in t!e $in"s -er2itte" 'n"er t!is s'#-section an a2o'nt in e3cess o1 t%ent7-1ive -er cent'2 o1 t!e total a"2itte" assets o1 s'c! ins'rer as o1 Dece2#er t!irt71irst ne3t -rece"in* t!e "ate o1 s'c! invest2ent As 'se" in t!is s'#-section t!e ter2 6net earnin*s availa#le 1or 1i3e" c!ar*es6 s!all 2ean net inco2e a1ter "e"'ctin* o-eratin* an" 2aintenance e3-enses0 ta3es ot!er t!an inco2e ta3es0 "e-reciation an" "e-letion8 #'t e3cl'"in* e3traor"inar7 non-rec'rrin* ite2s o1 inco2e or e3-ense a--earin* in t!e re*'lar 1inancial state2ent o1 t!e iss'in*0 ass'2in* or *'aranteein* instit'tion T!e ter2 61i3e" c!ar*es6 s!all incl'"e interest on 1'n"e" an" 'n1'n"e" "e#t0 a2orti9ation o1 "e#t "isco'nt0 an" rentals 1or lease" -ro-erties (e) Pre1erre" or *'arantee" stoc$s o1 an7 solvent cor-oration or instit'tion create" or e3istin* 'n"er t!e la%s o1 t!e P!ili--ines5 Provi"e"0 !o%ever0 T!at t!e iss'in*0 ass'2in* or *'aranteein* entit7 or its -re"ecessors !as -ai" re*'lar "ivi"en"s '-on its -re1erre" or *'arantee" stoc$s 1or a -erio" o1 at least t!ree 7ears ne3t -rece"in* t!e "ate o1 invest2ent in s'c! -re1erre" or *'arantee" stoc$5 Provi"e"0 1'rt!er0 T!at i1 t!e stoc$s are *'arantee"0 t!e a2o'nt o1 stoc$s so *'arantee" is not e3cess o1 1i1t7 -er cent'2 o1 t!e a2o'nt o1 t!e -re1erre" or co22on stoc$s0 as t!e case 2a7 #e0 o1 t!e *'aranteein* cor-oration5 an" Provi"e"0 1inall70 T!at no li1e ins'rance co2-an7 s!all invest in or loan '-on o#li*ations o1 an7 one instit'tion in t!e $in"s -er2itte" 'n"er t!is s'#-section an a2o'nt in e3cess o1 ten -er cent'2 o1 t!e total a"2itte" assets o1 s'c! ins'rer as o1 Dece2#er t!irt71irst ne3t -rece"in* t!e "ate o1 s'c! invest2ent (1) Co22on stoc$s o1 an7 solvent cor-oration or instit'tion create" or e3istin* 'n"er t!e la%s o1 t!e P!ili--ines '-on %!ic! re*'lar "ivi"en"s s!all !ave #een -ai" 1or t!e t!ree 7ears ne3t -rece"in* t!e -'rc!ase o1 s'c! stoc$5 Provi"e"0 !o%ever0 T!at no li1e ins'rance co2-an7 s!all invest in or loan '-on t!e o#li*ations o1 an7 one cor-oration or instit'tion in t!e $in"s -er2itte" 'n"er t!is s'#-section an a2o'nt in e3cess o1 ten -er cent'2 o1 t!e total a"2itte" assets o1 s'c! ins'rer as o1 Dece2#er t!irt7-1irst ne3t -rece"in* t!e "ate o1 s'c! invest2ent (*) Certi1icates0 notes an" ot!er o#li*ations iss'e" #7 t!e tr'stees or receivers o1 an7 instit'tion create" or e3istin* 'n"er t!e la%s o1 t!e P!ili--ines %!ic!0 or t!e assets o1 %!ic!0 are #ein* a"2inistere" 'n"er t!e "irection o1 an7 co'rt !avin* :'ris"iction8 Provi"e"0 !o%ever0 T!at s'c! certi1icates0 notes or ot!er o#li*ations are a"e4'atel7 sec're" as to -rinci-al an" interests (!) E4'i-2ent tr'st o#li*ations or certi1icates %!ic! are a"e4'atel7 sec're" or ot!er a"e4'atel7 sec're" instr'2ents evi"encin* an interest in e4'i-2ent %!oll7 or in -art %it!in t!e P!ili--ines5 Provi"e"0 !o%ever0 T!at t!ere is a ri*!t to receive "eter2ine" -ortions o1 rental0 -'rc!ase or ot!er 1i3e" o#li*ator7 -a72ents 1or t!e 'se or -'rc!ase o1 s'c! e4'i-2ent (i) An7 o#li*ation o1 an7 cor-oration or instit'tion create" or e3istin* 'n"er t!e la%s o1 t!e P!ili--ines %!ic! is0 on t!e "ate o1 ac4'isition #7 t!e ins'rer0 a"e4'atel7 sec're" an" !as 4'alities an" c!aracteristics %!erein t!e s-ec'lative ele2ents are not -re"o2inant (:) S'c! ot!er sec'rities as 2a7 #e a--rove" #7 t!e Co22issioner (,) An7 "o2estic ins'rer %!ic! !as o'tstan"in* ins'rance0 ann'it7 or reins'rance contracts in c'rrencies ot!er t!an t!e national c'rrenc7 o1 t!e P!ili--ines 2a7 invest in0 or ot!er%ise ac4'ire or loan '-on sec'rities an" invest2ents in s'c! c'rrenc7 %!ic! are s'#stantiall7 o1 t!e sa2e $in"s0 classes an" invest2ent *ra"es as t!ose eli*i#le 1or invest2ent 'n"er t!e 1ore*oin* s'#"ivisions o1 t!is section8 #'t t!e a**re*ate a2o'nt o1 s'c! invest2ent an" o1 s'c! cas! in s'c! c'rrenc7 %!ic! is at an7ti2e !el" #7 s'c! ins'rer s!all not e3cee" one an" one-!al1 ti2es t!e a2o'nt o1 its reserves an" ot!er o#li*ations 'n"er s'c! contracts or t!e a2o'nt %!ic! s'c! ins'rer is re4'ire" #7 t!e la% o1 an7 co'ntr7 or -ossession o'tsi"e t!e

SPC )a% >atc! +?1.

35

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Re-'#lic o1 t!e P!ili--ines to #e invest in s'c! co'ntr7 or -ossession0 %!ic!ever s!all #e *reater Sec +?1 An ins'rance co2-an7 2a7 (1) invest in e4'ities o1 ot!er 1inancial instit'tions0 an" (+) en*a*e in t!e #'7in* an" sellin* o1 s!ort-ter2 "e#t instr'2ents5 Provi"e"0 T!at an7 or all o1 s'c! invest2ents s!all #e %it! t!e -rior a--roval o1 t!e Co22issioner Sec +?+ An7 li1e ins'rance co2-an7 2a75 (a) Ac4'ire or constr'ct !o'sin* -ro:ects an"0 in connection %it! an7 s'c! -ro:ect0 2a7 ac4'ire lan" or an7 interest t!erein #7 -'rc!ase0 lease or ot!er%ise0 or 'se lan" ac4'ire" -'rs'ant to an7 ot!er -rovision o1 t!is Co"e S'c! co2-an7 2a7 t!erea1ter o%n0 2aintain0 2ana*e0 collect or receive inco2e 1ro20 or sell an" conve70 an7 lan" or interest t!erein so ac4'ire" an" an7 i2-rove2ents t!ereon T!e a**re*ate #oo$ val'e o1 t!e invest2ents o1 an7 s'c! co2-an7 in all s'c! -ro:ects s!all not e3cee" at t!e ti2e o1 s'c! invest2ents t%ent7 1ive -er cent'2 o1 t!e total a"2itte" assets o1 s'c! co2-an7 on t!e t!irt7-1irst "a7 o1 Dece2#er ne3t -rece"in*8 (#) Ac4'ire real -ro-ert70 ot!er t!an -ro-ert7 to #e 'se" -ri2aril7 1or -rovi"in* !o'sin* an" -ro-ert7 1or acco22o"ation o1 its o%n #'siness0 as an invest2ent 1or t!e -ro"'ction o1 inco2e0 or 2a7 ac4'ire real -ro-ert7 to #e i2-rove" or "evelo-e" 1or s'c! invest2ent -'r-ose -'rs'ant to a -ro*ra2 t!ere1or0 s'#:ect to t!e con"ition t!at t!e cost o1 eac! -arcel o1 real -ro-ert7 so ac4'ire" 'n"er t!e a't!orit7 o1 t!is -ara*ra-! (#)0 incl'"in* t!e esti2ate" cost to t!e co2-an7 o1 t!e i2-rove2ent or "evelo-2ent t!ereo10 %!en a""e" to t!e #oo$ val'e o1 all ot!er real -ro-ert7 !el" #7 its -'rs'ant to t!is -ara*ra-! (#)0 s!all not e3cee" t%ent7-1ive -er cent'2 o1 its a"2itte" assets as o1 t!e t!irt7-1irst "a7 o1 Dece2#er ne3t -rece"in* Sec +?, Ever7 "o2estic ins'rance co2-an7 s!all0 to t!e e3tent o1 an a2o'nt e4'al in val'e to t%ent7-1ive -er cent'2 o1 t!e 2ini2'2 -ai"-'ca-ital re4'ire" 'n"er section one !'n"re" ei*!t7-ei*!t0 invest its 1'n"s onl7 in sec'rities0 satis1actor7 to t!e Co22issioner0 consistin* o1 #on"s or ot!er evi"ences o1 "e#t o1 t!e Govern2ent o1 t!e P!ili--ines or its -olitical s'#"ivisions or instr'2entalities0 or o1 *overn2ent-o%ne" or controlle" cor-orations an" entities0 incl'"in* t!e Central >an$ o1 t!e P!ili--ines5 Provi"e"0 T!at s'c! invest2ents s!all at all ti2es #e 2aintaine" 1ree 1ro2 an7 lien or enc'2#rance8 an" Provi"e"0 1'rt!er0 T!at s'c! sec'rities s!all #e "e-osite" %it! an" !el" #7 t!e Co22issioner 1or t!e 1ait!1'l -er1or2ance #7 t!e "e-ositin* ins'rer o1 all its o#li*ations 'n"er its ins'rance contracts T!e -rovisions o1 section one !'n"re" ninet7-t%o s!all0 so 1ar as -ractica#le0 a--l7 to t!e sec'rities "e-osite" 'n"er t!is section E3ce-t as ot!er%ise -rovi"e" in t!is Co"e0 no :'"*2ent cre"itor or ot!er clai2ant s!all !ave t!e ri*!t to lev7 '-on an7 o1 t!e sec'rities o1 t!e ins'rer !el" on "e-osit 'n"er t!is section or !el" on "e-osit -'rs'ant to t!e re4'ire2ent o1 t!e Co22issioner (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec +?. A1ter satis17in* t!e re4'ire2ents containe" in t!e -rece"in* section0 an7 "o2estic non-li1e ins'rance co2-an70 s!all invest0 to an a2o'nt -rescri#e" #elo%0 its 1'n"s in0 or ot!er%ise0 ac4'ire or loan '-on0 onl7 t!e classes o1 invest2ents "escri#e" in section t%o !'n"re"0 incl'"in* sec'rities iss'e" #7 an7 6re*istere" enter-rise60 as t!is ter2 is "e1ine" in Re-'#lic Act No ;1F60 ot!er%ise $no%n as t!e Invest2ent Incentives Act0 an" s'c! ot!er classes o1 invest2ents as 2a7 #e a't!ori9e" #7 t!e Co22issioner 1or -'r-oses o1 t!is section5 Provi"e"0 T!at (a) no 2ore t!an t%ent7 -er cent'2 o1 t!e net %ort! o1 s'c! co2-an7 as s!o%n #7 its latest 1inancial state2ent a--rove" #7 t!e Co22issioner s!all #e investe" in t!e lot an" #'il"in* in %!ic! t!e ins'rance co2-an7 con"'cts its #'siness an" (#) t!e total invest2ent o1 an ins'rance co2-an7 in an7 re*istere" enter-rise s!all not e3cee" t%ent7 -er cent'2 o1 t!e net %ort! o1 sai" ins'rance co2-an7 as s!o%n #7 its a1oresai" 1inancial state2ent nor t%ent7 -er cent'2 o1 t!e -ai"-'- ca-ital o1 t!e re*istere" enter-rise e3cl'"in* t!e inten"e" invest2ent0 'nless -revio'sl7 a't!ori9e" #7 t!e Co22issioner5 an"0 Provi"e"0 1'rt!er0 T!at s'c! invest2ents 1ree 1ro2 an7 lien or enc'2#rance0 s!all #e at least e4'al in a2o'nt to t!e a**re*ate a2o'nt o1 (a) its le*al
36

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) reserve0 as -rovi"e" in section t%o !'n"re" t!irteen0 an" (#) its reserve 1'n" !el" 1or reins'rance as -rovi"e" 1or in t!e -ertinent treat7 -rovision in t!e case o1 reins'rance ce"e" to a't!ori9e" ins'rers (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec +?; A1ter satis17in* t!e re4'ire2ents containe" in sections one !'n"re" ninet7-one0 one !'n"re" ninet7-t!ree0 t%o !'n"re" t!ree an" t%o !'n"re" 1o'r0 an7 non-li1e ins'rance co2-an7 2a7 invest an7 -ortion o1 its 1'n"s re-resentin* earne" s'r-l's in an7 o1 t!e invest2ents "escri#e" in sections one !'n"re" ninet7-ei*!t0 t%o !'n"re" an" t%o !'n"re" one0 or in an7 sec'rities iss'e" #7 a 6re*istere" enter-rise6 2entione" in t!e -rece"in* sections5 Provi"e"0 T!at no invest2ent in stoc$s or #on"s o1 an7 sin*le entit7 s!all in t!e a**re*ate0 e3cee" t%ent7 -er cent'2 o1 t!e net %ort! o1 t!e ins'rance co2-an7 as s!o%n in its latest 1inancial state2ent a--rove" #7 t!e Co22issioner or t%ent7 -er cent'2 o1 t!e -ai"-'- ca-ital o1 t!e iss'in* co2-an70 %!ic!ever is lesser0 'nless ot!er%ise a--rove" #7 t!e Co22issioner Sec +?6 A1ter satis17in* t!e 2ini2'2 ca-ital invest2ent re4'ire" in section t%o !'n"re" t!ree0 an7 li1e ins'rance co2-an7 2a7 invest its le*al -olic7 reserve0 as -rovi"e" in section t%o !'n"re" eleven or in section t%o !'n"re" t%elve0 in an7 o1 t!e classes o1 sec'rities or t7-es o1 invest2ents "escri#e" in sections one !'n"re" ninet7-ei*!t0 t%o !'n"re"0 t%o !'n"re" one an" t%o !'n"re" t%o0 s'#:ect to t!e li2itations t!erein containe"0 an" in an7 sec'rities iss'e" #7 an7 6re*istere" enter-rise6 2entione" in section t%o !'n"re" 1o'r0 1ree 1ro2 an7 lien or enc'2#rance0 in s'c! a2o'nts as 2a7 #e a--rove" #7 t!e Co22issioner S'c! co2-an7 2a7 li$e%ise invest an7 -ortion o1 its earne" s'r-l's in t!e a1oresai" sec'rities or invest2ents s'#:ect to t!e a1oresai" li2itations Sec +?E An7 invest2ent 2a"e in violation o1 t!e a--lica#le -rovisions o1 t!is title s!all #e consi"ere" non-a"2itte" assets Sec +?F (1) All #on"s or ot!er evi"ences o1 in"e#te"ness !avin* a 1i3e" ter2 an" rate o1 interest an" !el" #7 an7 li1e ins'rance co2-an7 a't!ori9e" to "o #'siness in t!is co'ntr70 i1 a2-l7 sec're" an" i1 not in "e1a'lt as to -rinci-al or interest0 s!all #e val'e" as 1ollo%s5 I1 -'rc!ase" at -ar0 at t!e -ar val'e8 i1 -'rc!ase" a#ove or #elo% -ar0 on t!e #asis o1 t!e -'rc!ase -rice a":'ste" so as to #rin* t!e val'e to -ar at 2at'rit7 an" so as to 7iel" in t!e 2eanti2e t!e e11ective rate o1 interest at %!ic! t!e -'rc!ase %as 2a"e0 or in t!e "iscretion o1 t!e Co22issioner0 on t!e #asis o1 t!e 2et!o" o1 calc'lation co22onl7 $no%n as t!e -ro-rata 2et!o" In a--l7in* t!e 1ore*oin* r'le t!e -'rc!ase -rice s!all in no case #e ta$en at a !i*!er 1i*'re t!an t!e act'al 2ar$et val'e at t!e ti2e o1 ac4'isition T!e Co22issioner s!all !ave t!e -o%er to "eter2ine t!e eli*i#ilit7 o1 an7 s'c! invest2ents 1or val'ation on t!e #asis o1 a2orti9ation0 an" 2a7 #7 re*'lation -rescri#e or li2it t!e classes o1 sec'rities so eli*i#le 1or a2orti9ation All #on"s or ot!er evi"ences o1 in"e#te"ness %!ic! in t!e :'"*2ent o1 t!e Co22issioner are not a2-l7 sec're" s!all not #e eli*i#le 1or a2orti9ation an" s!all #e val'e" in accor"ance %it! -ara*ra-! t%o T!e Co22issioner 2a70 i1 !e 1in"s t!at t!e interest o1 -olic7 !ol"ers so -er2it or re4'ire0 #7 o11icial re*'lation -er2it or re4'ire an7 class or classes o1 ins'rers0 ot!er t!an li1e ins'rance co2-anies0 a't!ori9e" to "o #'siness in t!is co'ntr70 to val'e t!eir #on"s or ot!er evi"ences o1 in"e#te"ness in accor"ance %it! t!e 1ore*oin* r'le (+) T!e invest2ents o1 all ins'rers a't!ori9e" to "o #'siness in t!is co'ntr70 e3ce-t sec'rities s'#:ect to a2orti9ation an" e3ce-t as ot!er%ise -rovi"e" in t!is c!a-ter0 s!all #e val'e"0 in t!e "iscretion o1 t!e Co22issioner0 at t!eir 2ar$et val'e0 or at t!eir a--raise" val'e0 or at -rices "eter2ine" #7 !i2 as re-resentin* t!eir 1air 2ar$et val'e I1 t!e Co22issioner 1in"s t!at in vie% o1 t!e c!aracter o1 invest2ents o1 an7 ins'rer a't!ori9e" to "o #'siness in t!is co'ntr7 it %o'l" #e -r'"ent 1or s'c! ins'rer to esta#lis! a s-ecial reserve 1or -ossi#le losses or 1l'ct'ations in t!e val'es o1 its invest2ents0 !e 2a7 re4'ire s'c! ins'rer to esta#lis! s'c! reserve0 reasona#le in a2o'nt0 an" 2a7 re4'ire t!at s'c! reserve #e 2aintaine" an" re-orte" in an7 state2ent or re-ort o1 t!e 1inancial con"ition o1 s'c! ins'rer T!e Co22issioner 2a70 in connection %it! an7 e3a2ination or re4'ire" 1inancial state2ent o1 an
37

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) a't!ori9e" ins'rer0 re4'ire s'c! ins'rer to 1'rnis! !i2 co2-lete 1inancial state2ents an" a'"ite" re-ort o1 t!e 1inancial con"ition o1 an7 cor-oration o1 %!ic! t!e sec'rities are o%ne" %!oll7 or -artl7 #7 s'c! ins'rer an" 2a7 ca'se an e3a2ination to #e 2a"e o1 an7 s'#si"iar7 or a11iliate o1 s'c! ins'rer (,) T!e stoc$ o1 an ins'rance co2-an7 s!all #e val'e" at t!e lesser o1 its 2ar$et val'e or its #oo$ val'e as s!o%n #7 its last a--rove" ann'al state2ent or t!e last re-ort on e3a2ination0 %!ic!ever is 2ore recent T!e #oo$ val'e o1 a s!are o1 co22on stoc$ o1 an ins'rance co2-an7 s!all #e ascertaine" #7 "ivi"in* (a) t!e a2o'nt o1 its ca-ital an" s'r-l's less t!e val'e o1 all o1 its -re1erre" stoc$0 i1 an70 o'tstan"in*0 #7 (#) t!e n'2#er o1 s!ares o1 its co22on stoc$ iss'e" an" o'tstan"in* Not%it!stan"in* t!e 1ore*oin* -rovisions0 an ins'rer 2a70 at its o-tion0 val'e its !ol"in*s o1 stoc$ in a s'#si"iar7 ins'rance co2-an7 in an a2o'nt not less t!an ac4'isition cost i1 s'c! ac4'isition cost is less t!an t!e val'e "eter2ine" as !erein#e1ore -rovi"e" (.) Real estate re4'ire" #7 1oreclos're or #7 "ee" in lie' t!ereo10 in t!e a#sence o1 a recent a--raisal "ee2e" #7 t!e Co22issioner to #e relia#le0 s!all not #e val'e" at an a2o'nt *reater t!an t!e 'n-ai" -rinci-al o1 t!e "e1a'lte" loan at t!e "ate o1 s'c! 1oreclos're or "ee"0 to*et!er %it! an7 ta3es an" e3-enses -ai" or inc'rre" #7 s'c! ins'rer at s'c! ti2e in connection %it! s'c! ac4'isition0 an" t!e cost o1 a""itions or i2-rove2ents t!erea1ter -ai" #7 s'c! ins'rer an" an7 a2o'nt or a2o'nts t!erea1ter -ai" #7 s'c! ins'rer on an7 assess2ents levie" 1or i2-rove2ents in connection %it! t!e -ro-ert7 c!anro#les virt'al la% li#rar7 (;) P'rc!ase 2one7 2ort*a*es receive" on "is-ositions o1 real -ro-ert7 !el" -'rs'ant to section one !'n"re" ninet7-ei*!t s!all #e val'e" in an a2o'nt e4'ivalent to ninet7 -er cent'2 o1 t!e val'e o1 s'c! real -ro-ert7 P'rc!ase 2one7 2ort*a*es receive" on "is-osition o1 real -ro-ert7 ot!er%ise !el" s!all #e val'e" in an a2o'nt not e3cee"in* ninet7 -er cent'2 o1 t!e val'e o1 s'c! real -ro-ert7 as "eter2ine" #7 an a--raisal 2a"e #7 an a--raiser at or a#o't t!e ti2e o1 "is-osition o1 s'c! real -ro-ert7 (6) T!e stoc$ o1 a s'#si"iar7 o1 an ins'rer s!all #e val'e" on t!e #asis o1 t!e *reater o1 (i) t!e val'e o1 onl7 s'c! s'#si"iar7 o1 t!e assets o1 s'c! s'#si"iar7 as %o'l" constit'te la%1'l invest2ents 1or t!e ins'rer i1 ac4'ire" or !el" "irectl7 #7 t!e ins'rer or (ii) s'c! ot!er val'e "eter2ine" -'rs'ant to stan"ar"s an" c'2'lative li2itations0 containe" in a re*'lation to #e -ro2'l*ate" #7 t!e Co22issioner (E) Not%it!stan"in* an7 -rovision containe" in t!is section or else%!ere in t!is c!a-ter0 i1 t!e Co22issioner 1in" t!at t!e interests o1 -olic7!ol"ers so -er2it or re4'ire0 !e 2a7 -er2it or re4'ire an7 class or classes o1 ins'rers a't!ori9e" to "o #'siness in t!is co'ntr7 to val'e t!eir invest2ents or an7 class or classes t!ereo1 as o1 an7 "ate !ereto1ore or !erea1ter in accor"ance %it! an7 a--lica#le val'ation or 2et!o" Sec +?G It s!all #e t!e "'t7 o1 t!e o11icers o1 t!e ins'rance co2-an7 to re-ort %it!in t!e 1irst 1i1teen "a7s o1 ever7 2ont! all s'c! invest2ents as 2a7 #e 2a"e #7 t!e2 "'rin* t!e -rece"in* 2ont!0 an" t!e Co22issioner 2a70 i1 s'c! invest2ents or an7 o1 t!e2 see2 in:'"icio's to !i20 re4'ire t!e sale or "is-osal o1 t!e sa2e T!e re-ort s!all also incl'"e a list o1 invest2ents sol" or "is-ose" o1 #7 t!e co2-an7 "'rin* t!e sa2e -erio" Title ; RESERIES Sec +1? Ever7 li1e ins'rance co2-an70 "oin* #'siness in t!e P!ili--ines0 s!all ann'all7 2a$e a val'ation o1 all -olicies0 a""itions t!ereto0 'n-ai" "ivi"en"s0 an" all ot!er o#li*ations o'tstan"in* on t!e t!irt7-1irst "a7 o1 Dece2#er o1 t!e -rece"in* 7ear All s'c! val'ations s!all #e 2a"e '-on t!e net -re2i'2s #asis0 accor"in* to t!e stan"ar" a"o-te" #7 t!e co2-an70 %!ic! stan"ar" s!all #e state" in its ann'al re-ort S'c! stan"ar" o1 val'ation %!et!er o1 t!e net level -re2i'20 1'll -reli2inar7 ter20 an7 2o"i1ie" -reli2inar7 ter20 or select an" 'lti2ate reserve #asis0 s!all #e accor"in* to a stan"ar" ta#le o1 2ortalit7 %it! interest at not 2ore

SPC )a% >atc! +?1.

38

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) t!an si3 -er cent'2 co2-o'n" interest /!en t!e -reli2inar7 ter2 #asis is 'se"0 t!e ter2 ins'rance s!all #e li2ite" to t!e 1irst -olic7 7ear T!e res'lts o1 s'c! val'ations s!all #e re-orte" to t!e Co22issioner on or #e1ore t!e t!irtiet! "a7 o1 A-ril o1 eac! 7ear acco2-anie" #7 a s%orn state2ent o1 t!e co2-an7Ds act'ar7 certi17in* to t!e 1i*'res an" statin* '-on %!at 2ortalit7 ta#le it is #ase"0 '-on %!at rate o1 interest t!e val'ation is 2a"e0 an" t!e 2et!o"s 'se" in arrivin* at t!e res'lt o#taine" Sec +11 T!e a**re*ate net val'e so ascertaine" o1 t!e -olicies o1 s'c! co2-an7 s!all #e "ee2e" its reserve lia#ilit70 to -rovi"e 1or %!ic! it s!all !ol" 1'n"s in sec're invest2ents e4'al to s'c! net val'e0 a#ove all its ot!er lia#ilities8 an" it s!all #e t!e "'t7 o1 t!e Co22issioner0 a1ter !avin* veri1ie"0 to s'c! an e3tent as !e 2a7 "ee2 necessar70 t!e val'ation o1 all -olicies in 1orce0 to satis17 !i2sel1 t!at t!e co2-an7 !as s'c! a2o'nt in sa1e le*al sec'rities a1ter all ot!er "e#ts an" clai2s a*ainst it !ave #een -rovi"e" 1or T!e reserve lia#ilit7 1or varia#le contracts "e1ine" in section t%o !'n"re" t!irt7-t%o s!all #e esta#lis!e" in accor"ance %it! act'arial -roce"'res t!at reco*ni9e t!e varia#le nat're o1 t!e #ene1its -rovi"e"0 an" s!all #e a--rove" #7 t!e Co22issioner Sec +1+ Ever7 "o2estic li1e ins'rance co2-an70 con"'cte" on t!e 2't'al -lan or a -lan in %!ic! -olic7!ol"ers are #7 t!e ter2s o1 t!eir -olicies entitle" to s!are in t!e -ro1its or s'r-l's s!all0 on all -olicies o1 li1e ins'rance !ereto1ore or !erea1ter iss'e"0 'n"er t!e con"itions o1 %!ic! t!e "istri#'tion o1 s'r-l's is "e1erre" to a 1i3e" or s-eci1ie" ti2e an" contin*ent '-on t!e -olic7 #ein* in 1orce an" t!e ins're" livin* at t!at ti2e0 ann'all7 ascertain t!e a2o'nt o1 t!e s'r-l's to %!ic! all s'c! -olicies as se-arate class are entitle"0 an" s!all ann'all7 a--ortion to s'c! -olicies as a class t!e a2o'nt o1 t!e s'r-l's so ascertaine"0 an" carr7 t!e a2o'nt o1 s'c! a--ortione" s'r-l's0 -l's t!e act'al interest earnin*s an" accretions to s'c! 1'n"0 as a "istinct an" se-arate lia#ilit7 to s'c! class o1 -olicies on an" 1or %!ic! t!e sa2e %as acc'2'late"0 an" no co2-an7 or an7 o1 its o11icers s!all #e -er2itte" to 'se an7 -art o1 s'c! a--ortione" s'r-l's 1'n" 1or an7 -'r-ose %!atsoever ot!er t!an 1or t!e e3-ress -'r-ose 1or %!ic! t!e sa2e %as acc'2'late" Sec +1, Ever7 ins'rance co2-an70 ot!er t!an li1e0 s!all 2aintain a reserve 1or 'nearne" -re2i'2s on its -olicies in 1orce0 %!ic! s!all #e c!ar*e" as a lia#ilit7 in an7 "eter2ination o1 its 1inancial con"ition S'c! reserve s!all #e e4'al to 1ort7 -er cent'2 o1 t!e *ross -re2i'2s0 less ret'rns an" cancellations0 receive" on -olicies or ris$s !avin* not 2ore t!an a 7ear to r'n0 an" -ro rata on all *ross -re2i'2s receive" on -olicies or ris$s !avin* 2ore t!an a 7ear to r'n5 Provi"e"0 T!at 1or 2arine car*o ris$s t!e reserve s!all #e e4'al to 1ort7 -er cent'2 o1 t!e -re2i'2s %ritten in t!e -olicies '-on 7earl7 ris$s0 an" t!e 1'll a2o'nt o1 t!e -re2i'2s %ritten "'rin* t!e last t%o 2ont!s o1 t!e calen"ar 7ear '-on all ot!er 2arine ris$s not ter2inate" Sec +1. In a""ition to its lia#ilities an" reserves on contracts o1 ins'rance iss'e" #7 it0 ever7 ins'rance co2-an7 s!all #e c!ar*e" %it! t!e esti2ate" a2o'nt o1 all o1 its ot!er lia#ilities0 incl'"in* ta3es0 e3-enses an" ot!er o#li*ations "'e or accr'e" at t!e "ate o1 state2ent0 an" incl'"in* an7 s-ecial reserves re4'ire" #7 t!e Co22issioner -'rs'ant to t!e -rovisions o1 t!is Co"e Title 6 )IAIT OC SING)E RIS@ Sec +1; No ins'rance co2-an7 ot!er t!an li1e0 %!et!er 1orei*n or "o2estic0 s!all retain an7 ris$ on an7 one s'#:ect o1 ins'rance in an a2o'nt e3cee"in* t%ent7 -er cent'2 o1 its net %ort! Cor -'r-oses o1 t!is section0 t!e ter2 6s'#:ect o1 ins'rance6 s!all incl'"e all -ro-erties or ris$s ins're" #7 t!e sa2e ins'rer t!at c'sto2aril7 are consi"ere" #7 non-li1e co2-an7 'n"er%riters to #e s'#:ect to loss or "a2a*e 1ro2 t!e sa2e occ'rrence o1 an7 !a9ar" ins're" a*ainst

SPC )a% >atc! +?1.

39

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Reins'rance ce"e" as a't!ori9e" 'n"er t!e s'ccee"in* title s!all #e "e"'cte" in "eter2inin* t!e ris$ retaine" As to s'ret7 ris$0 "e"'ction s!all also #e 2a"e o1 t!e a2o'nt ass'2e" #7 an7 ot!er co2-an7 a't!ori9e" to transact s'ret7 #'siness an" t!e val'e o1 an7 sec'rit7 2ort*a*e0 -le"*e"0 or !el" s'#:ect to t!e s'ret7Ds control an" 1or t!e s'ret7Ds -rotection Title E REINSURANCE TRANSACTIONS Sec +16 An ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines 2a7 acce-t reins'rances onl7 o1 s'c! ris$s0 an" retain ris$ t!ereon %it!in s'c! li2its0 as it is ot!er%ise a't!ori9e" to ins're Sec +1E No ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines s!all ce"e all or -art o1 an7 ris$s sit'ate" in t!e P!ili--ines #7 %a7 o1 reins'rance "irectl7 to an7 1orei*n ins'rer not a't!ori9e" to "o #'siness in t!e P!ili--ines 'nless s'c! 1orei*n ins'rer or0 i1 t!e services o1 a non-resi"ent #ro$er are 'tili9e"0 s'c! non-resi"ent #ro$er is re-resente" in t!e P!ili--ines #7 a resi"ent a*ent "'l7 re*istere" %it! t!e Co22issioner as re4'ire" in t!is Co"e T!e resi"ent a*ent o1 s'c! 'na't!ori9e" 1orei*n ins'rer or non- resi"ent #ro$er s!all i22e"iatel7 '-on re*istration 1'rnis! t!e Co22issioner %it! t!e ann'al state2ent o1 s'c! ins'rer0 or o1 s'c! co2-an7 or co2-anies %!ere s'c! #ro$er 2a7 -lace P!ili--ine #'siness as o1 t!e 7ear -rece"in* s'c! re*istration0 an" ann'all7 t!erea1ter as soon as availa#le Sec +1F All ins'rance co2-anies0 #ot! li1e an" non-li1e0 a't!ori9e" to "o #'siness in t!e P!ili--ines s!all ce"e t!eir e3cess ris$s to ot!er co2-anies si2ilarl7 a't!ori9e" to "o #'siness in t!e P!ili--ines in s'c! a2o'nts an" 'n"er s'c! arran*e2ents as %o'l" #e consistent %it! so'n" 'n"er%ritin* -ractices #e1ore t!e7 enter into reins'rance arran*e2ents %it! 'na't!ori9e" 1orei*n ins'rers Sec +1G An7 ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines "esirin* to ce"e t!eir e3cess ris$s to 1orei*n ins'rance or reins'rance co2-anies not a't!ori9e" to transact #'siness in t!e P!ili--ines 2a7 "o so 'n"er t!e 1ollo%in* con"itions5 (1) E3ce-t in 1ac'ltative reins'rance an" e3cess o1 loss covers0 t!e 1'll a2o'nt o1 t!e reserve 1'n" re4'ire" #7 la% s!all #e set '- in t!e #oo$s o1 an" !el" #7 t!e ce"in* co2-an7 1or so lon* as t!e ris$ concerne" is in 1orce5 Provi"e"0 T!at in case o1 1ac'ltative ins'rance0 t!e ce"in* co2-an7 s!all s!o% to t!e satis1action o1 t!e Co22issioner t!at t!e P!ili--ine 2ar$et cannot -rovi"e t!e 1acilities so'*!t a#roa" (+) T!e reserve 1'n" %it!!el" s!all #e investe" in #on"s or ot!er evi"ences o1 "e#t o1 t!e Govern2ent o1 t!e P!ili--ines or its -olitical s'#"ivisions or instr'2entalities0 or o1 *overn2ent-o%ne" or controlle" cor-orations an" entities0 incl'"in* t!e Central >an$0 an"Mor ot!er sec'rities acce-ta#le 'n"er section t%o !'n"re" S!o'l" an7 reins'rance a*ree2ent #e 1or an7 reason cancelle" or ter2inate"0 t!e ce"in* co2-an7 concerne" s!all in1or2 t!e Co22issioner in %ritin* o1 s'c! cancellation or ter2ination %it!in t!irt7 "a7s 1ro2 t!e "ate o1 s'c! cancellation or ter2ination or 1ro2 t!e "ate notice or in1or2ation o1 s'c! cancellation or ter2ination is receive" #7 s'c! co2-an7 as t!e case 2a7 #e Sec ++? Ever7 ins'rance co2-an7 a't!ori9e" to "o #'siness in t!e P!ili--ines s!all re-ort to t!e Co22issioner on 1or2s -rescri#e" #7 !i2 t!e -artic'lars o1 reins'rance treaties as o1 t!e 1irst "a7 o1 Jan'ar7 o1 t!e 7ear 1ollo%in* t!e a--roval o1 t!is Co"e an" s!all t!erea1ter si2ilarl7 re-ort to t!e Co22issioner -artic'lars o1 an7 ne% treaties or c!an*es in e3istin* treaties Sec ++1 No cre"it s!all #e allo%e" as an a"2itte" asset or as a "e"'ction 1ro2 lia#ilit70 to an7 ce"in* ins'rer 1or reins'rance 2a"e0 ce"e"0 rene%e"0 or ot!er%ise #eco2in* e11ective a1ter Jan'ar7 1irst0 nineteen !'n"re" sevent71ive0 'nless t!e reins'rance s!all #e -a7a#le #7 t!e ass'2in* ins'rer on t!e #asis o1 t!e lia#ilit7 o1 t!e ce"in* ins'rer 'n"er t!e contract or contracts reins're" %it!o't "i2in'tion #eca'se o1 t!e insolvenc7 o1 t!e ce"in* ins'rer
40

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) nor 'nless 'n"er t!e contract or contracts o1 reins'rance t!e lia#ilit7 1or s'c! reins'rance is ass'2e" #7 t!e ass'2in* ins'rer or ins'rers as o1 t!e sa2e e11ective "ate8 nor 'nless t!e reins'rance a*ree2ent -rovi"es t!at -a72ents #7 t!e ass'2in* ins'rer s!all #e 2a"e "irectl7 to t!e ce"in* ins'rer or to its li4'i"ator0 receiver0 or stat'tor7 s'ccessor e3ce-t (a) %!ere t!e contract s-eci1icall7 -rovi"es anot!er -a7ee o1 s'c! reins'rance in t!e event o1 t!e insolvenc7 o1 t!e ce"in* ins'rer an" (#) %!ere t!e ass'2in* ins'rer %it! t!e consent o1 t!e "irect ins're" or ins're"s !as ass'2e" s'c! -olic7 o#li*ations o1 t!e ce"in* ins'rer as "irect o#li*ations o1 t!e ass'2in* ins'rer to t!e -a7ees 'n"er s'c! -olicies an" in s'#stit'tion 1or t!e o#li*ations o1 t!e ce"in* ins'rer to s'c! -a7ees Sec +++ No li1e ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines s!all reins're its %!ole ris$ on an7 in"ivi"'al li1e or :oint lives0 or s'#stantiall7 all o1 its ins'rance in 1orce0 %it!o't !avin* 1irst o#taine" t!e %ritten -er2ission o1 t!e Co22issioner Title F ANNUA) STATEAENT Sec ++, Ever7 ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines s!all ter2inate its 1iscal -erio" on t!e t!irt7-1irst "a7 o1 Dece2#er ever7 7ear0 an" s!all ann'all7 on or #e1ore t!e t!irtiet! "a7 o1 A-ril o1 eac! 7ear ren"er to t!e Co22issioner a state2ent si*ne" an" s%orn to #7 t!e c!ie1 o11icer o1 s'c! co2-an7 s!o%in*0 in s'c! 1or2 an" "etails as 2a7 #e -rescri#e" #7 t!e Co22issioner0 t!e e3act con"ition o1 its a11airs on t!e -rece"in* t!irt7-1irst "a7 o1 Dece2#er An7 entr7 in t!e state2ent %!ic! is 1o'n" to #e 1alse s!all constit'te a 2is"e2eanor an" t!e o11icer si*nin* s'c! state2ent s!all #e s'#:ect to t!e -enalt7 -rovi"e" 1or 'n"er section 1o'r !'n"re" nineteen Sec ++. Ever7 ins'rance co2-an7 a't!ori9e" 'n"er title ten o1 t!is c!a-ter to iss'e0 "eliver or 'se varia#le contracts s!all ann'all7 1ile %it! t!e Co22issioner se-arate ann'al state2ent o1 its se-arate varia#le acco'nts S'c! state2ent s!all #e on a 1or2 -rescri#e" or a--rove" #7 t!e Co22issioner an" s!all incl'"e "etails as to all o1 t!e inco2e0 "is#'rse2ents0 assets an" lia#ilit7 ite2s o1 an" associate" %it! t!e sai" se-arate varia#le acco'nts Sai" state2ent s!all #e 'n"er oat! o1 t%o o11icers o1 t!e co2-an7 an" s!all #e 1ile" si2'ltaneo'sl7 %it! t!e ann'al state2ent re4'ire" #7 t!e -rece"in* section Sec ++; /it!in t!irt7 "a7s a1ter recei-t o1 t!e ann'al state2ent a--rove" #7 t!e Co22issioner0 ever7 ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines s!all -'#lis! in t%o ne%s-a-ers o1 *eneral circ'lation in t!e Cit7 o1 Aanila0 one -'#lis!e" in En*lis! an" one in Pili-ino0 a 1'll s7-nosis o1 its ann'al 1inancial state2ent s!o%in* 1'll7 t!e con"itions o1 its #'siness0 an" settin* 1ort! its reso'rces an" lia#ilities Title G PO)ICH CORAS Sec ++6 No -olic70 certi1icate or contract o1 ins'rance s!all #e iss'e" or "elivere" %it!in t!e P!ili--ines 'nless in t!e 1or2 -revio'sl7 a--rove" #7 t!e Co22issioner0 an" no a--lication 1or2 s!all #e 'se" %it!0 an" no ri"er0 cla'se0 %arrant7 or en"orse2ent s!all #e attac!e" to0 -rinte" or sta2-e" '-on s'c! -olic70 certi1icate or contract 'nless t!e 1or2 o1 s'c! a--lication0 ri"er0 cla'se0 %arrant7 or en"orse2ent !as #een a--rove" #7 t!e Co22issioner Sec ++E In t!e case o1 in"ivi"'al li1e or en"o%2ent ins'rance0 t!e -olic7 s!all contain in s'#stance t!e 1ollo%in* con"itions5 (a) A -rovision t!at t!e -olic7!ol"er is entitle" to a *race -erio" eit!er o1 t!irt7 "a7s or o1 one 2ont! %it!in %!ic! t!e -a72ent o1 an7 -re2i'2 a1ter t!e 1irst 2a7 #e 2a"e0 s'#:ect at t!e o-tion o1 t!e ins'rer to an interest c!ar*e not in e3cess o1 si3 -er cent'2 -er ann'2 1or t!e n'2#er o1 "a7s o1 *race ela-sin* #e1ore t!e -a72ent o1 t!e -re2i'20 "'rin* %!ic! -erio" o1
41

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) *race t!e -olic7 s!all contin'e in 1'll 1orce0 #'t in case t!e -olic7 #eco2es a clai2 "'rin* t!e sai" -erio" o1 *race #e1ore t!e over"'e -re2i'2 is -ai"0 t!e a2o'nt o1 s'c! -re2i'2 %it! interest 2a7 "e "e"'cte" 1ro2 t!e a2o'nt -a7a#le 'n"er t!e -olic7 in settle2ent8 (#) A -rovision t!at t!e -olic7 s!all #e incontesta#le a1ter it s!all !ave #een in 1orce "'rin* t!e li1eti2e o1 t!e ins're" 1or a -erio" o1 t%o 7ears 1ro2 its "ate o1 iss'e as s!o%n in t!e -olic70 or "ate o1 a--roval o1 last reinstate2ent0 e3ce-t 1or non--a72ent o1 -re2i'2 an" e3ce-t 1or violation o1 t!e con"itions o1 t!e -olic7 relatin* to 2ilitar7 or naval service in ti2e o1 %ar8 (c) A -rovision t!at t!e -olic7 s!all constit'te t!e entire contract #et%een t!e -arties0 #'t i1 t!e co2-an7 "esires to 2a$e t!e a--lication a -art o1 t!e contract it 2a7 "o so -rovi"e" a co-7 o1 s'c! a--lication s!all #e in"orse" '-on or attac!e" to t!e -olic7 %!en iss'e"0 an" in s'c! case t!e -olic7 s!all contain a -rovision t!at t!e -olic7 an" t!e a--lication t!ere1or s!all constit'te t!e entire contract #et%een t!e -arties8 (") A -rovision t!at i1 t!e a*e o1 t!e ins're" is consi"ere" in "eter2inin* t!e -re2i'2 an" t!e #ene1its accr'in* 'n"er t!e -olic70 an" t!e a*e o1 t!e ins're" !as #een 2isstate"0 t!e a2o'nt -a7a#le 'n"er t!e -olic7 s!all #e s'c! as t!e -re2i'2 %o'l" !ave -'rc!ase" at t!e correct a*e8 (e) I1 t!e -olic7 is -artici-atin*0 a -rovision t!at t!e co2-an7 s!all -erio"icall7 ascertain an" a--ortion an7 "ivisi#le s'r-l's accr'in* on t!e -olic7 'n"er con"itions s-eci1ie" t!erein8 (1) A -rovision s-eci17in* t!e o-tions to %!ic! t!e -olic7!ol"er is entitle" to in t!e event o1 "e1a'lt in a -re2i'2 -a72ent a1ter t!ree 1'll ann'al -re2i'2s s!all !ave #een -ai" S'c! o-tion s!all consist o15c!anro#lesvirt'alla%li#rar7 (1) A cas! s'rren"er val'e -a7a#le '-on s'rren"er o1 t!e -olic7 %!ic! s!all not #e less t!an t!e reserve on t!e -olic70 t!e #asis o1 %!ic! s!all #e in"icate"0 1or t!e t!en c'rrent -olic7 7ear an" an7 "ivi"en" a""itions t!ereto0 re"'ce" #7 a s'rren"er c!ar*e %!ic! s!all not #e 2ore t!an one-1i1t! o1 t!e entire reserve or t%o an" one-!al1 -er cent'2 o1 t!e a2o'nt ins're" an" an7 "ivi"en" a""itions t!ereto8 (+) One or 2ore -ai"-'- #ene1its on a -lan or -lans s-eci1ie" in t!e -olic7 o1 s'c! val'e as 2a7 #e -'rc!ase" #7 t!e cas! s'rren"er val'e8 (*) A -rovision t!at at an7ti2e a1ter a cas! s'rren"er val'e is availa#le 'n"er t!e -olic7 an" %!ile t!e -olic7 is in 1orce0 t!e co2-an7 %ill a"vance0 on -ro-er assi*n2ent or -le"*e o1 t!e -olic7 an" on sole sec'rit7 t!ereo10 a s'2 e4'al to0 or at t!e o-tion o1 t!e o%ner o1 t!e -olic70 less t!an t!e cas! s'rren"er val'e on t!e -olic70 at a s-eci1ie" rate o1 interest0 not 2ore t!an t!e 2a3i2'2 allo%e" #7 la%0 to #e "eter2ine" #7 t!e co2-an7 1ro2 ti2e to ti2e0 #'t not 2ore o1ten t!an once a 7ear0 s'#:ect to t!e a--roval o1 t!e Co22issioner8 an" t!at t!e co2-an7 %ill "e"'ct 1ro2 s'c! loan val'e an7 e3istin* in"e#te"ness on t!e -olic7 an" an7 'n-ai" #alance o1 t!e -re2i'2 1or t!e c'rrent -olic7 7ear0 an" 2a7 collect interest in a"vance on t!e loan to t!e en" o1 t!e c'rrent -olic7 7ear0 %!ic! -rovision 2a7 1'rt!er -rovi"e t!at s'c! loan 2a7 #e "e1erre" 1or not e3cee"in* si3 2ont!s a1ter t!e a--lication t!ere1or is 2a"e8 (!) A ta#le s!o%in* in 1i*'res cas! s'rren"er val'es an" -ai"-'- o-tions availa#le 'n"er t!e -olic7 eac! 7ear '-on "e1a'lt in -re2i'2 -a72ents0 "'rin* at least t%ent7 7ears o1 t!e -olic7 #e*innin* %it! t!e 7ear in %!ic! t!e val'es an" o-tions 1irst #eco2e availa#le0 to*et!er %it! a -rovision t!at in t!e event o1 t!e 1ail're o1 t!e -olic7!ol"er to elect one o1 t!e sai" o-tions %it!in t!e ti2e s-eci1ie" in t!e -olic70 one o1 sai" o-tions s!all a'to2aticall7 ta$e e11ect an" no -olic7!ol"er s!all ever 1or1eit !is ri*!t to sa2e #7 reason o1 !is 1ail're to so elect8 (i) In case t!e -rocee"s o1 a -olic7 are -a7a#le in install2ents or as an ann'it70 a ta#le s!o%in* t!e 2ini2'2 a2o'nts o1 t!e install2ents or ann'it7 -a72ents8 (:) A -rovision t!at t!e -olic7!ol"er s!all #e entitle" to !ave t!e -olic7 reinstate" at an7 ti2e %it!in t!ree 7ears 1ro2 t!e "ate o1 "e1a'lt o1 -re2i'2 -a72ent 'nless t!e cas! s'rren"er val'e !as #een "'l7 -ai"0 or t!e e3tension -erio" !as e3-ire"0 '-on -ro"'ction o1 evi"ence o1 ins'ra#ilit7 satis1actor7 to t!e co2-an7 an" '-on -a72ent o1 all over"'e -re2i'2s an"
42

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) an7 in"e#te"ness to t!e co2-an7 '-on sai" -olic70 %it! interest rate not e3cee"in* t!at %!ic! %o'l" !ave #een a--lica#le to sai" -re2i'2s an" in"e#te"ness in t!e -olic7 7ears -rior to reinstate2ent An7 o1 t!e 1ore*oin* -rovisions or -ortions t!ereo1 not a--lica#le to sin*le -re2i'2 or ter2 -olicies s!all to t!at e3tent not #e incor-orate" t!erein8 an" an7 s'c! -olic7 2a7 #e iss'e" an" "elivere" in t!e P!ili--ines %!ic! in t!e o-inion o1 t!e Co22issioner contains -rovisions on an7 one or 2ore o1 t!e 1ore*oin* re4'ire2ents 2ore 1avora#le to t!e -olic7!ol"er t!an !erein#e1ore re4'ire" T!is section s!all not a--l7 to -olicies o1 *ro'- li1e or in"'strial li1e ins'rance Sec ++F No -olic7 o1 *ro'- li1e ins'rance s!all #e iss'e" an" "elivere" in t!e P!ili--ines 'nless it contains in s'#stance t!e 1ollo%in* -rovisions0 or -rovisions %!ic! in t!e o-inion o1 t!e Co22issioner are 2ore 1avora#le to t!e -ersons ins're"0 or at least as 1avora#le to t!e -ersons ins're" an" 2ore 1avora#le to t!e -olic7-!ol"ers5c!anro#lesvirt'alla%li#rar7 (a) A -rovision t!at t!e -olic7!ol"er is entitle" to a *race -erio" o1 eit!er t!irt7 "a7s or o1 one 2ont! 1or t!e -a72ent o1 an7 -re2i'2 "'e a1ter t!e 1irst0 "'rin* %!ic! *race -erio" t!e "eat! #ene1it covera*e s!all contin'e in 1orce0 'nless t!e -olic7!ol"er s!all !ave *iven t!e ins'rer %ritten notice o1 "iscontin'ance in a"vance o1 t!e "ate o1 "iscontin'ance an" in accor"ance %it! t!e ter2s o1 t!e -olic7 T!e -olic7 2a7 -rovi"e t!at t!e -olic7!ol"er s!all #e lia#le 1or t!e -a72ent o1 a -ro rata -re2i'2 1or t!e ti2e t!e -olic7 is in 1orce "'rin* s'c! *race -erio"8 (#) A -rovision t!at t!e vali"it7 o1 t!e -olic7 s!all not #e conteste"0 e3ce-t 1or non--a72ent o1 -re2i'2s a1ter it !as #een in 1orce 1or t%o 7ears 1ro2 its "ate o1 iss'e8 an" t!at no state2ent 2a"e #7 an7 ins're" 'n"er t!e -olic7 relatin* to !is ins'ra#ilit7 s!all #e 'se" in contestin* t!e vali"it7 o1 t!e ins'rance %it! res-ect to %!ic! s'c! state2ent %as 2a"e a1ter s'c! ins'rance !as #een in 1orce -rior to t!e contest 1or a -erio" o1 t%o 7ears "'rin* s'c! -ersonDs li1eti2e nor 'nless containe" in %ritten instr'2ent si*ne" #7 !i28 (c) A -rovision t!at a co-7 o1 t!e a--lication0 i1 an70 o1 t!e -olic7!ol"er s!all #e attac!e" to t!e -olic7 %!en iss'e"0 t!at all state2ents 2a"e #7 t!e -olic7!ol"er or #7 -ersons ins're" s!all #e "ee2e" re-resentations an" not %arranties0 an" t!at no state2ent 2a"e #7 an7 ins're" s!all #e 'se" in an7 contest 'nless a co-7 o1 t!e instr'2ent containin* t!e state2ent is or !as #een 1'rnis!e" to s'c! -erson or to !is #ene1iciar78 (") A -rovision settin* 1ort! t!e con"itions0 i1 an70 'n"er %!ic! t!e ins'rer reserves t!e ri*!t to re4'ire a -erson eli*i#le 1or ins'rance to 1'rnis! evi"ence o1 in"ivi"'al ins'ra#ilit7 satis1actor7 to t!e ins'rer as a con"ition to -art or all o1 !is covera*e8 (e) A -rovision s-eci17in* an e4'ita#le a":'st2ent o1 -re2i'2s or o1 #ene1its or o1 #ot! to #e 2a"e in t!e event t!at t!e a*e o1 a -erson ins're" !as #een 2isstate"0 s'c! -rovision to contain a clear state2ent o1 t!e 2et!o" o1 a":'st2ent to #e 'se"8 (1) A -rovision t!at an7 s'2 #eco2in* "'e #7 reason o1 "eat! o1 t!e -erson ins're" s!all #e -a7a#le to t!e #ene1iciar7 "esi*nate" #7 t!e ins're"0 s'#:ect to t!e -rovisions o1 t!e -olic7 in t!e event t!at t!ere is no "esi*nate" #ene1iciar70 as to all or an7 -art o1 s'c! s'20 livin* at t!e "eat! o1 t!e ins're"0 an" s'#:ect to an7 ri*!t reserve" #7 t!e ins'rer in t!e -olic7 an" set 1ort! in t!e certi1icate to -a7 at its o-tion a -art o1 s'c! s'2 not e3cee"in* 1ive !'n"re" -esos to an7 -erson a--earin* to t!e ins'rer to #e e4'ita#l7 entitle" t!ereto #7 reason o1 !avin* inc'rre" 1'neral or ot!er e3-enses inci"ent to t!e last illness or "eat! o1 t!e -erson ins're"8 (*) A -rovision t!at t!e ins'rer %ill iss'e to t!e -olic7!ol"er 1or "eliver7 to eac! -erson ins're" an in"ivi"'al certi1icate settin* 1ort! a state2ent as to t!e ins'rance -rotection to %!ic! !e is entitle"0 to %!o2 t!e ins'rance #ene1its are -a7a#le0 an" t!e ri*!ts set 1ort! in -ara*ra-!s (!)0 (i) an" (:) 1ollo%in*8 (!) A -rovision t!at i1 t!e ins'rance0 or an7 -ortion o1 it0 on a -erson covere" 'n"er t!e -olic7 ceases #eca'se o1 ter2ination o1 e2-lo72ent or o1 2e2#ers!i- in t!e class or classes eli*i#le 1or covera*e 'n"er t!e -olic70 s'c! -erson s!all #e entitle" to !ave iss'e" to !i2 #7 t!e ins'rer0 %it!o't evi"ence o1 ins'ra#ilit70 an in"ivi"'al -olic7 o1 li1e ins'rance %it!o't "isa#ilit7
43

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) or ot!er s'--le2entar7 #ene1its0 -rovi"e" a--lication 1or t!e in"ivi"'al -olic7 an" -a72ent o1 t!e 1irst -re2i'2 to t!e ins'rer s!all #e 2a"e %it!in t!irt7 "a7s a1ter s'c! ter2ination an" -rovi"e" 1'rt!er t!at5 (1) t!e in"ivi"'al -olic7 s!all #e on an7 one o1 t!e 1or2s0 e3ce-t ter2 ins'rance0 t!en c'sto2aril7 iss'e" #7 t!e ins'rer at t!e a*e an" 1or an a2o'nt not in e3cess o1 t!e covera*e 'n"er t!e *ro'- -olic78 an" (+) t!e -re2i'2 on t!e in"ivi"'al -olic7 s!all #e at t!e ins'rerDs t!en c'sto2ar7 rate a--lica#le to t!e 1or2 an" a2o'nt o1 t!e in"ivi"'al -olic70 to t!e class o1 ris$ to %!ic! s'c! -erson t!en #elon*s0 an" to !is a*e attaine" on t!e e11ective "ate o1 t!e in"ivi"'al -olic7 (i) A -rovision t!at i1 t!e *ro'- -olic7 ter2inates or is a2en"e" so as to ter2inate t!e ins'rance o1 an7 class o1 ins're" -ersons0 ever7 -erson ins're" t!ere'n"er at t!e "ate o1 s'c! ter2ination %!ose ins'rance ter2inates an" %!o !as #een so ins're" 1or 1ive 7ears -rior to s'c! ter2ination "ate s!all #e entitle" to !ave iss'e" to !i2 #7 t!e ins'rer an in"ivi"'al -olic7 o1 li1e ins'rance s'#:ect to t!e sa2e li2itations as set 1ort! in -ara*ra-! (!)0 e3ce-t t!at t!e *ro'- -olic7 2a7 -rovi"e t!at t!e a2o'nt o1 s'c! in"ivi"'al -olic7 s!all not e3cee" t!e s2aller o1 (a) t!e a2o'nt o1 t!e -ersonDs li1e ins'rance -rotection ceasin* less t!e a2o'nt o1 an7 li1e ins'rance 1or %!at !e is or #eco2es eli*i#le 'n"er an7 *ro'- -olic7 iss'e" or reinstate" #7 t!e sa2e or anot!er reins'rer %it!in t!irt7 "a7s a1ter s'c! ter2ination0 an" (#) t%o t!o'san" -esos8 (:) A -rovision t!at i1 a -erson ins're" 'n"er t!e *ro'- -olic7 "ies "'rin* t!e t!irt7-"a7 -erio" %it!in %!ic! !e %o'l" !ave #een entitle" to an in"ivi"'al -olic7 iss'e" to !i2 in accor"ance %it! (!) an" (i) a#ove an" #e1ore s'c! in"ivi"'al -olic7 s!all !ave #eco2e e11ective0 t!e a2o'nt o1 li1e ins'rance %!ic! !e %o'l" !ave #een entitle" to !ave iss'e" to !i2 as an in"ivi"'al -olic7 s!all #e -a7a#le as a clai2 'n"er t!e *ro'- -olic7 %!et!er or not a--lication 1or t!e in"ivi"'al -olic7 or t!e -a72ent o1 t!e 1irst -re2i'2 !as #een 2a"e8 ($) In t!e case o1 a -olic7 iss'e" to a cre"itor to ins're "e#tors o1 s'c! cre"itor0 a -rovision t!at t!e ins'rer %ill 1'rnis! to t!e -olic7!ol"er 1or "eliver7 to eac! "e#tor ins're" 'n"er t!e -olic7 a 1or2 %!ic! %ill contain a state2ent t!at t!e li1e o1 t!e "e#tor is ins're" 'n"er t!e -olic7 an" t!at an7 "eat! #ene1it -ai" t!ere'n"er #7 reason o1 !is "eat! s!all #e a--lie" to re"'ce or e3tin*'is! in"e#te"ness T!e -rovisions o1 -ara*ra-!s (1) to (:) s!all not a--l7 to -olicies iss'e" to a cre"itor to ins're !is "e#tors I1 a *ro'- li1e -olic7 is on a -lan o1 ins'rance ot!er t!an ter20 it s!all contain a non-1or1eit're -rovision or -rovisions %!ic! in t!e o-inion o1 t!e Co22issioner is or are e4'ita#le to t!e ins're" or t!e -olic7!ol"er5 Provi"e"0 T!at not!in* !erein containe" s!all #e so constr'e" as to re4'ire *ro'- li1e -olicies to contain t!e sa2e non-1or1eit're -rovisions as are re4'ire" o1 in"ivi"'al li1e -olicies Sec ++G T!e ter2 6in"'strial li1e ins'rance6 as 'se" in t!is Co"e s!all 2ean t!at 1or2 o1 li1e ins'rance 'n"er %!ic! t!e -re2i'2s are -a7a#le eit!er 2ont!l7 or o1tener0 i1 t!e 1ace a2o'nt o1 ins'rance -rovi"e" in an7 -olic7 is not 2ore t!an 1ive !'n"re" ti2es t!at o1 t!e c'rrent stat'tor7 2ini2'2 "ail7 %a*e in t!e Cit7 o1 Aanila0 an" i1 t!e %or"s 6in"'strial -olic76 are -rinte" '-on t!e -olic7 as -art o1 t!e "escri-tive 2atter An in"'strial li1e -olic7 s!all not la-se 1or non--a72ent o1 -re2i'2 i1 s'c! non--a72ent %as "'e to t!e 1ail're o1 t!e co2-an7 to sen" its re-resentative or a*ent to t!e ins're" at t!e resi"ence o1 t!e ins're" or at so2e ot!er -lace in"icate" #7 !i2 1or t!e -'r-ose o1 collectin* s'c! -re2i'25 Provi"e"0 T!at t!e -rovisions o1 t!is -ara*ra-! s!all not a--l7 %!en t!e -re2i'2 on t!e -olic7 re2ains 'n-ai" 1or a -erio" o1 t!ree 2ont!s or t%elve %ee$s a1ter t!e *race -erio" !as e3-ire" Sec +,? In t!e case o1 in"'strial li1e ins'rance0 t!e -olic7 s!all contain in s'#stance t!e 1ollo%in* -rovisions5 (a) A -rovision t!at t!e ins're" is entitle" to a *race -erio" o1 1o'r %ee$s %it!in %!ic! t!e -a72ent o1 an7 -re2i'2 a1ter t!e 1irst 2a7 #e 2a"e0 e3ce-t t!at %!ere -re2i'2s are -a7a#le 2ont!l70 t!e -erio" o1 *race s!all #e eit!er one 2ont! or t!irt7 "a7s8 an" t!at "'rin* t!e -erio" o1 *race0 t!e -olic7 s!all contin'e in 1'll 1orce0 #'t i1 "'rin* s'c! *race -erio" t!e -olic7
44

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) #eco2es a clai20 t!en an7 over"'e an" 'n-ai" -re2i'2s 2a7 #e "e"'cte" 1ro2 an7 a2o'nt -a7a#le 'n"er t!e -olic7 in settle2ent8 (#) A -rovision t!at t!e -olic7 s!all #e incontesta#le a1ter it !as #een in 1orce "'rin* t!e li1eti2e o1 t!e ins're" 1or a s-eci1ie" -erio"0 not 2ore t!an t%o 7ears 1ro2 its "ate o1 iss'e0 e3ce-t 1or non--a72ent o1 -re2i'2s an" e3ce-t 1or violation o1 t!e con"itions o1 t!e -olic7 relatin* to naval or 2ilitar7 service0 or services a'3iliar7 t!ereto0 an" e3ce-t as to -rovisions relatin* to #ene1its in t!e event o1 "isa#ilit7 as "e1ine" in t!e -olic70 an" t!ose *rantin* a""itional ins'rance s-eci1icall7 a*ainst "eat! #7 acci"ent or #7 acci"ental 2eans0 or to a""itional ins'rance a*ainst loss o10 or loss o1 'se o10 s-eci1ic 2e2#ers o1 t!e #o"78 (c) A -rovision t!at t!e -olic7 s!all constit'te t!e entire contract #et%een t!e -arties0 or i1 a co-7 o1 t!e a--lication is en"orse" '-on an" attac!e" to t!e -olic7 %!en iss'e"0 a -rovision t!at t!e -olic7 an" t!e a--lication t!ere1or s!all constit'te t!e entire contract #et%een t!e -arties0 an" in t!e latter case0 a -rovision t!at all state2ents 2a"e #7 t!e ins're" s!all0 in t!e a#sence o1 1ra'"0 #e "ee2e" re-resentations an" not %arranties8 (") A -rovision t!at i1 t!e a*e o1 t!e -erson ins're"0 or t!e a*e o1 an7 -erson0 consi"ere" in "eter2inin* t!e -re2i'20 or t!e #ene1its accr'in* 'n"er t!e -olic70 !as #een 2isstate"0 an7 a2o'nt -a7a#le or #ene1it accr'in* 'n"er t!e -olic7 s!all #e s'c! as t!e -re2i'2 -ai" %o'l" !ave -'rc!ase" at t!e correct a*e8 (e) A -rovision t!at i1 t!e -olic7 is a -artici-atin* -olic70 t!e co2-an7 s!all -erio"icall7 ascertain an" a--ortion an7 "ivisi#le s'r-l's accr'in* on t!e -olic7 'n"er t!e con"itions s-eci1ie" t!erein8 (1) A -rovision t!at in t!e event o1 "e1a'lt in -re2i'2 -a72ents a1ter t!ree 1'll 7earsD -re2i'2s !ave #een -ai"0 t!e -olic7 s!all #e converte" into a sti-'late" 1or2 o1 ins'rance0 an" t!at in t!e event o1 "e1a'lt in -re2i'2 -a72ents a1ter 1ive 1'll 7earsD -re2i'2s !ave #een -ai"0 a s-eci1ie" cas! s'rren"er val'e s!all #e availa#le0 in lie' o1 t!e sti-'late" 1or2 o1 ins'rance0 at t!e o-tion o1 t!e -olic7!ol"er T!e net val'e o1 s'c! sti-'late" 1or2 o1 ins'rance an" t!e a2o'nt o1 s'c! cas! val'e s!all not #e less t!an t!e reserve on t!e -olic7 an" "ivi"en" a""itions t!ereto0 i1 an70 at t!e en" o1 t!e last co2-lete" -olic7 7ear 1or %!ic! -re2i'2s s!all !ave #een -ai" (t!e -olic7 to s-eci17 t!e 2ortalit7 ta#le0 rate o1 interest an" 2et!o" o1 val'ation a"o-te" to co2-'te s'c! reserve)0 e3cl'sive o1 an7 reserve on "isa#ilit7 #ene1its an" acci"ental "eat! #ene1its0 less an a2o'nt not to e3cee" t%o an" one-!al1 -er cent'2 o1 t!e 2a3i2'2 a2o'nt ins're" #7 t!e -olic7 an" "ivi"en" a""itions t!ereto0 i1 an70 at t!e en" o1 t!e last co2-lete" -olic7 7ear 1or %!ic! -re2i'2s s!all !ave #een -ai" (t!e -olic7 to s-eci17 t!e 2ortalit7 ta#le0 rate o1 interest an" 2et!o" o1 val'ation a"o-te" to co2-'te s'c! reserve)0 e3cl'sive o1 an7 reserve on "isa#ilit7 #ene1its an" acci"ental "eat! #ene1its0 less an a2o'nt not to e3cee" t%o an" one-!al1 -er cent'2 o1 t!e 2a3i2'2 a2o'nt ins're" #7 t!e -olic7 an" "ivi"en" a""itions t!ereto0 i1 an70 %!en t!e iss'e a*e is 'n"er ten 7ears0 an" less an a2o'nt not to e3cee" t%o an" one-!al1 -er cent'2 o1 t!e c'rrent a2o'nt ins're" #7 t!e -olic7 an" "ivi"en" a""itions t!ereto0 i1 an70 i1 t!e iss'e a*e is ten 7ears or ol"er0 an" less an7 e3istin* in"e#te"ness to t!e co2-an7 on or sec're" #7 t!e -olic78 (*) A -rovision t!at t!e -olic7 2a7 #e s'rren"ere" to t!e co2-an7 at its !o2e o11ice %it!in a -erio" o1 not less t!an si3t7 "a7s a1ter t!e "'e "ate o1 a -re2i'2 in "e1a'lt 1or t!e s-eci1ie" cas! val'e0 -rovi"e" t!at t!e ins'rer 2a7 "e1er -a72ent 1or not 2ore t!an si3 2ont!s a1ter t!e a--lication t!ere1or is 2a"e8 (!) A ta#le t!at s!o%s in 1i*'res t!e non-1or1eit're #ene1its availa#le 'n"er t!e -olic7 ever7 7ear '-on "e1a'lt in -a72ent o1 -re2i'2s "'rin* at least t!e 1irst t%ent7 7ears o1 t!e -olic70 s'c! ta#le to #e*in %it! t!e 7ear in %!ic! s'c! val'es #eco2e availa#le0 an" a -rovision t!at t!e co2-an7 %ill 1'rnis! '-on re4'est an e3tension o1 s'c! ta#le #e7on" t!e 7ear s!o%n in t!e -olic78 (i) A -rovision t!at s-eci1ies %!ic! one o1 t!e sti-'late" 1or2s o1 ins'rance -rovi"e" 1or 'n"er t!e -rovision o1 -ara*ra-! (1) o1 t!is section s!all ta$e e11ect in t!e event o1 t!e ins're"Ds 1ail're0 %it!in si3t7 "a7s 1ro2 t!e "'e "ate o1 t!e -re2i'2 in "e1a'lt0 to noti17 t!e ins'rer in %ritin* as to %!ic! one o1 s'c! 1or2s !e !as selecte"8

SPC )a% >atc! +?1.

45

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (:) A -rovision t!at t!e -olic7 2a7 #e reinstate" at an7 ti2e %it!in t%o 7ears 1ro2 t!e "'e "ate o1 t!e -re2i'2 in "e1a'lt 'nless t!e cas! s'rren"er val'e !as #een -ai" or t!e -erio" o1 e3ten"e" ter2 ins'rance e3-ire"0 '-on -ro"'ction o1 evi"ence o1 ins'ra#ilit7 satis1actor7 to t!e co2-an7 an" -a72ent o1 arrears o1 -re2i'2s %it! interest at a rate not e3cee"in* si3 -er cent'2 -er ann'2 -a7a#le ann'all78 ($) A -rovision t!at %!en a -olic7 s!all #eco2e a clai2 #7 "eat! o1 t!e ins're"0 settle2ent s!all #e 2a"e '-on recei-t o1 "'e -roo1 o1 "eat!0 or not later t!an t%o 2ont!s a1ter recei-t o1 s'c! -roo18 (l) A title on t!e 1ace an" on t!e #ac$ o1 t!e -olic7 correctl7 "escri#in* its 1or28 (2) A s-ace on t!e 1ront or t!e #ac$ o1 t!e -olic7 1or t!e na2e o1 t!e #ene1iciar7 "esi*nate" #7 t!e ins're" %it! a reservation o1 t!e ins're"Ds ri*!t to "esi*nate or c!an*e t!e #ene1iciar7 a1ter t!e iss'ance o1 t!e -olic7 T!e -olic7 2a7 also -rovi"e t!at no "esi*nation or c!an*e o1 #ene1iciar7 s!all #e #in"in* on t!e ins'rer 'ntil en"orse" on t!e -olic7 #7 t!e ins'rer0 an" t!at t!e ins'rer 2a7 re1'se to en"orse t!e na2e o1 an7 -ro-ose" #ene1iciar7 %!o "oes not a--ear to t!e ins'rer to !ave an ins'ra#le interest in t!e li1e o1 t!e ins're" S'c! -olic7 2a7 also contain a -rovision t!at i1 t!e #ene1iciar7 "esi*nate" in t!e -olic7 "oes not s'rren"er t!e -olic7 %it! "'e -roo1 o1 "eat! %it!in t!e -erio" state" in t!e -olic70 %!ic! s!all not #e less t!an t!irt7 "a7s a1ter t!e "eat! o1 t!e ins're"0 or i1 t!e #ene1iciar7 is t!e estate o1 t!e ins're"0 or is a 2inor0 or "ies #e1ore t!e ins're"0 or is not le*all7 co2-etent to *ive vali" release0 t!en t!e ins'rer 2a7 2a$e an7 -a72ent t!ere'n"er to t!e e3ec'tor or a"2inistrator o1 t!e ins're"0 or to an7 o1 t!e ins're"Ds relatives #7 #loo" or le*al a"o-tion or connections #7 2arria*e or to an7 -erson a--earin* to t!e ins'rer to #e e4'ita#l7 entitle" t!ereto #7 reason o1 !avin* inc'rre" e3-ense 1or t!e 2aintenance0 2e"ical attention or #'rial o1 t!e ins're"8 an" (n) A -rovision t!at %!en an in"'strial li1e ins'rance -olic7 is iss'e" -rovi"in* 1or acci"ental or !ealt! #ene1its0 or #ot!0 in a""ition to li1e ins'rance0 t!e 1ore*oin* -rovisions s!all a--l7 onl7 to t!e li1e ins'rance -ortion o1 t!e -olic7 An7 o1 t!e 1ore*oin* -rovisions or -ortions t!ereo1 not a--lica#le to non-artici-atin* or ter2 -olicies s!all to t!at e3tent not #e incor-orate" t!erein T!e 1ore*oin* -rovisions s!all not a--l7 to -olicies iss'e" or *rante" -'rs'ant to t!e non-1or1eit're -rovisions -rescri#e" in -rovisions o1 -ara*ra-!s (1) an" (i) o1 t!is section0 nor s!all -rovisions o1 -ara*ra-!s (1)0 (*)0 (!)0 an" (i) !ereo1 #e re4'ire" in ter2 ins'rance o1 t%ent7 7ears or less #'t s'c! ter2 -olicies s!all s-eci17 t!e 2ortalit7 ta#le0 rate o1 interest0 an" 2et!o" o1 co2-'tin* reserves Sec +,1 No -olic7 o1 in"'strial li1e ins'rance s!all #e iss'e" or "elivere" in t!e P!ili--ines i1 it contains an7 o1 t!e 1ollo%in* -rovisions5c!anro#lesvirt'alla%li#rar7 (a) A -rovision t!at *ives t!e ins'rer t!e ri*!t to "eclare t!e -olic7 voi" #eca'se t!e ins're" !as !a" an7 "isease or ail2ent0 %!et!er s-eci1ie" or not0 or #eca'se t!e ins're" !as receive" instit'tional0 !os-ital0 2e"ical or s'r*ical treat2ent or attention0 e3ce-t a -rovision %!ic! *ives t!e ins'rer t!e ri*!t to "eclare t!e -olic7 voi" i1 t!e ins're" !as0 %it!in t%o 7ears -rior to t!e iss'ance o1 t!e -olic70 receive" instit'tional !os-ital0 2e"ical or s'r*ical treat2ent or attention an" i1 t!e ins're" or t!e clai2ant 'n"er t!e -olic7 1ails to s!o% t!at t!e con"ition occasionin* s'c! treat2ent or attention %as not o1 a serio's nat're or %as not 2aterial to t!e ris$8 (#) A -rovision t!at *ives t!e ins'rer t!e ri*!t to "eclare t!e -olic7 voi" #eca'se t!e ins're" !as #een re:ecte" 1or ins'rance0 'nless s'c! ri*!t #e con"itione" '-on a s!o%in* #7 t!e ins'rer t!at $no%le"*e o1 s'c! re:ection %o'l" !ave le" to a re1'sal #7 t!e ins'rer to 2a$e s'c! contract8 (c) A -rovision t!at allo%s t!e co2-an7 to -a7 t!e -rocee"s o1 t!e -olic7 at t!e "eat! o1 t!e ins're" to an7 -erson ot!er t!an t!e na2e" #ene1iciar70 e3ce-t in accor"ance %it! a stan"ar" -rovision as s-eci1ie" 'n"er t!e -rovisions o1 -ara*ra-! (2) o1 t!e -rece"in* section8 (") A -rovision t!at li2its t!e ti2e %it!in %!ic! an7 action at la% or in e4'it7 2a7 #e co22ence" to less t!an si3 7ears a1ter t!e ca'se o1 action s!all accr'e8 an" (e) A -rovision t!at s-eci1ies an7 2o"e o1 settle2ent at 2at'rit7 o1 less val'e t!an t!e a2o'nt ins're" #7 t!e -olic7 -l's "ivi"en" a""itions0 i1 an70 less
46

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) an7 in"e#te"ness to t!e co2-an7 on t!e -olic7 an" less an7 -re2i'2 t!at 2a7 #7 t!e ter2s o1 t!e -olic7 #e "e"'cte"0 -a72ents to #e 2a"e in accor"ance %it! t!e ter2s o1 t!e -olic7 Not!in* containe" in t!is section nor in t!e -rovision o1 -ara*ra-! (#) o1 t!e -rece"in* section0 relatin* to incontesta#ilit70 s!all #e constr'e" as -ro!i#itin* t!e li1e ins'rance co2-an7 1ro2 -lacin* in its in"'strial li1e -olicies -rovisions li2itin* its lia#ilit7 %it! res-ect to5 (1) "eat! res'ltin* 1ro2 aviation ot!er t!an as a 1are--a7in* -assen*er on a re*'larl7 sc!e"'le" ro'te #et%een "e1initel7 esta#lis!e" air-orts8 an" (+) 2ilitar7 or naval service5 Provi"e"0 T!at i1 t!e lia#ilit7 o1 t!e co2-an7 is li2ite" as !erein -rovi"e"0 s'c! lia#ilit7 s!all in no event #e 1i3e" at an a2o'nt less t!an t!e reserve on t!e -olic7 (e3cl'"in* t!e reserve 1or an7 a""itional #ene1its in t!e event o1 "eat! #7 acci"ent or acci"ental 2eans or 1or #ene1its in t!e event o1 an7 t7-e o1 "isa#ilit7)0 less an7 in"e#te"ness on or sec're" #7 s'c! -olic78 nor s!all an7 -rovision o1 t!is section a--l7 to an7 -rovision in an in"'strial li1e ins'rance -olic7 1or a""itional #ene1its in t!e event o1 "eat! #7 acci"ent or acci"ental 2eans Title 1? IARIA>)E CONTRACTS Sec +,+ (1) No ins'rance co2-an7 a't!ori9e" to transact #'siness in t!e P!ili--ines s!all iss'e0 "eliver0 sell or 'se an7 varia#le contract in t!e P!ili--ines0 'nless an" 'ntil s'c! co2-an7 s!all !ave satis1ie" t!e Co22issioner t!at its 1inancial an" *eneral con"ition an" its 2et!o"s o1 o-erations0 incl'"in* t!e iss'e an" sale o1 varia#le contracts0 are not an" %ill not #e !a9ar"o's to t!e -'#lic or to its -olic7 an" contract o%ners No 1orei*n ins'rance co2-an7 s!all #e a't!ori9e" to iss'e0 "eliver or sell an7 varia#le contract in t!e P!ili--ines0 'nless it is li$e%ise a't!ori9e" to "o so #7 t!e la%s o1 its "o2icile (+) T!e ter2 6varia#le contract6 s!all 2ean an7 -olic7 or contract on eit!er a *ro'- or on an in"ivi"'al #asis iss'e" #7 an ins'rance co2-an7 -rovi"in* 1or #ene1its or ot!er contract'al -a72ents or val'es t!ere'n"er to var7 so as to re1lect invest2ent res'lts o1 an7 se*re*ate" -ort1olio o1 invest2ents or o1 a "esi*nate" se-arate acco'nt in %!ic! a2o'nts receive" in connection %it! s'c! contracts s!all !ave #een -lace" an" acco'nte" 1or se-aratel7 an" a-art 1ro2 ot!er invest2ents an" acco'nts T!is contract 2a7 also -rovi"e #ene1its or val'es inci"ental t!ereto -a7a#le in 1i3e" or varia#le a2o'nts0 or #ot! It s!all not #e "ee2e" to #e a 6sec'rit76 or 6sec'rities6 as "e1ine" in T!e Sec'rities Act0 as a2en"e"0 or in t!e T!e Invest2ent Co2-an7 Act0 as a2en"e"0 nor s'#:ect to re*'lation 'n"er sai" Acts (,) In "eter2inin* t!e 4'ali1ications o1 a co2-an7 re4'estin* a't!orit7 to iss'e0 "eliver0 sell or 'se varia#le contracts0 t!e Co22issioner s!all al%a7s consi"er t!e 1ollo%in*5 (a) t!e !istor70 1inancial an" *eneral con"ition o1 t!e co2-an75 Provi"e"0 T!at s'c! co2-an70 i1 a 1orei*n co2-an70 2'st !ave "e-osite" %it! t!e Co22issioner 1or t!e #ene1it an" sec'rit7 o1 its varia#le contract o%ners in t!e P!ili--ines0 sec'rities satis1actor7 to t!e Co22issioner consistin* o1 #on"s o1 t!e Govern2ent o1 t!e P!ili--ines or its instr'2entalities %it! an act'al 2ar$et val'e o1 t%o 2illion -esos8 (#) t!e c!aracter0 res-onsi#ilit7 an" 1itness o1 t!e o11icers an" "irectors o1 t!e co2-an78 an" (c) t!e la% an" re*'lation 'n"er %!ic! t!e co2-an7 is a't!ori9e" in t!e state o1 "o2icile to iss'e s'c! contracts (.) I1 a1ter notice an" !earin*0 t!e Co22issioner s!all 1in" t!at t!e co2-an7 is 4'ali1ie" to iss'e0 "eliver0 sell or 'se varia#le contracts in accor"ance %it! t!is Co"e an" t!e re*'lations an" r'les iss'e" t!ere'n"er0 t!e corres-on"in* or"er o1 a't!ori9ation s!all #e iss'e" An7 "ecision or or"er "en7in* a't!orit7 to iss'e0 "eliver0 sell or 'se varia#le contracts s!all clearl7 an" "istinctl7 state t!e reasons an" *ro'n"s on %!ic! it is #ase" Sec +,, An7 ins'rance co2-an7 iss'in* varia#le contracts -'rs'ant to t!is Co"e 2a7 in its "iscretion iss'e contracts -rovi"in* a co2#ination o1 1i3e" a2o'nt an" varia#le a2o'nt o1 #ene1its an" 1or o-tion l'2--s'2 -a72ent o1 #ene1its Sec +,. Ever7 varia#le contract 1or2 "elivere" or iss'e" 1or "eliver7 in t!e P!ili--ines0 an" ever7 certi1ie" 1or2 evi"encin* varia#le #ene1its iss'e" -'rs'ant to an7 s'c! contract on a *ro'- #asis0 an" t!e a--lication0 ri"er an" en"orse2ent 1or2s a--lica#le t!ereto an" 'se" in connection t!ere%it!0 s!all #e s'#:ect to t!e -rior a--roval o1 t!e Co22issioner

SPC )a% >atc! +?1.

47

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Sec +,; Ill'stration o1 #ene1its -a7a#le 'n"er an7 varia#le contract s!all not incl'"e or involve -ro:ections o1 -ast invest2ent e3-erience into t!e 1't're an" s!all con1or2 %it! t!e r'les an" re*'lations -ro2'l*ate" #7 t!e Co22issioner Sec +,6 Iaria#le contracts 2a7 #e iss'e" on t!e in"'strial li1e #asis0 -rovi"e" t!at t!e -ertinent -rovisions o1 t!is Co"e an" o1 t!e r'les an" re*'lations o1 t!e Co22issioner *overnin* varia#le contracts are co2-lie" %it! in connection %it! s'c! contracts Sec +,E Ever7 li1e ins'rance co2-an7 a't!ori9e" 'n"er t!e -rovisions o1 t!is Co"e to iss'e0 "eliver0 sell or 'se varia#le contracts s!all0 in connection %it! sa2e0 esta#lis! one or 2ore se-arate acco'nts to #e $no%n as se-arate varia#le acco'nts All a2o'nts receive" #7 t!e co2-an7 in connection %it! an7 s'c! contracts %!ic! are re4'ire" #7 t!e ter2s t!ereo10 to #e collecte" or a--lie" to one or 2ore "esi*nate" se-arate varia#le acco'nts s!all #e -lace" in s'c! "esi*nate" acco'nt or acco'nts T!e assets an" lia#ilities o1 eac! s'c! se-arate varia#le acco'nt s!all at all ti2es #e clearl7 i"enti1ia#le an" "istin*'is!a#le 1ro2 t!e assets an" lia#ilities in all ot!er acco'nts o1 t!e co2-an7 Not%it!stan"in* an7 -rovision o1 la% to t!e contrar70 t!e assets !el" in an7 s'c! se-arate varia#le acco'nt s!all not #e c!ar*ea#le %it! lia#ilities arisin* o't o1 an7 ot!er #'siness t!e co2-an7 con"'ct #'t s!all #e !el" an" a--lie" e3cl'sivel7 1or t!e #ene1it o1 t!e o%ners or #ene1iciaries o1 t!e varia#le contracts a--lica#le t!ereto In t!e event o1 t!e insolvenc7 o1 t!e co2-an70 t!e assets o1 eac! s'c! se-arate varia#le acco'nt s!all #e a--lie" to t!e contract'al clai2s o1 t!e o%ners or #ene1iciaries o1 t!e varia#le contracts a--lica#le t!ereto E3ce-t as ot!er%ise s-eci1icall7 -rovi"e" #7 t!e contract0 no sale0 e3c!an*e or ot!er trans1er o1 assets 2a7 #e 2a"e #7 a co2-an70 #et%een an7 o1 its se-arate acco'nts or #et%een an7 ot!er invest2ent acco'nt an" one or 2ore o1 its se-arate acco'nts0 'nless in t!e case o1 a trans1er into a se-arate acco'nt0 s'c! trans1er is 2a"e solel7 to esta#lis! t!e acco'nt or to s'--ort t!e o-eration o1 t!e contracts %it! res-ect to t!e se-arate acco'nt to %!ic! t!e trans1er is 2a"e0 or in case o1 a trans1er 1ro2 a se-arate acco'nt0 s'c! trans1er %o'l" not ca'se t!e re2ainin* assets o1 t!e acco'nt to #eco2e less t!an t!e reserves an" ot!er contract lia#ilities %it! res-ect to s'c! se-arate acco'nt S'c! trans1er0 %!et!er into or 1ro2 a se-arate acco'nt0 s!all #e 2a"e #7 a trans1er o1 cas!0 or #7 a trans1er o1 sec'rities !avin* a val'ation %!ic! co'l" #e rea"il7 "eter2ine" in t!e 2ar$et -lace0 -rovi"e" t!at s'c! trans1er o1 sec'rities is a--rove" #7 t!e Co22issioner T!e Co22issioner 2a7 a't!ori9e ot!er trans1ers a2on* s'c! acco'nts0 i10 in !is o-inion0 s'c! trans1er %o'l" not #e ine4'ita#le All a2o'nts an" assets allocate" to an7 s'c! se-arate varia#le acco'nt s!all #e o%ne" #7 t!e co2-an7 an" %it! res-ect to sa2e t!e co2-an7 s!all not #e nor !ol" itsel1 o't to #e a tr'stee Sec +,F An7 ins'rance co2-an7 %!ic! !as esta#lis!e" one or 2ore se-arate varia#le acco'nts -'rs'ant to t!e -rece"in* section 2a7 invest an" re-invest all or an7 -art o1 t!e assets allocate" to an7 s'c! acco'nt in t!e sec'rities an" invest2ents a't!ori9e" #7 sections one !'n"re" ninet7-ei*!t0 t%o !'n"re"0 t%o !'n"re" one an" t%o !'n"re" t%o 1or an7 o1 t!e 1'n"s o1 an ins'rance co2-an7 in s'c! a2o'nt or a2o'nts as 2a7 #e a--rove" #7 t!e Co22issioner In a""ition t!ereto0 s'c! co2-an7 2a7 also invest in co22on stoc$s or ot!er e4'ities %!ic! are liste" on or a"2itte" to tra"in* in a sec'rities e3c!an*e locate" in t!e P!ili--ines0 or %!ic! are -'#licl7 !el" an" tra"e" in t!e 6over-t!e-co'nter 2ar$et6 as "e1ine" #7 t!e Co22issioner an" as to %!ic! 2ar$et 4'otations !ave #een availa#le5 Provi"e"0 !o%ever0 T!at no s'c! co2-an7 s!all invest in e3cess o1 ten -er cent'2 o1 t!e assets o1 an7 s'c! se-arate varia#le acco'nts in an7 one cor-oration iss'in* s'c! co22on stoc$ T!e assets an" invest2ents o1 s'c! se-arate varia#le acco'nts s!all not #e ta$en into acco'nt in a--l7in* t!e 4'antitative invest2ent li2itations a--lica#le to ot!er invest2ents o1 t!e co2-an7 In t!e -'rc!ase o1 co22on ca-ital stoc$ or ot!er e4'ities0 t!e ins'rer s!all "esi*nate to t!e #ro$er0 or to t!e seller i1 t!e -'rc!ase is not 2a"e t!ro'*! a #ro$er0 t!e s-eci1ic varia#le acco'nt 1or %!ic! t!e invest2ent is 2a"e Sec +,G Assets allocate" to an7 se-arate varia#le acco'nt s!all #e val'e" at t!eir 2ar$et val'e on t!e "ate o1 an7 val'ation0 or i1 t!ere is no rea"il7 availa#le 2ar$et t!en in accor"ance %it! t!e ter2s o1 t!e varia#le contract a--lica#le to s'c! assets0 or i1 t!ere are no s'c! contract ter2s t!en in s'c!

SPC )a% >atc! +?1.

48

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) 2anner as 2a7 #e -rescri#e" #7 t!e r'les an" re*'lations o1 t!e Co22issioner Sec +.? T!e reserve lia#ilit7 1or varia#le contracts s!all #e esta#lis!e" in accor"ance %it! act'arial -roce"'res t!at reco*ni9e t!e varia#le nat're o1 t!e #ene1its -rovi"e"0 an" s!all #e a--rove" #7 t!e Co22issioner Title 11 C)AIAS SETT)EAENT Sec +.1 (1) No ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines s!all re1'se0 %it!o't :'st ca'se0 to -a7 or settle clai2s arisin* 'n"er covera*es -rovi"e" #7 its -olicies0 nor s!all an7 s'c! co2-an7 en*a*e in 'n1air clai2 settle2ent -ractices An7 o1 t!e 1ollo%in* acts #7 an ins'rance co2-an70 i1 co22itte" %it!o't :'st ca'se an" -er1or2e" %it! s'c! 1re4'enc7 as to in"icate a *eneral #'siness -ractice0 s!all constit'te 'n1air clai2 settle2ent -ractices5c!anro#lesvirt'alla%li#rar7 (a) $no%in*l7 2isre-resentin* to clai2ants -ertinent 1acts or -olic7 -rovisions relatin* to covera*e at iss'e8 (#) 1ailin* to ac$no%le"*e %it! reasona#le -ro2-tness -ertinent co22'nications %it! res-ect to clai2s arisin* 'n"er its -olicies8 (c) 1ailin* to a"o-t an" i2-le2ent reasona#le stan"ar"s 1or t!e -ro2-t investi*ation o1 clai2s arisin* 'n"er its -olicies8 (") not atte2-tin* in *oo" 1ait! to e11ect'ate -ro2-t0 1air an" e4'ita#le settle2ent o1 clai2s s'#2itte" in %!ic! lia#ilit7 !as #eco2e reasona#l7 clear8 or (e) co2-ellin* -olic7!ol"ers to instit'te s'its to recover a2o'nts "'e 'n"er its -olicies #7 o11erin* %it!o't :'sti1ia#le reason s'#stantiall7 less t!an t!e a2o'nts 'lti2atel7 recovere" in s'its #ro'*!t #7 t!e2 (+) Evi"ence as to n'2#ers an" t7-es o1 vali" an" :'sti1ia#le co2-laints to t!e Co22issioner a*ainst an ins'rance co2-an70 an" t!e Co22issionerDs co2-laint e3-erience %it! ot!er ins'rance co2-anies %ritin* si2ilar lines o1 ins'rance s!all #e a"2issi#le in evi"ence in an a"2inistrative or :'"icial -rocee"in* #ro'*!t 'n"er t!is section (,) I1 it is 1o'n"0 a1ter notice an" an o--ort'nit7 to #e !ear"0 t!at an ins'rance co2-an7 !as violate" t!is section0 eac! instance o1 nonco2-liance %it! -ara*ra-! (1) 2a7 #e treate" as a se-arate violation o1 t!is section an" s!all #e consi"ere" s'11icient ca'se 1or t!e s's-ension or revocation o1 t!e co2-an7Ds certi1icate o1 a't!orit7 Sec +.+ T!e -rocee"s o1 a li1e ins'rance -olic7 s!all #e -ai" i22e"iatel7 '-on 2at'rit7 o1 t!e -olic70 'nless s'c! -rocee"s are 2a"e -a7a#le in install2ents or as an ann'it70 in %!ic! case t!e install2ents0 or ann'ities s!all #e -ai" as t!e7 #eco2e "'e5 Provi"e"0 !o%ever0 T!at in t!e case o1 a -olic7 2at'rin* #7 t!e "eat! o1 t!e ins're"0 t!e -rocee"s t!ereo1 s!all #e -ai" %it!in si3t7 "a7s a1ter -resentation o1 t!e clai2 an" 1ilin* o1 t!e -roo1 o1 t!e "eat! o1 t!e ins're" Re1'sal or 1ail're to -a7 t!e clai2 %it!in t!e ti2e -rescri#e" !erein %ill entitle t!e #ene1iciar7 to collect interest on t!e -rocee"s o1 t!e -olic7 1or t!e "'ration o1 t!e "ela7 at t!e rate o1 t%ice t!e ceilin* -rescri#e" #7 t!e Aonetar7 >oar"0 'nless s'c! 1ail're or re1'sal to -a7 is #ase" on t!e *ro'n" t!at t!e clai2 is 1ra'"'lent T!e -rocee"s o1 t!e -olic7 2at'rin* #7 t!e "eat! o1 t!e ins're" -a7a#le to t!e #ene1iciar7 s!all incl'"e t!e "isco'nte" val'e o1 all -re2i'2s -ai" in a"vance o1 t!eir "'e "ates0 #'t are not "'e an" -a7a#le at 2at'rit7 Sec +., T!e a2o'nt o1 an7 loss or "a2a*e 1or %!ic! an ins'rer 2a7 #e lia#le0 'n"er an7 -olic7 ot!er t!an li1e ins'rance -olic70 s!all #e -ai" %it!in t!irt7 "a7s a1ter -roo1 loss is receive" #7 t!e ins'rer an" ascertain2ent o1 t!e loss or "a2a*e is 2a"e eit!er #7 a*ree2ent #et%een t!e ins're" an" t!e ins'rer or #7 ar#itration8 #'t i1 s'c! ascertain2ent is not !a" or 2a"e %it!in si3t7 "a7s a1ter s'c! recei-t #7 t!e ins'rer o1 t!e -roo1 o1 loss0 t!en t!e loss or "a2a*e s!all #e -ai" %it!in ninet7 "a7s a1ter s'c! recei-t Re1'sal or 1ail're to -a7 t!e loss or "a2a*e %it!in t!e ti2e -rescri#e" !erein %ill entitle t!e ass're" to collect interest on t!e -rocee"s o1 t!e -olic7 1or t!e "'ration o1 t!e "ela7 at t!e rate o1 t%ice t!e ceilin* -rescri#e" #7 t!e Aonetar7 >oar"0 'nless s'c! 1ail're or re1'sal to -a7 is #ase" on t!e *ro'n" t!at t!e clai2 is 1ra'"'lent Sec +.. In case o1 an7 liti*ation 1or t!e en1orce2ent o1 an7 -olic7 or contract o1 ins'rance0 it s!all #e t!e "'t7 o1 t!e Co22issioner or t!e Co'rt0 as t!e case 2a7 #e0 to 2a$e a 1in"in* as to %!et!er t!e -a72ent o1 t!e clai2 o1 t!e ins're" !as #een 'nreasona#l7 "enie" or %it!!el"8 an" in t!e
49

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) a11ir2ative case0 t!e ins'rance co2-an7 s!all #e a":'"*e" to -a7 "a2a*es %!ic! s!all consist o1 attorne7Ds 1ees an" ot!er e3-enses inc'rre" #7 t!e ins're" -erson #7 reason o1 s'c! 'nreasona#le "enial or %it!!ol"in* o1 -a72ent -l's interest o1 t%ice t!e ceilin* -rescri#e" #7 t!e Aonetar7 >oar" o1 t!e a2o'nt o1 t!e clai2 "'e t!e ins're"0 1ro2 t!e "ate 1ollo%in* t!e ti2e -rescri#e" in section t%o !'n"re" 1ort7-t%o or in section t%o !'n"re" 1ort7t!ree0 as t!e case 2a7 #e0 'ntil t!e clai2 is 1'll7 satis1ie"8 Provi"e"0 T!at t!e 1ail're to -a7 an7 s'c! clai2 %it!in t!e ti2e -rescri#e" in sai" sections s!all #e consi"ere" -ri2a 1acie evi"ence o1 'nreasona#le "ela7 in -a72ent Title 1+ ENAAINATION OC COAPANIES Sec +.; T!e Co22issioner s!all re4'ire ever7 ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines to $ee- its #oo$s0 recor"s0 acco'nts an" vo'c!ers in s'c! 2anner t!at !e or !is a't!ori9e" re-resentatives 2a7 rea"il7 veri17 its ann'al state2ents an" ascertain %!et!er t!e co2-an7 is solvent an" !as co2-lie" %it! t!e -rovisions o1 t!is Co"e or t!e circ'lars0 instr'ctions0 r'lin*s or "ecisions o1 t!e Co22issioner Sec +.6 T!e Co22issioner s!all at least once a 7ear an" %!enever !e consi"ers t!e -'#lic interest so "e2an"s0 ca'se an e3a2ination to #e 2a"e into t!e a11airs0 1inancial con"ition an" 2et!o" o1 #'siness o1 ever7 ins'rance co2-an7 a't!ori9e" to transact #'siness in t!e P!ili--ines an" o1 an7 ot!er -erson0 1ir2 or cor-oration 2ana*in* t!e a11airs an"Mor -ro-ert7 o1 s'c! ins'rance co2-an7 S'c! co2-an70 as %ell as s'c! 2ana*in* -erson0 1ir2 or cor-oration0 s!all s'#2it to t!e e3a2iner all s'c! #oo$s0 -a-ers an" sec'rities as !e 2a7 re4'ire an" s'c! e3a2iner s!all also !ave t!e -o%er to e3a2ine t!e o11icers o1 s'c! co2-an7 'n"er oat! to'c!in* its #'siness an" 1inancial con"ition0 an" t!e a't!orit7 to transact #'siness in t!e P!ili--ines o1 an7 s'c! co2-an7 s!all #e s's-en"e" #7 t!e Co22issioner i1 s'c! e3a2ination is re1'se" an" s'c! co2-an7 s!all not t!erea1ter #e allo%e" to transact 1'rt!er #'siness in t!e P!ili--ines 'ntil it !as 1'll7 co2-lie" %it! t!e -rovisions o1 t!is section Govern2ent-o%ne" or controlle" cor-orations or entities en*a*e" in social -rivate ins'rance s!all si2ilarl7 #e s'#:ect to s'c! e3a2ination #7 t!e Co22issioner 'nless t!eir res-ective c!arters ot!er%ise -rovi"e Title 1, SUSPENSION OR REIOCATION OC AUTHORITH Sec +.E I1 t!e Co22issioner is o1 t!e o-inion '-on e3a2ination o1 ot!er evi"ence t!at an7 "o2estic or 1orei*n ins'rance co2-an7 is in an 'nso'n" con"ition0 or t!at it !as 1aile" to co2-l7 %it! t!e -rovisions o1 la% or re*'lations o#li*ator7 '-on it0 or t!at its con"ition or 2et!o" o1 #'siness is s'c! as to ren"er its -rocee"in*s !a9ar"o's to t!e -'#lic or to its -olic7!ol"ers0 or t!at its -ai"-'- ca-ital stoc$0 in t!e case o1 a "o2estic stoc$ co2-an70 or its availa#le cas! assets0 in t!e case o1 a "o2estic 2't'al co2-an70 or its sec'rit7 "e-osits0 in t!e case o1 a 1orei*n co2-an70 is i2-aire" or "e1icient0 or t!at t!e 2ar*in o1 solvenc7 re4'ire" o1 s'c! co2-an7 is "e1icient0 t!e Co22issioner is a't!ori9e" to s's-en" or revo$e all certi1icates o1 a't!orit7 *rante" to s'c! ins'rance co2-an70 its o11icers an" a*ents0 an" no ne% #'siness s!all t!erea1ter #e "one #7 s'c! co2-an7 or 1or s'c! co2-an7 #7 its a*ent in t!e P!ili--ines %!ile s'c! s's-ension0 revocation or "isa#ilit7 contin'es or 'ntil its a't!orit7 to "o #'siness is restore" #7 t!e Co22issioner >e1ore restorin* s'c! a't!orit70 t!e Co22issioner s!all re4'ire t!e co2-an7 concerne" to s'#2it to !i2 a #'siness -lan s!o%in* t!e co2-an7Ds esti2ate" recei-ts an" "is#'rse2ents0 as %ell as t!e #asis t!ere1or0 1or t!e ne3t s'ccee"in* t!ree 7ears (As a2en"e" #7 Presi"ential Decree No 1.;;) Title 1. APPOINTAENT OC CONSERIATOR Sec +.F I1 at an7 ti2e #e1ore0 or a1ter0 t!e s's-ension or revocation o1 t!e certi1icate o1 a't!orit7 o1 an ins'rance co2-an7 as -rovi"e" in t!e -rece"in* title0 t!e Co22issioner 1in"s t!at s'c! co2-an7 is in a state o1 contin'in* ina#ilit7 or 'n%illin*ness to 2aintain a con"ition o1 solvenc7 or li4'i"it7 "ee2e" a"e4'ate to -rotect t!e interest o1 -olic7 !ol"ers an" cre"itors0 !e 2a7 a--oint a conservator to ta$e c!ar*e t!e assets0 lia#ilities0 an" t!e 2ana*e2ent o1 s'c! co2-an70 collect all 2one7s an" "e#ts "'e sai"
50

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) co2-an7 an" e3ercise all -o%ers necessar7 to -reserve t!e assets o1 sai" co2-an70 reor*ani9e t!e 2ana*e2ent t!ereo10 an" restore its via#ilit7 T!e sai" conservator s!all !ave t!e -o%er to overr'le or revo$e t!e actions o1 t!e -revio's 2ana*e2ent an" #oar" o1 "irectors o1 t!e sai" co2-an70 an7 -rovision o1 la%0 or o1 t!e articles o1 incor-oration or #7-la%s o1 t!e co2-an70 to t!e contrar7 not%it!stan"in*0 an" s'c! ot!er -o%ers as t!e Co22issioner s!all "ee2 necessar7 T!e conservator 2a7 #e anot!er ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines0 #7 o11icer or o11icers o1 s'c! co2-an70 or an7 ot!er co2-etent an" 4'ali1ie" -erson0 1ir2 or cor-oration T!e re2'neration o1 t!e conservator an" ot!er e3-enses atten"ant to t!e conservation s!all #e #orne #7 t!e ins'rance co2-an7 concerne" T!e conservator s!all not #e s'#:ect to an7 action0 clai2 or "e2an" #70 or lia#ilit7 to0 an7 -erson in res-ect o1 an7t!in* "one or o2itte" to #e "one in *oo" 1ait! in t!e e3ercise0 or in connection %it! t!e e3ercise0 o1 t!e -o%ers con1erre" on t!e conservator T!e conservator a--ointe" s!all re-ort an" #e res-onsi#le to t!e Co22issioner 'ntil s'c! ti2e as t!e Co22issioner is satis1ie" t!at t!e ins'rance co2-an7 can contin'e to o-erate on its o%n an" t!e conservators!i- s!all li$e%ise #e ter2inate" s!o'l" #e Co22issioner0 on t!e #asis o1 t!e re-ort o1 t!e conservator or o1 !is o%n 1in"in*s0 "eter2ine t!at t!e contin'ance in #'siness o1 t!e ins'rance co2-an7 %o'l" #e !a9ar"o's to -olic7 !ol"ers an" cre"itors0 in %!ic! case t!e -rovisions o1 Title 1; s!all a--l7 Title 1; PROCEEDINGS UPON INSO)IENCH Sec +.G /!enever0 '-on e3a2ination or ot!er evi"ence0 it s!all #e "isclose" t!at t!e con"ition o1 an7 ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines is one o1 insolvenc70 or t!at its contin'ance in #'siness %o'l" #e !a9ar"o's to its -olic7!ol"ers an" cre"itors0 t!e Co22issioner s!all 1ort!%it! or"er t!e co2-an7 to cease an" "esist 1ro2 transactin* #'siness in t!e P!ili--ines an" s!all "esi*nate a receiver to i22e"iatel7 ta$e c!ar*e o1 its assets an" lia#ilities0 as e3-e"itio'sl7 as -ossi#le collect an" *at!er all t!e assets an" a"2inister t!e sa2e 1or t!e #ene1it o1 its -olic7!ol"ers an" cre"itors0 an" e3ercise all t!e -o%ers necessar7 1or t!ese -'r-oses incl'"in*0 #'t not li2ite" to0 #rin*in* s'its an" 1oreclosin* 2ort*a*es in t!e na2e o1 t!e ins'rance co2-an7 T!e Co22issioner s!all t!ere'-on "eter2ine %it!in t!irt7 "a7s %!et!er t!e ins'rance co2-an7 2a7 #e reor*ani9e" or ot!er%ise -lace" in s'c! con"ition so t!at it 2a7 #e -er2itte" to res'2e #'siness %it! sa1et7 to its -olic7!ol"ers an" cre"itors an" s!all -rescri#e t!e con"itions 'n"er %!ic! s'c! res'2-tion o1 #'siness s!all ta$e -lace as %ell as t!e ti2e 1or 1'l1ill2ent o1 s'c! con"itions In s'c! case0 t!e e3-enses an" 1ees in t!e collection an" a"2inistration o1 t!e ins'rance co2-an7 s!all #e "eter2ine" #7 t!e Co22issioner an" s!all #e -ai" o't o1 t!e assets o1 s'c! co2-an7 I1 t!e Co22issioner s!all "eter2ine an" con1ir2 %it!in t!e sai" -erio" t!at t!e ins'rance co2-an7 is solvent0 as "e1ine" !ere'n"er0 or cannot res'2e #'siness %it! sa1et7 to its -olic7!ol"ers an" cre"itors0 !e s!all0 i1 t!e -'#lic interest re4'ires0 or"er its li4'i"ation0 in"icate t!e 2anner o1 its li4'i"ation an" a--rove a li4'i"ation -lan an" i2-le2ent it i22e"iatel7 T!e Co22issioner s!all "esi*nate a co2-etent an" 4'ali1ie" -erson as li4'i"ator %!o s!all ta$e over t!e 1'nctions o1 t!e receiver -revio'sl7 "esi*nate" an"0 %it! all convenient s-ee"0 reins're all its o'tstan"in* -olicies0 convert t!e assets o1 t!e ins'rance co2-an7 to cas!0 or sell0 assi*n or ot!er%ise "is-ose o1 t!e sa2e to t!e -olic7!ol"ers0 cre"itors an" ot!er -arties 1or t!e -'r-ose o1 settlin* t!e lia#ilities or -a7in* t!e "e#ts o1 s'c! co2-an7 an" !e 2a70 in t!e na2e o1 t!e co2-an70 instit'te s'c! actions as 2a7 #e necessar7 in t!e a--ro-riate Co'rt to collect an" recover acco'nts an" assets o1 t!e ins'rance co2-an70 an" to "o s'c! ot!er acts as 2a7 #e necessar7 to co2-lete t!e li4'i"ation as or"ere" #7 t!e Co22issioner T!e -rovisions o1 an7 la% to t!e contrar7 not%it!stan"in*0 t!e actions o1 t!e Co22issioner 'n"er t!is Section s!all #e 1inal an" e3ec'tor70 an" can #e set asi"e #7 t!e Co'rt '-on -etition #7 t!e co2-an7 an" onl7 i1 t!ere is convincin* -roo1 t!at t!e action is -lainl7 ar#itrar7 an" 2a"e in #a" 1ait! T!e Co22issioner0 t!ro'*! t!e Solicitor General0 s!all t!en 1ile t!e corres-on"in* ans%er recitin* t!e -rocee"in* ta$en an" -ra7in* t!e
51

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) assistance o1 t!e Co'rt in t!e li4'i"ation o1 t!e co2-an7 No restrainin* or"er or in:'nction s!all #e iss'e" #7 t!e Co'rt en:oinin* t!e Co22issioner 1ro2 i2-le2entin* !is actions 'n"er t!is Section0 'nless t!ere is convincin* -roo1 t!at t!e action o1 t!e Co22issioner is -lainl7 ar#itrar7 an" 2a"e in #a" 1ait! an" t!e -etitioner or -lainti11 1iles %it! t!e Cler$ or J'"*e o1 t!e Co'rt in %!ic! t!e action is -en"in* a #on" e3ec'te" in 1avor o1 t!e Co22issioner in an a2o'nt to #e 1i3e" #7 t!e Co'rt T!e restrainin* or"er or in:'nction s!all #e re1'se" or0 i1 *rante"0 s!all #e "issolve" '-on 1ilin* #7 t!e Co22issioner0 i1 !e so "esires0 o1 a #on" in an a2o'nt t%ice t!e a2o'nt o1 t!e #on" o1 t!e -etitioner or -lainti11 con"itione" t!at it %ill -a7 t!e "a2a*es %!ic! t!e -etition or -lainti11 2a7 s'11er #7 t!e re1'sal or t!e "issol'tion o1 t!e in:'nction T!e -rovisions o1 R'le ;F o1 t!e Ne% R'les o1 Co'rt inso1ar as t!e7 are a--lica#le s!all *overn t!e iss'ance an" "issol'tion o1 t!e restrainin* or"er or in:'nction conte2-late" in t!is Section All -rocee"in*s 'n"er t!is Title s!all #e *iven -re1erence in t!e Co'rts T!e Co22issioner s!all not #e re4'ire" to -a7 an7 1ee to an7 -'#lic o11icer 1or 1ilin*0 recor"in*0 or in an7 2anner a't!enticatin* an7 -a-er or instr'2ent relatin* to t!e -rocee"in*s As 'se" in t!is Title0 t!e ter2 6Insolvenc76 s!all 2ean t!e ina#ilit7 o1 an ins'rance co2-an7 to -a7 its la%1'l o#li*ations as t!e7 1all "'e in t!e 's'al an" or"inar7 co'rse o1 #'siness as 2a7 #e s!o%n #7 its 1ail're to 2aintain t!e 2ar*in o1 solvenc7 re4'ire" 'n"er Section 1G. o1 t!is Co"e (As a2en"e" #7 Presi"ential Decree No 11.1 an" 1'rt!er a2en"e" #7 Presi"ential Decree No 1.;;) Sec +;? In case o1 li4'i"ation o1 an ins'rance co2-an70 a1ter -a72ent o1 t!e cost o1 t!e -rocee"in*s0 incl'"in* reasona#le e3-enses an" 1ees inc'rre" in t!e li4'i"ation to #e allo%e" #7 t!e Co'rt0 t!e Co22issioner s!all -a7 all allo%e" clai2s a*ainst s'c! co2-an70 'n"er or"er o1 t!e Co'rt0 in accor"ance %it! t!eir le*al -riorit7 Sec +;1 T!e receiver or t!e li4'i"ator0 as t!e case 2a7 #e0 "esi*nate" 'n"er t!e -rovisions o1 t!is title s!all not #e s'#:ect to an7 action0 clai2 or "e2an" #70 or lia#ilit7 to0 an7 -erson in res-ect o1 an7t!in* "one or o2itte" to #e "one in *oo" 1ait! in t!e e3ercise0 or in connection %it! t!e e3ercise0 o1 t!e -o%ers con1erre" on s'c! receiver or li4'i"ator Title 16 CONSO)IDATION AND AERGER OC INSURANCE COAPANIES Sec +;+ U-on -rior notice to t!e Co22issioner0 t%o or 2ore "o2estic ins'rance co2-anies0 actin* t!ro'*! t!eir res-ective #oar"s o1 "irectors0 2a7 ne*otiate to 2er*e into a sin*le cor-oration %!ic! s!all #e one o1 t!e constit'ent cor-orations0 or consoli"ate into a sin*le cor-oration %!ic! s!all #e a ne% cor-oration to #e 1or2e" #7 t!e consoli"ation A co22on a*ree2ent o1 t!e -ro-ose" 2er*er or consoli"ation s!all #e "ra%n '- 1or s'#2ission to t!e stoc$!ol"ers or 2e2#ers o1 t!e constit'ent co2-anies 1or a"o-tion an" a--rove" in accor"ance %it! t!e -rovisions o1 t!e res-ective #7-la%s o1 t!e constit'ent co2-anies an" all e3istin* la%s t!at 2a7 #e -ertinent Sec +;, S'c! a*ree2ent s!all incl'"e0 asi"e 1ro2 t!e -ro-ose" 2er*er or consoli"ation0 -rovisions relative to t!e 2anner o1 trans1er o1 assets to an" ass'2-tion o1 lia#ilities #7 t!e a#sor#in* or ac4'irin* co2-an7 1ro2 t!e a#sor#e" or "issolve" co2-an7 or co2-anies8 t!e -ro-ose" articles o1 2er*er or consoli"ation an" #7-la%s o1 t!e s'rvivin* or ac4'irin* co2-an78 t!e cor-orate na2e to #e a"o-te" %!ic! s!o'l" not #e t!at o1 an7 ot!er e3istin* co2-an7 transactin* si2ilar #'siness or one so si2ilar as to #e calc'late" to 2islea" t!e -'#lic8 t!e ri*!ts o1 t!e stoc$!ol"ers or 2e2#ers o1 t!e a#sor#e" or "issolve" co2-anies8 "ate o1 e11ectivit7 o1 t!e 2er*er or consoli"ation8 an" s'c! -artic'lars as 2a7 #e necessar7 to e3-lain an" 2a$e 2ani1est t!e o#:ects an" -'r-oses o1 t!e a#sor#in* or ac4'irin* co2-an7 Sec +;. U-on e3ec'tion o1 s'c! a*ree2ent to 2er*e or consoli"ate #7 an" #et%een or a2on* t!e #oar"s o1 "irectors o1 t!e constit'ent co2-anies0 notice t!ereo1 s!all #e 2aile" i22e"iatel7 to t!eir -olic7!ol"ers an" cre"itors T!e co2-an7 or co2-anies to #e a#sor#e" or "issolve" s!all "isc!ar*e all its accr'e" lia#ilities8 ot!er%ise0 s'c! lia#ilities s!all0 %it! t!e consent o1 its cre"itors0 #e trans1erre" to an" ass'2e" #7 t!e a#sor#in* or ac4'irin* co2-an70 or s'c! lia#ilities #e reins're" #7 t!e latter In t!e case o1 s'c! -olicies as are s'#:ect to cancellation #7 t!e co2-an7 or co2-anies
52

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) to #e a#sor#e" or "issolve"0 sa2e 2a7 #e cancelle" -'rs'ant to t!e ter2s t!ereo1 in lie' o1 s'c! trans1er0 ass'2-tion0 or reins'rance Sec +;; U-on a--roval or a"o-tion in t!e 2eetin*s o1 t!e stoc$!ol"ers or 2e2#ers calle" 1or t!e -'r-ose in eac! o1 t!e constit'ent co2-anies o1 t!e a*ree2ent to 2er*e or consoli"ate0 all stoc$!ol"ers or 2e2#ers "issentin* or o#:ectin* to 2er*er or consoli"ation s!all #e -ai" t!e val'e o1 t!eir s!ares #7 t!e co2-an7 concerne" in accor"ance %it! t!e #7-la%s t!ereo1 Sec +;6 U-on t!e a--roval or a"o-tion o1 t!e a*ree2ent to 2er*e or consoli"ate #7 t!e stoc$!ol"ers or 2e2#ers o1 t!e constit'ent co2-anies0 t!e corres-on"in* articles o1 2er*er or o1 consoli"ation s!all #e "'l7 e3ec'te" #7 t!e -resi"ents an" atteste" #7 t!e cor-orate secretaries an" s!all #ear t!e cor-orate seals o1 t!e 2er*in* or consoli"atin* co2-anies settin* 1ort!5c!anro#lesvirt'alla%li#rar7 (1) T!e -lan o1 2er*er or t!e -lan o1 consoli"ation8 (+) As to eac! cor-oration0 t!e n'2#er o1 s!ares o'tstan"in*0 or in case o1 2't'al cor-orations0 t!e n'2#er o1 2e2#ers8 an" (,) As to eac! cor-oration0 t!e n'2#er o1 s!ares or 2e2#ers vote" 1or an" a*ainst s'c! -lan res-ectivel7 T!erea1ter0 a certi1ie" co-7 o1 s'c! articles o1 2er*er or consoli"ation0 to*et!er %it! a certi1icate o1 a--roval or a"o-tion #7 t!e stoc$!ol"ers or 2e2#ers o1 s'c! articles o1 2er*er or consoli"ation0 veri1ie" #7 a11i"avits o1 s'c! o11icers an" 'n"er t!e seal o1 t!e constit'ent co2-anies0 s!all #e s'#2itte" to t!e Co22issioner0 to*et!er %it! s'c! ot!er -a-ers or "oc'2ents %!ic! t!e Co22issioner 2a7 re4'ire0 1or !is consi"eration Sec +;E T!e articles o1 2er*er or o1 consoli"ation0 si*ne" an" veri1ie" as !ereina#ove re4'ire"0 s!all #e 1ile" %it! t!e Sec'rities an" E3c!an*e Co22ission 1or its e3a2ination an" a--roval Sec +;F U-on recei-t 1ro2 t!e Sec'rities an" E3c!an*e Co22ission o1 t!e certi1icate o1 2er*er or o1 consoli"ation0 t!e constit'ent co2-anies s!all s'rren"er to t!e Co22issioner t!eir res-ective certi1icates o1 a't!orit7 to transact ins'rance #'siness T!e a#sor#in* or s'rvivin* co2-an7 in case o1 2er*er0 or t!e ne%l7 1or2e" co2-an7 in case o1 consoli"ation0 s!all i22e"iatel7 1ile %it! t!e co22issioner t!e corres-on"in* a--lication 1or iss'ance o1 a ne% certi1icate o1 a't!orit7 to transact ins'rance #'siness0 to*et!er %it! a certi1ie" co-7 o1 t!e certi1icate o1 2er*er or o1 consoli"ation0 an" o1 t!e certi1icate o1 increase o1 stoc$s0 i1 t!ere is an70 iss'e" #7 t!e Sec'rities an" E3c!an*e Co22ission Sec +;G Not!in* in t!is title s!all #e constr'e" to enlar*e t!e -o%ers o1 t!e a#sor#in* or s'rvivin* co2-an7 in case o1 2er*er0 or t!e ne%l7 1or2e" co2-an7 in case o1 consoli"ation0 e3ce-t t!ose con1erre" #7 t!e certi1icate o1 2er*er or o1 consoli"ation an" t!e articles o1 2er*er o1 consoli"ation0 or t!e a2en"e" articles o1 incor-oration0 as re*istere" %it! t!e Sec'rities an" E3c!an*e Co22ission Sec +6? No "irector0 o11icer0 or stoc$!ol"er o1 an7 s'c! constit'ent co2-anies s!all receive an7 1ee0 co22ission0 co2-ensation0 or ot!er val'a#le consi"eration %!atsoever0 "irectl7 or in"irectl70 or in an7 2anner ai"in*0 -ro2otin* or assistin* in s'c! 2er*er or consoli"ation Sec +61 T!e 2er*er o1 consoli"ation o1 co2-anies 'n"er0 t!is Co"e s!all #e s'#:ect to t!e -rovisions o1 t!e Cor-oration )a%0 an"0 in t!ose cases s-eci1ie" in Re-'#lic Act No ;.;;0 as a2en"e"0 #e 1'rt!er s'#:ect to t!e -rovisions o1 sai" la% Title 1E AUTUA)ILATION OC STOC@ )ICE INSURANCE COAPANIES Sec +6+ An7 "o2estic stoc$ li1e ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines 2a7 convert itsel1 into an incor-orate" 2't'al li1e ins'rer To t!at en" it 2a7 -rovi"e an" carr7 o't a -lan 1or t!e ac4'isition o1 t!e o'tstan"in* s!ares o1 its ca-ital stoc$ 1or t!e #ene1it o1 its -olic7!ol"ers0 or an7 class or classes o1 its -olic7!ol"ers0 #7 co2-l7in* %it! t!e re4'ire2ents o1 t!is c!a-ter Sec +6, S'c! -lan s!all incl'"e a--ro-riate -rocee"in*s 1or a2en"in* t!e ins'rerDs articles o1 incor-oration to *ive e11ect to t!e ac4'isition0 #7 sai" ins'rer0 1or t!e #ene1it o1 its -olic7!ol"ers or an7 class or classes t!ereo10 o1 t!e o'tstan"in* s!ares o1 its ca-ital stoc$ an" t!e conversion o1 t!e ins'rer 1ro2 a stoc$ cor-oration into a non-stoc$ cor-oration 1or t!e #ene1it o1 its 2e2#ers T!e 2e2#ers o1 s'c! non-stoc$ cor-oration s!all #e t!e -olic7!ol"ers 1ro2 ti2e to ti2e o1 t!e class or classes 1or %!ose #ene1it t!e
53

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) stoc$ o1 t!e ins'rer %as ac4'ire"0 an" t!e -olic7!ol"ers o1 s'c! ot!er class or classes as 2a7 #e s-eci1ie" in s'c! cor-orationDs articles o1 incor-oration as t!e7 2a7 #e a2en"e" 1ro2 ti2e to ti2e S'c! -lan s!all #e5c!anro#lesvirt'alla%li#rar7 (1) A"o-te" #7 a vote o1 a 2a:orit7 o1 t!e "irectors8 (+) A--rove" #7 t!e vote o1 t!e !ol"ers o1 at least a 2a:orit7 o1 t!e o'tstan"in* s!ares at a s-ecial 2eetin* o1 s!are!ol"ers calle" 1or t!at -'r-ose0 or #7 t!e %ritten consent o1 s'c! s!ares!ol"ers8 (,) S'#2itte" to t!e Co22issioner an" a--rove" #7 !i2 in %ritin*8 (.) A--rove" #7 a 2a:orit7 vote o1 all t!e -olic7!ol"ers o1 t!e class or classes 1or %!ose #ene1it t!e stoc$ is to #e ac4'ire" votin* at an election #7 t!e -olic7!ol"ers calle" 1or t!at -'r-ose0 s'#:ect to t!e -rovisions o1 section t%o !'n"re" si3t7-1ive T!e ter2s 6-olic7!ol"er6 or 6-olic7!ol"ers6 as 'se" in t!is c!a-ter s!all #e "ee2e" to 2ean t!e -erson or -ersons ins're" 'n"er an in"ivi"'al -olic7 o1 li1e ins'rance0 or o1 !ealt! an" acci"ent ins'rance0 or o1 an7 co2#ination o1 li1e0 !ealt! an" acci"ent ins'rance T!e7 s!all also incl'"e t!e -erson or -ersons to %!o2 an7 ann'it7 or -'re en"o%2ent is -resentl7 or -ros-ectivel7 -a7a#le #7 t!e ter2s o1 an in"ivi"'al ann'it7 or -'re en"o%2ent contract0 e3ce-t %!ere t!e -olic7 or contract "eclares so2e ot!er -erson to #e t!e o%ner or !ol"er t!ereo10 in %!ic! case s'c! ot!er -erson s!all #e "ee2e" -olic7!ol"er In an7 case %!ere a -olic7 or contract na2es t%o or 2ore -ersons as :oint ins're"0 -a7ees0 o%ners or !ol"ers t!ereo10 t!e -ersons so na2e" s!all #e "ee2e" collectivel7 to #e one -olic7!ol"er 1or t!e -'r-ose o1 t!is c!a-ter In an7 case %!ere a -olic7 or contract s!all !ave #een assi*ne" #7 assi*n2ent a#sol'te on its 1ace to an assi*nee ot!er t!an t!e ins'rer0 an" s'c! assi*n2ent s!all !ave #een 1ile" at t!e -rinci-al o11ice o1 t!e ins'rer at least t!irt7 "a7s -rior to t!e "ate o1 an7 election or 2eetin* re1erre" to in t!is c!a-ter0 t!en s'c! assi*nee s!all #e "ee2e" at s'c! election or 2eetin* to #e t!e -olic7!ol"er Cor t!e -'r-ose o1 t!is c!a-ter t!e ter2s 6-olic7!ol"er6 an" 6-olic7!ol"ers6 incl'"e t!e e2-lo7er to %!o20 or a -resi"ent0 secretar7 or ot!er e3ec'tive o11icer o1 an7 cor-oration or association to %!ic! a 2aster *ro'- -olic7 !as #een iss'e"0 #'t e3cl'"e t!e !ol"ers o1 certi1icates or -olicies iss'e" 'n"er or in connection %it! a 2aster *ro'- -olic7 >ene1iciaries 'n"er 'n2at're" contracts s!all not as s'c! #e "ee2e" to #e -olic7!ol"ers8 (;) Cile" %it! t!e Co22issioner a1ter !avin* #een a--rove" as -rovi"e" in t!is section Sec +6. T!e Co22issioner s!all e3a2ine t!e -lan s'#2itte" to !i2 'n"er t!e -rovisions o1 s'#--ara*ra-! t!ree o1 section t%o !'n"re" si3t7-t!ree He s!all not a--rove s'c! -lan 'nless in !is o-inion t!e ri*!ts an" interest o1 t!e ins'rer0 its -olic7!ol"ers an" s!are!ol"ers are -rotecte" nor 'nless !e is satis1ie" t!at t!e -lan %ill #e 1air an" e4'ita#le in its o-eration c!anro#les virt'al la% li#rar7 Sec +6; T!e election -rescri#e" #7 s'#--ara*ra-! 1o'r o1 section t%o !'n"re" si3t7-t!ree s!all #e calle" #7 t!e #oar" o1 "irectors or t!e -resi"ent0 an" ever7 -olic7!ol"er o1 t!e class or classes 1or %!ose #ene1it t!e stoc$ is to #e ac4'ire"0 %!ose ins'rance s!all !ave #een in 1orce 1or at least one 7ear -rior to s'c! election s!all !ave one vote0 re*ar"less o1 t!e n'2#er o1 -olicies or a2o'nt o1 ins'rance !e !ol"s0 an" re*ar"less o1 %!et!er s'c! -olicies are -olicies o1 li1e ins'rance or -olicies o1 !ealt! an" acci"ent ins'rance or ann'it7 contracts Notice o1 s'c! election s!all #e *iven to -olic7!ol"ers entitle" to vote #7 2ail 1ro2 t!e -rinci-al o11ice o1 s'c! ins'rer at least t!irt7 "a7s -rior to t!e "ate set 1or s'c! election0 in a seale" envelo-e0 -osta*e -re-ai"0 a""resse" to eac! s'c! -olic7!ol"er at !is last $no%n a""ress Iotin* s!all #e #7 one o1 t!e 1ollo%in* 2et!o"s5c!anro#lesvirt'alla%li#rar7 (1) At a 2eetin* o1 s'c! -olic7!ol"ers0 !el" -'rs'ant to s'c! notice0 #7 #allot in -erson or #7 -ro37 (+) I1 not #7 t!e 2et!o" "escri#e" in t!e -rece"in* s'#--ara*ra-!0 t!en #7 2ail -'rs'ant to a -roce"'re an" on 1or2s to #e -rescri#e" #7 s'c! -lan S'c! election s!all #e con"'cte" 'n"er t!e "irection an" s'-ervision o1 t!ree i2-artial an" "isintereste" ins-ectors a--ointe" #7 t!e ins'rer an" a--rove" #7 t!e Co22issioner In case an7 -erson a--ointe" as ins-ector 1ails to a--ear at s'c! 2eetin* or 1ails or re1'ses to act at s'c! election0 t!e vacanc70 i1 occ'rrin* in a"vance o1 t!e convenin* o1 t!e 2eetin* or in a"vance o1 t!e o-enin* o1 t!e 2ail vote0 2a7 #e 1ille" in t!e 2anner
54

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) -rescri#e" 1or t!e a--oint2ent o1 ins-ectors an"0 i1 occ'rrin* at t!e 2eetin* or "'rin* t!e canvass o1 t!e 2ail vote0 2a7 #e 1ille" #7 t!e -erson actin* as c!air2an o1 sai" 2eetin* or "esi*nate" 1or t!at -'r-ose in s'c! -lan T!e "ecision0 act or certi1icate o1 a 2a:orit7 o1 t!e ins-ectors s!all #e e11ective in all res-ects as t!e "ecision0 act or certi1icate o1 all T!e ins-ectors o1 election s!all "eter2ine t!e n'2#er o1 -olic7!ol"ers0 t!e votin* -o%er o1 eac!0 t!e -olic7!ol"ers re-resente" at t!e 2eetin* or votin* #7 2ail0 t!e e3istence o1 a 4'or'2 an" t!e a't!encit70 vali"it7 an" e11ect o1 -ro3ies T!e7 s!all receives votes0 !ear an" "eter2ine all c!allen*es an" 4'estions in an7 %a7 arisin* in connection %it! t!e ri*!t to vote0 co'nt an" ta#'late all votes0 "eter2ine t!e res'lt0 an" "o s'c! ot!er acts as are -ro-er to con"'ct t!e vote %it! 1airness to all -olic7!ol"ers T!e ins-ectors o1 election s!all0 #e1ore co22encin* -er1or2ance o1 t!eir "'ties0 s'#scri#e to an" 1ile %it! t!e ins'rer an" %it! t!e Co22issioner on oat! t!at t!e70 an" eac! o1 t!e20 %ill -er1or2 t!eir "'ties i2-artiall70 in *oo" 1ait!0 to t!e #est o1 t!eir a#ilit7 an" as e3-e"itio'sl7 as in -ractica#le On t!e re4'est o1 t!e ins'rer0 t!e Co22issioner0 a -olic7!ol"er or !is -ro370 t!e ins-ectors s!all 2a$e a re-ort in %ritin* o1 an7 c!allen*e or 4'estion or 2atter "eter2ine" #7 t!e2 an" e3ec'te a certi1icate o1 an7 1act 1o'n" #7 t!e2 T!e7 s!all also certi17 t!e res'lt o1 s'c! vote to t!e ins'rer an" to t!e Co22issioner An7 re-ort or certi1icate 2a"e #7 t!e2 s!all #e -ri2a 1acie evi"ence o1 1acts state" t!erein All necessar7 e3-enses inc'rre" in connection %it! s'c! election s!all #e -ai" #7 t!e ins'rer Cor t!e -'r-ose o1 t!is section0 a 4'or'2 s!all consist o1 1ive -er cent'2 o1 t!e -olic7!ol"ers o1 s'c! ins'rer entitle" to vote at s'c! election Sec +66 In carr7in* o't an7 s'c! -lan0 t!e ins'rer 2a7 ac4'ire an7 s!ares o1 its o%n stoc$ #7 *i1t0 #e4'est or -'rc!ase An7 s!ares so ac4'ire" s!all0 'nless as a res'lt o1 s'c! ac4'isition all o1 t!e s!ares o1 t!e ins'rer s!all !ave #een ac4'ire"0 #e ac4'ire" in tr'st 1or t!e -olic7!ol"ers o1 t!e class or classes 1or %!ose #ene1it t!e -lan -rovi"es t!at t!e stoc$ o1 t!e ins'rer s!all #e ac4'ire" as !ereina1ter -rovi"e" S'c! s!ares s!all #e assi*ne" an" trans1erre" on t!e #oo$s o1 s'c! ins'rer an" a--rove" #7 t!e Co22issioner S'c! tr'stees s!all !ol" s'c! stoc$ in tr'st 'ntil all o1 t!e o'tstan"in* s!ares o1 ca-ital stoc$ o1 s'c! ins'rer !ave #een ac4'ire"0 #'t 1or not lon*er t!an t!irt7 7ears %it! s'c! e3tensions o1 not 2ore t!an 1ive 7ears eac! as 2a7 #e *rante" #7 t!e Co22issioner S'c! e3tensions 2a7 #e *rante" #7 t!e Co22issioner i1 t!e -lan so -rovi"es an" i1 in !is o-inion t!e -lan o1 ac4'isition o1 all o1 s'c! stoc$ can #e co2-lete" %it!in a reasona#le -erio" S'c! tr'stees s!all vote s'c! stoc$ at all cor-orate 2eetin*s at %!ic! stoc$!ol"ers !ave t!e ri*!t to vote /!en all t!e o'tstan"in* s!ares o1 ca-ital stoc$ o1 s'c! ins'rer !ave #een ac4'ire"0 all sai" s!ares s!all #e cancelle"0 t!e certi1icate o1 a2en"2ent o1 t!e ins'rerDs articles o1 incor-oration *ivin* e11ect t!ereto s!all #e 1ile" in accor"ance %it! t!e -rovisions o1 t!e Cor-oration )a%0 an" t!e ins'rer s!all #eco2e a non-stoc$ cor-oration 1or t!e -ro1it o1 its 2e2#ers an" s'c! tr'st s!all t!ere'-on ter2inate T!erea1ter s'c! cor-oration s!all #e con"'cte" 1or t!e 2't'al #ene1it0 rata#l70 o1 its -olic7!ol"ers o1 t!e class or classes 1or %!ose #ene1it t!e stoc$ %as ac4'ire" an" s!all !ave -o%er to iss'e non-assessa#le -olicies on a reserve #asis s'#:ect to all -rovisions o1 la% a--lica#le to incor-orate" li1e ins'rers iss'in* nonassessa#le -olicies on a reserve #asis Policies so iss'e" 2a7 #e '-on t!e #asis o1 1'll or -artial -artici-ation t!erein as a*ree" #et%een t!e ins'rer an" t!e ins're" U-on t!e ter2ination o1 an7 s'c! votin* tr'st0 eit!er in accor"ance %it! its ter2s or as !ereina#ove -rovi"e"0 s'c! -lan o1 2't'ali9ation s!all ter2inate0 'nless t!ereto1ore co2-lete" U-on s'c! ter2ination0 'nless t!e -lan o1 2't'ali9ation -rovi"es 1or t!e "is-osition o1 t!e s!ares ac4'ire" #7 t!e ins'rer 'n"er s'c! -lan or 1or t!e "is-osition o1 t!e -rocee"s t!ereo10 t!e s!ares !el" #7 s'c! tr'stees s!all #e "is-ose" o1 in accor"ance %it! an or"er o1 t!e co'rt o1 co2-etent :'ris"iction in t!e :'"icial "istrict in %!ic! is locate" t!e -rinci-al o11ice o1 s'c! ins'rer0 2a"e '-on a veri1ie" -etition o1 t!e Co22issioner Sec +6E An7 s'c! -lan o1 2't'ali9ation 2a7 -rovi"e 1or t!e creation o1 a votin* tr'st 'n"er a tr'st a*ree2ent 1or t!e !ol"in* an" votin* #7 t!ree or 2ore tr'stees o1 an7 -ortion or all o1 t!e s!ares o1 t!e ins'rer not re4'ire" '-on t!e a"o-tion o1 s'c! -lan T!e votin* tr'stees s!all #e na2e" in accor"ance %it! s'c! -lan or0 i1 no -rovision is 2a"e t!erein 1or t!e na2in*
55

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) o1 s'c! tr'stees0 t!en #7 t!e ins'rer T!e votin* tr'st a*ree2ent an" votin* tr'stees s!all #e s'#:ect to t!e a--roval o1 t!e Co22issioner An7 or all o1 t!e tr'stees 'n"er s'c! votin* tr'st a*ree2ent 2a7 #e t!e sa2e -erson or -ersons as an7 or all o1 t!e tr'stees re1erre" to in section t%o !'n"re" si3t7si3 S'c! votin* tr'st a*ree2ent s!all -rovi"e t!at in t!e event o1 ac4'isition #7 t!e ins'rer o1 an7 o1 t!e s!ares o1 stoc$ !el" t!ere'n"er in accor"ance %it! t!e -rovisions o1 t!e -lan0 s'c! s!ares so ac4'ire" to*et!er %it! t!e votin* ri*!ts t!ereo1 s!all #e trans1erre" #7 t!e tr'stees na2e" 'n"er t!e -rovisions o1 t!is section to t!e tr'stees na2e" 'n"er t!e -rovisions o1 section t%o !'n"re" si3t7-si3 An7 votin* tr'st a*ree2ent create" -'rs'ant to t!e -rovisions o1 t!is section 2a7 #e 2a"e irrevoca#le 1or not lon*er t!an t!irt7 7ears an" t!erea1ter 'ntil t!e ter2ination o1 t!e tr'st -rovi"e" 1or in section t%o !'n"re" si3t7-si3 T!e tr'st create" -'rs'ant to t!e -rovisions o1 t!is section s!all ter2inate in an7 event '-on ter2ination o1 t!e tr'st -rovi"e" 1or in section t%o !'n"re" si3t7-si3 U-on t!e ter2ination o1 t!e tr'st create" -'rs'ant to t!e -rovisions o1 t!is section0 an7 s!ares !el" in s'c! tr'st s!all revert to t!e -ersons entitle" t!ereto #7 la% Sec +6F Ever7 -a72ent 1or t!e ac4'isition o1 an7 s!ares o1 t!e ca-ital stoc$ o1 s'c! ins'rer0 t!e -'rc!ase -rice o1 %!ic! is not 1i3e" #7 s'c! -lan0 s!all #e s'#:ect to t!e -rior a--roval o1 t!e Co22issioner Neit!er s'c! -lan0 nor an7 s'c! -a72ent0 2a7 #e a--rove" #7 t!e Co22issioner 'nless !e 1in"s t!at t!e ri*!ts an" interests o1 t!e ins'rer0 its -olic7!ol"ers0 an" s!are!ol"ers are -rotecte" Sec +6G T!e tr'stees re1erre" to in section t%o !'n"re" si3t7-si3 s!all 1ile %it! s'c! ins'rer an" %it! t!e Co22issioner a veri1ie" acce-tance o1 t!eir a--oint2ents an" veri1ie" "eclarations t!at t!e7 %ill 1ait!1'll7 "isc!ar*e t!eir "'ties as s'c! tr'stees All "ivi"en"s an" ot!er s'2s receive" #7 sai" tr'stees on t!e s!ares !el" #7 t!e20 a1ter -a7in* t!e necessar7 e3-enses o1 e3ec'tin* t!eir tr'st0 s!all #e i22e"iatel7 re-ai" to s'c! ins'rer 1or t!e #ene1it o1 all %!o are0 or 2a7 #eco2e0 -olic7!ol"ers o1 s'c! ins'rance o1 t!e class or classes 1or %!ose #ene1it t!e stoc$ o1 s'c! ins'rer %as ac4'ire" an" entitle" to -artici-ate in t!e -ro1its t!ereo1 an" s!all #e a""e" to an" #eco2e -art o1 t!e assets o1 s'c! ins'rer Sec +6G-A I10 at an7 ti2e %it!in t!e -erio" -rovi"e" in t!e -lan 1or t!e ac4'isition o1 t!e o'tstan"in* s!ares o1 stoc$ o1 t!e ins'rer0 ninet7 -ercent t!ereo1 !as alrea"7 #een ac4'ire" an" trans1erre" to t!e tr'stees 'n"er t!e -lan0 t!e ins'rer #7 a vote o1 a 2a:orit7 o1 t!e "irectors 2a7 "eter2ine to 2a$e an o11er0 %it! t!e -er2ission o1 t!e Co22issioner an" s'#:ect to s'c! re4'ire2ent as !e 2a7 s-eci170 to ac4'ire #7 -'rc!ase all o1 t!e s!ares not t!ereto1ore ac4'ire" 'n"er t!e -lan0 at a s-eci1ie" -rice %!ic! t!e ins'rer consi"ers to #e t!eir 1air val'e as o1 t!e "ate o1 2a$in* s'c! o11er I1 t!e o11er to ac4'ire is -er2itte" #7 t!e Co22issioner0 t!e ins'rer s!all 2a$e a %ritten o11er #7 re*istere" 2ail to eac! s!are!ol"er %!ose s!ares !ave not t!ereto1ore #een ac4'ire" 'n"er t!e -lan or ot!er%ise0 o11erin* to ac4'ire all !is s!ares at s'c! -rice i1 acce-te" in %ritin* %it!in t!irt7 "a7s a1ter t!e 2ailin* o1 s'c! o11er An7 s!are!ol"er acce-tin* s'c! o11er0 %it!in t!e ti2e t!ere1or s!all0 %it!in si3t7 "a7s a1ter !is acce-tance0 trans1er to t!e ins'rer t!e certi1icates re-resentin* s'c! s!ares an"0 '-on "oin* so0 s!all #e -ai" #7 t!e ins'rer t!e a2o'nt o1 s'c! o11er 1or !is s!ares An7 s!are so ac4'ire" s!all #e assi*ne" an" trans1erre" to t!e tr'stees 'n"er t!e -lan an" !el" #7 t!e2 as s!ares ac4'ire" -'rs'ant to t!e -lan Eac! s!are!ol"er %!o "oes not acce-t s'c! o11er to ac4'ire !is s!ares %it!in t!e ti2e state" in s'c! o11er 1or acce-tance t!ereo1 s!all %it!in 1i1teen "a7s a1ter t!e e3-iration o1 s'c! o11er a--l7 to t!e Secretar7 o1 Cinance 1or "eter2ination o1 t!e 1air val'e o1 !is s!ares as o1 t!e "ate o1 2a$in* s'c! o11er T!e Secretar7 o1 Cinance 2a7 !i2sel10 a1ter "'e notice an" !earin*0 "eter2ine '-on t!e evi"ence receive" t!e 1air val'e o1 t!e s!ares as o1 t!e "ate o1 2a$in* s'c! o11er0 or a--oint t!ree i2-artial an" "isintereste" -ersons to a--raise t!e 1air val'e o1 s'c! s!ares %it! s'c! "irection as !e s!all "ee2 -ro-er an" necessar7 to e3-e"ite t!e -rocee"in*s U-on co2-letion o1 t!e a--raisal -rocee"in*s0 t!e a--raisers s!all 1ile %it! t!e Secretar7 o1 Cinance t!eir re-ort in %ritin* statin* t!e 1air val'e o1 s'c! s!ares as o1 t!e "ate o1 t!e 2a$in* o1 s'c! o11er an" settin* 1ort! t!eir 1in"in*s in s'--ort o1 s'c! state2ent T!e a--raisers s!all 1'rnis! eac! -art7 to t!e -rocee"in*s a co-7 o1 t!eir a--raisal re-ort0 an" %it!in ten "a7s a1ter recei-t t!ereo1 an7 s'c! -art7 2a7 si*ni17 !is o#:ection0 i1 an70 to t!e re-ort
56

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) or 2ove 1or t!e a--roval t!ereo1 U-on t!e e3-iration o1 t!e -erio" o1 ten "a7s re1erre" to a#ove0 t!e re-ort s!all #e set 1or !earin*0 a1ter %!ic! t!e Secretar7 o1 Cinance s!all iss'e an or"er a"o-tin*0 2o"i17in* or re:ectin* t!e re-ort in %!ole or in -art or !e 2a7 receive 1'rt!er evi"ence or 2a7 reco22it it %it! instr'ctions /!enever t!e Secretar7 o1 Cinance s!all "eter2ine in an7 2anner0 as a1oresai"0 t!e 1air val'e o1 s'c! s!ares0 !e 2a7 also "eter2ine t!e ter2s o1 -a72ent t!ereo1 #7 t!e ins'rer T!e e3-enses inci"ental to t!e -rocee"in*s incl'"in* c!ar*es o1 t!e a--raisers0 i1 an70 s!all #e -ai" e4'all7 #7 t!e ins'rer an" t!e s!are!ol"er c!anro#les virt'al la% li#rar7 T!e 1in"in*s o1 t!e Secretar7 o1 Cinance on all 4'estions o1 1act raise" at t!e !earin* o1 t!e a--lication 1or "eter2ination o1 t!e 1air val'e o1 s'c! s!ares s!all #e concl'sive '-on all -arties to t!e -rocee"in*s T!e or"er o1 t!e Secretar7 o1 Cinance "eter2inin* t!e 1air val'e o1 t!e s!ares an" t!e ter2s o1 -a72ent t!ereo1 s!all !ave t!e 1orce an" e11ect o1 a :'"*2ent %!ic! s!all #e a--eala#le on an7 4'estion o1 la% S'c! or"er s!all #eco2e 1inal an" e3ec'tor7 1i1teen "a7s a1ter recei-t t!ereo1 #7 t!e -arties to t!e -rocee"in*s U-on an7 s'c! or"er #eco2in* 1inal an" 1ro2 %!ic! no a--eal is -en"in*0 or %!en t!e ti2e to a--eal t!ere1ro2 !as e3-ire"0 eac! s!are!ol"er -art7 to t!e -rocee"in*s s!all trans1er !is s!ares to t!e ins'rer an" s'rren"er to t!e sai" ins'rer t!e certi1icates re-resentin* s'c! s!ares an" t!e ins'rer s!all 2a$e -a72ent t!ere1or as -rovi"e" in s'c! or"er An7 s!ares so ac4'ire" #7 t!e ins'rer s!all #e assi*ne" an" trans1erre" to t!e tr'stees an" !el" #7 t!e2 as s!ares ac4'ire" -'rs'ant to t!e -lan An7 s!are!ol"er %!o "oes not a--l7 to t!e Secretar7 o1 Cinance in t!e 2anner an" %it!in t!e ti2e !erein#e1ore -rescri#e" s!all #e "ee2e" to !ave acce-te" t!e o11er re1erre" to a#ove0 e11ective0 !o%ever0 '-on t!e e3-iration o1 t!e ti2e !ereina#ove -rescri#e" 1or 2a$in* s'c! a--lication0 an" s'c! s!are!ol"erDs ti2e 1or acce-tin* s'c! o11er s!all0 1or t!at -'r-ose onl70 #e "ee2e" to !ave #een e3ten"e" accor"in*l7 An7 o11er to ac4'ire s!ares 2a"e -'rs'ant to t!is section s!all0 e3ce-t as ot!er%ise -rovi"e" !erein0 #e irrevoca#le 'ntil all -rocee"in*s '-on s'c! o11er !ave #een co2-lete" or all s!ares !ave ot!er%ise #een earlier ac4'ire" #7 t!e ins'rer An7 s!are!ol"er %!o !as e3-ressl7 or i2-lie"l7 acce-te" t!e -lan or t!e o11er to ac4'ire !is s!ares not t!ereto1ore ac4'ire" 'n"er t!e -lan0 an" an7 s!are!ol"er %!o !as re:ecte" s'c! -lan or s'c! o11er an" !as a--lie"0 as a1oresai"0 to t!e Secretar7 o1 Cinance 1or a "eter2ination o1 t!e 1air val'e o1 !is s!ares s'#se4'ent to %!ic! an a*ree2ent !as #een reac!e" or a 1inal or"er iss'e" 1i3in* s'c! 1air val'e #'t %!o 1ails to s'rren"er !is certi1icates 1or cancellation '-on -a72ent o1 t!e a2o'nt to %!ic! !e is entitle"0 2a7 #e co2-elle" to "o so #7 an or"er o1 t!e Secretar7 o1 Cinance 1or t!at -'r-ose an" s'c! or"er 2a7 -rovi"e t!at '-on 1ail're o1 s'c! s!are!ol"er to s'rren"er s'c! certi1icates 1or cancellation s'c! or"er s!all stan" in lie' o1 s'c! s'rren"er an" cancellation (As a2en"e" #7 Presi"ential Decree No 1+F?) Sec +E? S'c! ins'rer0 a1ter 2't'ali9ation0 s!all #e a contin'ation o1 t!e ori*inal ins'rer0 an" s'c! 2't'ali9ation s!all not a11ect s'c! ins'rerDs certi1icate o1 a't!orit7 nor e3istin* s'its0 ri*!ts or contracts e3ce-t as -rovi"e" in sai" -lan 1or t!e ac4'isition o1 t!e o'tstan"in* s!ares o1 t!e ca-ital stoc$ o1 s'c! ins'rer0 a--rove" as -rovi"e" in t!is c!a-ter S'c! ins'rer0 a1ter 2't'ali9ation0 s!all e3ercise all t!e ri*!ts an" -o%ers an" s!all -er1or2 all t!e "'ties con1erre" or i2-ose" #7 la% '-on ins'rers %ritin* t!e classes o1 ins'rance %ritten #7 it0 an" to -rotect ri*!ts an" contracts e3istin* -rior to 2't'ali9ation0 s'#:ect to t!e e11ect o1 sai" -lan T!e #oar" o1 "irectors o1 s'c! ins'rer0 -rior to 2't'ali9ation0 2a7 a"o-t a2en"2ents to its #7-la%s to ta$e e11ect '-on 2't'ali9ation Sec +E1 (1) An ann'al 2eetin* o1 2e2#ers s!all #e !el" at ten oDcloc$ in t!e 2ornin* o1 t!e 1o'rt! T'es"a7 o1 Aarc! o1 eac! 7ear at t!e -rinci-al o11ice o1 t!e ins'rer0 'nless a "i11erent ti2e or -lace #e -rovi"e" in t!e #7la%s (+) S-ecial 2eetin*s o1 t!e 2e2#ers0 1or an7 -'r-ose or -'r-oses %!atsoever0 2a7 #e calle" at an7 ti2e #7 t!e -resi"ent0 or #7 t!e #oar" o1 "irectors0 or #7 one or 2ore 2e2#ers !ol"in* not less t!an one-1i1t! o1 t!e

SPC )a% >atc! +?1.

57

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) votin* -o%er o1 s'c! ins'rer0 or #7 s'c! ot!er o11icers or -ersons as t!e #7la%s a't!ori9e (,) Notice o1 all 2eetin*s o1 2e2#ers %!et!er ann'al or s-ecial s!all #e *iven in %ritin* to t!e 2e2#ers entitle" to vote #7 t!e secretar70 or an assistant secretar70 or ot!er -erson c!ar*e" %it! t!at "'t70 or i1 t!ere #e no s'c! o11icer0 or in case o1 !is ne*lect or re1'sal0 #7 an7 "irector or 2e2#er At t!e o-tion o1 t!e ins'rer s'c! notice 2a7 #e i2-rinte" on -re2i'2 notices o1 recei-ts or on #ot! A notice 2a7 #e *iven #7 s'c! ins'rer to an7 2e2#er eit!er -ersonall70 or #7 2ail0 or ot!er 2eans o1 %ritten co22'nication0 c!ar*es -re-ai"0 a""resse" to s'c! 2e2#er at !is a""ress a--earin* on t!e #oo$s o1 t!e ins'rer0 or *iven #7 !i2 to t!e ins'rer 1or t!e -'r-ose o1 notice I1 a 2e2#er *ives no a""ress0 notice s!all #e "ee2e" to !ave #een *iven !i2 i1 sent #7 2ail or ot!er 2eans o1 %ritten co22'nication a""resse" to t!e -lace %!ere t!e -rinci-al o11ice o1 t!e ins'rer is sit'ate"0 or i1 -'#lis!e" at least once in so2e ne%s-a-er o1 *eneral circ'lation in t!e -lace in %!ic! sai" o11ice is locate" Notice o1 an7 2eetin* o1 2e2#ers s!all #e sent to eac! 2e2#er entitle" t!ereto not less t!an seven "a7s #e1ore s'c! 2eetin*0 'nless t!e #7-la%s -rovi"e ot!er%ise Notice o1 an7 2eetin* o1 2e2#ers s!all s-eci17 t!e -lace0 t!e "a7 an" t!e !o'r o1 t!e 2eetin* an" t!e *eneral nat're o1 t!e #'siness to #e transacte" Notice o1 an ann'al 2eetin* to #e !el" at t!e ti2e an" -lace s-eci1ie" in s'#--ara*ra-! one o1 t!is section s!all #e s'11icientl7 *iven i1 -'#lis!e" at least once in eac! o1 1o'r s'ccessive %ee$s in a ne%s-a-er o1 *eneral circ'lation in t!e -lace in %!ic! t!e -rinci-al o11ice o1 s'c! ins'rer is locate"0 an" i1 so -'#lis!e" no ot!er notice o1 s'c! 2eetin* s!all #e re4'ire" (.) T!e -resence in -erson or #7 -ro37 o1 1ive -er cent'2 o1 t!e 2e2#ers entitle" to vote at an7 2eetin* s!all constit'te a 4'or'2 1or t!e transaction o1 #'siness0 'nless ot!er%ise -rovi"e" #7 t!e #7-la%s (;) Eac! s'c! 2e2#er s!all !ave one vote at an7 2eetin* o1 2e2#ers re*ar"less o1 t!e n'2#er o1 -olicies or t!e a2o'nt o1 ins'rance t!at s'c! 2e2#er !ol"s an" re*ar"less o1 %!et!er s'c! -olicies are -olicies o1 li1e ins'rance0 or o1 !ealt! an" acci"ent ins'rance0 or #ot! An7 2e2#er entitle" to vote s!all !ave t!e ri*!t to "o so eit!er in -erson or #7 an a*ent or a*ents a't!ori9e" #7 a %ritten -ro37 e3ec'te" #7 s'c! -erson or !is "'l7 a't!ori9e" a*ent an" 1ile" %it! t!e secretar7 o1 s'c! ins'rer (6) T!e "irectors o1 t!e ins'rer in o11ice at t!e ti2e t!e ins'rer is 2't'ali9e" as -rovi"e" in t!is c!a-ter s!all contin'e in o11ice 'ntil t!e 1irst ann'al 2eetin* o1 2e2#ers At t!e 1irst ann'al 2eetin* o1 2e2#ers an" at eac! ann'al 2eetin* t!erea1ter "irectors s!all #e electe" #7 t!e 2e2#ers 1or t!e ter2 or ter2s a't!ori9e" #7 t!is c!a-ter (E) T!e articles o1 incor-oration or t!e #a7-la%s 2a7 -rovi"e t!at t!e "irectors 2a7 #e "ivi"e" into t%o or 2ore classes %!ose ter2s o1 o11ice s!all e3-ire at "i11erent ti2es0 #'t no ter2s s!all contin'e lon*er t!an si3 7ears In t!e a#sence o1 s'c! -rovisions0 eac! "irector0 e3ce-t 2e2#ers o1 t!e #oar" o1 "irectors at t!e ti2e t!e ins'rer is 2't'ali9e"0 s!all #e electe" 1or a ter2 o1 one 7ear All "irectors s!all !ol" o11ice 1or a ter2 1or %!ic! t!e7 are electe" an" 'ntil t!eir s'ccessors are electe" an" 4'ali1ie" A "irector 2a70 #'t nee" not #e a 2e2#er or -olic7!ol"er o1 t!e ins'rer o1 %!ic! !e is actin* as "irector Iacancies in t!e #oar" o1 "irectors 2a7 #e 1ille" #7 a 2a:orit7 o1 t!e re2ainin* "irectors0 t!o'*! less t!an a 4'or'20 an" eac! "irector so electe" s!all !ol" o11ice 'ntil t!e ne3t ann'al 2eetin* (F) All ins'rers 2't'ali9e" 'n"er t!e -rovisions o1 t!is c!a-ter s!all #e s'#:ect to all ot!er a--lica#le -rovisions o1 t!is Co"e an" o1 t!e Cor-oration )a% Sec +E+ T!e -rovisions o1 Co22on%ealt! Act No F,0 ot!er%ise $no%n as t!e Sec'rities Act0 as a2en"e"0 s!all not a--l7 to an7 o1 t!e 1ollo%in*5c!anro#lesvirt'alla%li#rar7 (a) S!ares o1 t!e ca-ital stoc$ o1 s'c! ins'rer ac4'ire" as -rovi"e" in section t%o !'n"re" si3t7-si3 an" assi*ne" an" trans1erre" to t!e tr'stees as is -rovi"e" in sai" section0 an" t!e assi*n2ent an" trans1er o1 sai" s!ares as so -rovi"e"8 (#) An7 certi1icate or ot!er instr'2ent iss'e" to a -olic7!ol"er o1 s'c! 2't'ali9e" ins'rer con1errin* or evi"encin* 2e2#ers!i- in s'c! 2't'ali9e" ins'rer or con1errin* or evi"encin* s'c! 2e2#erDs ri*!t to -artici-ate in t!e
58

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) -ro1its or s!are in t!e assets o1 s'c! 2't'ali9e" ins'rer #7 t!e virt'e o1 !is 2e2#ers!i- t!erein0 an" t!e iss'ance o1 s'c! certi1icate or ot!er instr'2ent8 (c) T!e -lan 1or t!e ac4'isition o1 t!e o'tstan"in* s!ares o1 t!e ca-ital stoc$ o1 s'c! ins'rer a't!ori9e" #7 t!e -rovisions o1 t!is c!a-ter0 t!e s'#2ission o1 sai" -lan to t!e Co22issioner an" to t!e -olic7!ol"ers o1 s'c! ins'rer as -rovi"e" in t!is c!a-ter0 an" t!e a--roval an" carr7in* o't o1 sai" -lan or an7 -art t!ereo1 in accor"ance %it! t!e -rovisions o1 t!is c!a-ter Title 1F /ITHDRA/A) OC COREIGN INSURANCE COAPANIES Sec +E, A 1orei*n ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines0 '-on -a72ent o1 t!e 1ee !ereina1ter -rescri#e" an" s'rren"er to t!e Co22issioner o1 its certi1icate o1 a't!orit70 2a7 a--l7 to %it!"ra% 1ro2 t!e P!ili--ines S'c! a--lication s!all #e "'l7 e3ec'te" in %ritin*0 acco2-anie" #7 evi"ence o1 "'e a't!orit7 1or s'c! e3ec'tion0 -ro-erl7 ac$no%le"*e" Sec +E. T!e Co22issioner s!all -'#lis! t!e a--lication 1or %it!"ra%al "ail7 1or a -erio" o1 one %ee$ in t%o ne%s-a-ers o1 *eneral circ'lation in t!e Cit7 o1 Aanila0 one in En*lis! an" t!e ot!er in Pili-ino T!e e3-enses o1 s'c! -'#lication s!all #e -ai" #7 t!e ins'rance co2-an7 1ilin* s'c! a--lication Sec +E; Ever7 1orei*n ins'rance co2-an7 "esirin* to %it!"ra% 1ro2 t!e P!ili--ines s!all0 -rior to s'c! %it!"ra%al0 "isc!ar*e its lia#ilities to -olic7!ol"ers an" cre"itors in t!is co'ntr7 In case o1 its -olicies ins'rin* resi"ents o1 t!e P!ili--ines0 it s!all ca'se t!e -ri2ar7 lia#ilities 'n"er s'c! -olicies to #e reins're" an" ass'2e" #7 anot!er ins'rance co2-an7 a't!ori9e" to transact #'siness in t!e P!ili--ines In t!e case o1 s'c! -olicies as are s'#:ect to cancellation #7 t!e %it!"ra%in* co2-an70 it 2a7 cancel s'c! -olicies -'rs'ant to t!e ter2s t!ereo1 in lie' o1 s'c! reins'rance an" ass'2-tion o1 lia#ilities Sec +E6 T!e Co22issioner s!all 2a$e an e3a2ination o1 t!e #oo$s an" recor"s o1 t!e %it!"ra%in* co2-an70 an" i10 '-on s'c! e3a2ination0 t!e Co22issioner 1in"s t!at t!e ins'rer !as no o'tstan"in* lia#ilities to resi"ents o1 t!e P!ili--ines0 it s!all cancel t!e %it!"ra%in* co2-an7Ds certi1icate o1 a't!orit70 i1 'ne3-ire"0 an" s!all -er2it t!e ins'rer to %it!"ra% T!e cost an" e3-enses o1 all s'c! e3a2ination s!all #e -ai" as -rescri#e" in section 1o'r !'n"re" seventeen Sec +EE U-on t!e 1ail're o1 s'c! %it!"ra%in* ins'rance co2-an7 or its a*ents in t!e P!ili--ines to -a7 t!e e3-enses o1 s'c! -'#lication %it!in t!irt7 "a7s a1ter t!e -resentation o1 t!e #ill t!ere1or0 t!e Co22issioner s!all collect s'c! 1ee 1ro2 t!e "e-osit 1'rnis!e" in accor"ance %it! t!e -rovisions o1 section one !'n"re" ninet7-one Sec +EF A 1orei*n li1e ins'rance co2-an7 t!at %it!"ra%s 1ro2 t!e P!ili--ines s!all #e consi"ere" a 6servicin* ins'rance co2-an76 i1 its #'siness transactions are con1ine" to acce-tin* -erio"ic -re2i'2 -a72ents 1ro20 or *rantin* -olic7 loans an" -a7in* cas! s'rren"er val'es o1 o'tstan"in* -olicies to0 or revivin* la-se" -olicies o10 P!ili--ine -olic7!ol"ers0 an" s'c! ot!er relate" services Sec +EG No co2-an7 s!all act as a servicin* ins'rance co2-an7 'ntil a1ter it s!all !ave o#taine" a s-ecial certi1ication o1 a't!orit7 to act as s'c! 1ro2 t!e Co22issioner '-on a--lication t!ere1or an" -a72ent #7 t!e co2-an7 o1 t!e 1ees !ereina1ter -rescri#e" S'c! certi1icate s!all e3-ire on t!e last "a7 o1 J'ne o1 eac! 7ear an" s!all #e rene%e" ann'all70 %!ile t!e co2-an7 contin'es to service its -olic7!ol"ers0 an" to co2-l7 %it! all t!e a--lica#le -rovisions o1 la% an" re*'lations Title 1G PROCESSIONA) REINSURERS Sec +F? E3ce-t as ot!er%ise -rovi"e" in t!is Co"e0 no -erson0 -artners!i-0 association or cor-oration s!all transact an7 #'siness in t!e P!ili--ines as a -ro1essional reins'rer 'ntil it s!all !ave o#taine" a certi1icate o1 a't!orit7 1or t!at -'r-ose 1ro2 t!e Co22issioner '-on t!e a--lication t!ere1or an" -a72ent #7 s'c! -erson0 -artners!i-0 association or cor-oration o1 t!e 1ees !ereina1ter -rescri#e" As 'se" in t!is Co"e0 t!e ter2 6-ro1essional reins'rer6 s!all 2ean an7 -erson0 -artners!i-0 association or cor-oration t!at transacts solel7 an" e3cl'sivel7 reins'rance #'siness in t!e P!ili--ines T!e Co22issioner 2a7 re1'se to iss'e a certi1icate o1 a't!orit7 to an7 s'c! -erson0 -artners!i-0 association or cor-oration i10 in !is :'"*2ent0 s'c! re1'sal %ill #est -ro2ote -'#lic interest No s'c! certi1icate o1 a't!orit7 s!all
59

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) #e *rante" to an7 s'c! -erson0 -artners!i-0 association or cor-oration 'nless an" 'ntil t!e Co22issioner s!all !ave satis1ie" !i2sel1 #7 s'c! e3a2ination as !e 2a7 2a$e an" s'c! evi"ence as !e 2a7 re4'ire t!at s'c! -erson0 -artners!i-0 association or cor-oration is 4'ali1ie" #7 t!e la%s o1 t!e P!ili--ines to transact #'siness t!erein as a -ro1essional reins'rer >e1ore iss'in* s'c! certi1icate o1 a't!orit7 o1 t!e Co22issioner 2'st #e satis1ie" t!at t!e na2e o1 t!e a--licant is not t!at o1 an7 ot!er $no%n co2-an7 transactin* ins'rance or reins'rance #'siness in t!e P!ili--ines0 or a na2e so si2ilar as to #e calc'late" to 2islea" t!e -'#lic S'c! certi1icate o1 a't!orit7 s!all e3-ire on t!e last "a7 o1 J'ne o1 eac! 7ear an" s!all #e rene%e" ann'all7 i1 s'c! -erson0 -artners!i-0 association0 or cor-oration is contin'in* to co2-l7 %it! -rovisions o1 t!is Co"e0 or t!e circ'lars0 instr'ctions0 r'lin*s0 or "ecisions o1 t!e Co22issioner an" s'c! ot!er -ertinent la%0 r'les an" re*'lations Ever7 s'c! -erson0 -artners!i-0 association0 or cor-oration receivin* s'c! certi1icate o1 a't!orit7 s!all #e s'#:ect to t!e -rovisions o1 t!is Co"e an" ot!er relate" la%s0 an" to t!e :'ris"iction an" s'-ervision o1 t!e Co22issioner Sec +F1 An7 -erson0 -artners!i-0 association0 or cor-oration a't!ori9e" to transact solel7 reins'rance #'siness 2'st !ave a -ai"-'- ca-ital stoc$ o1 at least ten 2illion -esos0 t%ent7-1ive -er cent'2 o1 %!ic! 2'st #e investe" in sec'rities satis1actor7 to t!e Co22issioner0 consistin* o1 #on"s or ot!er evi"ences o1 "e#t o1 t!e Govern2ent o1 t!e P!ili--ines or its -olitical s'#"ivisions or instr'2entalities0 or o1 *overn2ent-o%ne" or controlle" cor-orations an" entities0 incl'"in* t!e Central >an$ o1 t!e P!ili--ines0 an" "e-osite" %it! t!e Co22issioner0 an" t!e re2ainin* sevent7-1ive -er cent'2 in s'c! ot!er sec'rities as 2a7 #e allo%e" an" -er2itte" #7 t!e Co22issioner0 %!ic! sec'rities s!all at all ti2es #e 2aintaine" 1ree 1ro2 an7 lien or enc'2#rance5 Provi"e"0 T!at reins'rers alrea"7 "oin* #'siness as s'c! in t!e P!ili--ines s!all co2-l7 %it! t!e re4'ire2ent o1 t!is section #7 increasin* t!eir res-ective ca-ital as !erein -rovi"e" not later t!an Dece2#er t!irt7-one0 nineteen !'n"re" ei*!t75 Provi"e"0 C'rt!er0 T!at t!e -rovisions o1 t!is c!a-ter a--lica#le to ins'rance co2-anies s!all so 1ar as -ractica#le #e li$e%ise a--lica#le to -ro1essional reins'rers (As a2en"e" #7 Presi"ential Decree No 1.;;) Title +? HO)DING COAPANIES Sec +F+ As 'se" in t!is title0 t!e 1ollo%in* ter2s s!all !ave t!e res-ective 2eanin*s !ereina1ter set 1ort! 'nless t!e conte3t s!all ot!er%ise re4'ire5c!anro#lesvirt'alla%li#rar7 (a) 6Person6 2eans an in"ivi"'al0 -artners!i-0 1ir20 association0 cor-oration0 tr'st0 an7 si2ilar entit7 or an7 co2#ination o1 t!e 1ore*oin* actin* in concert8 (#) 6Control60 incl'"in* t!e ter2s 6controllin*60 6controlle" #76 an" 6'n"er co22on control %it!60 2eans t!e -ossession "irectl7 or in"irectl7 o1 t!e -o%er to "irect or ca'se t!e "irection o1 t!e 2ana*e2ent an" -olicies o1 a -erson0 %!et!er t!ro'*! t!e o%ners!i- o1 votin* sec'rities #7 a contract ot!er t!an a co22ercial contract 1or *oo"s or non-2ana*e2ent services or ot!er%ise S'#:ect to section t%o !'n"re" ei*!t-1o'r0 control s!all #e -res'2e" to e3ist i1 an7 -erson "irectl7 or in"irectl7 o%ns0 controls or !ol"s %it! t!e -o%er to vote 1ort7 -er cent'2 or 2ore o1 t!e votin* sec'rities o1 an7 ot!er -erson5 Provi"e"0 T!at no -erson s!all #e "ee2e" to control anot!er -erson solel7 #7 reason o1 !is #ein* an o11icer or "irector o1 s'c! ot!er -erson8 (c) 6Hol"in* co2-an76 2eans an7 -erson %!o "irectl7 or in"irectl7 controls an7 a't!ori9e" ins'rer8 (") 6Controlle" ins'rer6 2eans an a't!ori9e" ins'rer controlle" "irectl7 or in"irectl7 #7 a !ol"in* co2-an78 (e) 6Controlle" -erson6 2eans an7 -erson0 ot!er t!an a controlle" ins'rer0 %!o is controlle" "irectl7 or in"irectl7 #7 a !ol"in* co2-an78 (1) 6Hol"in* co2-an7 s7ste26 2eans a !ol"in* co2-an7 to*et!er %it! its controlle" ins'rers an" controlle" -ersons Sec +F, Not%it!stan"in* -ara*ra-! (#) o1 section t%o !'n"re" ei*!t7-t%o0 t!e Co22issioner 2a7 "eter2ine a1ter notice an" o--ort'nit7 to #e !ear"0 t!at a -erson e3ercises "irectl7 or in"irectl7 eit!er alone or -'rs'ant to an a*ree2ent %it! one or 2ore ot!er -ersons s'c! a controllin* in1l'ence over
60

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) t!e 2ana*e2ent or -olicies o1 an a't!ori9e" ins'rer as to 2a$e it necessar7 or a--ro-riate in t!e -'#lic interest or 1or t!e -rotection o1 -olic7!ol"ers or stoc$!ol"ers o1 t!e ins'rer t!at t!e -erson #e "ee2e" to control t!e ins'rer Sec +F. T!e Co22issioner 2a7 "eter2ine '-on a--lication t!at an7 -erson0 eit!er alone or -'rs'ant to a*ree2ent %it! one or 2ore ot!er -ersons0 "oes not or %ill not '-on t!e ta$in* o1 so2e -ro-ose" action control anot!er -erson T!e 1ilin* o1 an a--lication !ere'n"er in *oo" 1ait! #7 an7 -erson s!all relieve t!e a--licant 1ro2 an7 o#li*ation or lia#ilit7 i2-ose" #7 t!is title %it! res-ect to t!e s'#:ect o1 t!e a--lication0 e3ce-t as containe" in section t%o !'n"re" ninet7-1o'r0 'ntil t!e Co22issioner !as acte" '-on t!e a--lication /it!in t!irt7 "a7s or s'c! 1'rt!er -erio" as !e 2a7 -rescri#e0 t!e Co22issioner 2a7 -ros-ectivel7 revo$e or 2o"i17 !is "eter2ination0 a1ter notice an" o--ort'nit7 to #e !ear"0 %!enever in !is :'"*2ent revocation or 2o"i1ication is consistent %it! !is title Sec +F; Not%it!stan"in* an7 ot!er -rovisions o1 t!is title0 t!e 1ollo%in* s!all not #e "ee2e" !ol"in* co2-anies5c!anro#lesvirt'alla%li#rar7 (a) a't!ori9e" ins'rers or reins'rers or t!eir s'#si"iaries8 (#) t!e Govern2ent o1 t!e P!ili--ines0 or an7 -olitical s'#"ivision0 a*enc7 or instr'2entalit7 t!ereo10 or an7 cor-oration %!ic! is %!oll7 o%ne" "irectl7 or in"irectl7 #7 one or 2ore o1 t!e 1ore*oin* T!e Co22issioner 2a7 con"itionall7 or 'ncon"itionall7 e3e2-t an7 s-eci1ie" -erson or class o1 -ersons 1ro2 an7 o1 t!e o#li*ations or lia#ilities i2-ose" 'n"er t!is title0 i1 an" to t!e e3tent !e 1in"s t!e e3e2-tion necessar7 to a--ro-riate in t!e -'#lic interest or not a"verse to t!e interests o1 -olic7!ol"ers or stoc$!ol"ers an" consistent %it! t!e -'r-oses o1 t!is title Sec +F6 (1) Ever7 -erson %!o on t!e "ate t!is Co"e ta$es e11ect is a controlle" ins'rer an" ever7 -erson %!o t!erea1ter #eco2es a controlle" ins'rer0 s!all0 %it!in si3t7 "a7s t!erea1ter0 or %it!in t!irt7 "a7s a1ter #eco2in* a controlle" ins'rer0 %!ic!ever is later0 re*ister %it! t!e Co22issioner S'c! re*istration s!all #e a2en"e" %it!in t!irt7 "a7s 1ollo%in* an7 c!an*e in t!e i"entit7 o1 its !ol"in* co2-an7 T!e Co22issioner 2a7 *rant one or 2ore reasona#le e3tensions o1 t!e ti2e to re*ister (+) Ever7 re*istrant s!all 1'rnis! t!e Co22issioner %it! t!e 1ollo%in* in1or2ation concernin* its !ol"in* co2-an75 (a) a co-7 o1 its c!arter or articles o1 incor-oration an" its #7-la%s0 (#) t!e i"entities o1 its -rinci-al s!are!ol"ers0 o11icers0 "irectors an" controlle" -ersons0 an" (c) in1or2ation as to its ca-ital str'ct're an" 1inancial con"ition0 an" a "escri-tion o1 its -rinci-al #'siness activities Sec +FE Ever7 controlle" ins'rer s!all 1ile %it! t!e Co22issioner s'c! re-orts or 2aterial as !e 2a7 "irect 1or t!e -'r-ose o1 "isclosin* in1or2ation concernin* t!e o-erations o1 -ersons %it!in t!e !ol"in* co2-an7 s7ste2 %!ic! 2a7 2ateriall7 a11ect t!e o-erations0 2ana*e2ent or 1inancial con"ition o1 t!e ins'rer Sec +FF Ever7 !ol"in* co2-an7 an" ever7 controlle" -erson %it!in a !ol"in* co2-an7 s7ste2 s!all #e s'#:ect to e3a2ination #7 or"er o1 t!e Co22issioner i1 !e !as ca'se to #elieve t!at t!e o-erations o1 s'c! -ersons 2a7 2ateriall7 a11ect t!e o-erations0 2ana*e2ent or 1inancial con"ition o1 an7 controlle" ins'rer %it! t!e s7ste2 an" t!at !e is 'na#le to o#tain relevant in1or2ation 1ro2 s'c! controlle" ins'rer T!e *ro'n"s relie" '-on #7 t!e Co22issioner 1or s'c! e3a2ination s!all #e state" in !is or"er0 %!ic! or"er s!all #e s'#:ect to :'"icial revie% onl7 at t!e instance o1 t!e -erson so'*!t to #e e3a2ine" S'c! e3a2ination s!all #e con1ine" to 2atters s-eci1ie" in t!e or"er T!e cost o1 s'c! e3a2ination s!all #e assesse" a*ainst t!e -erson e3a2ine" an" no -ortion t!ereo1 s!all t!erea1ter #e rei2#'rse" to it "irectl7 or in"irectl7 #7 t!e controlle" ins'rer Sec +FG T!e Co22issioner s!all $ee- t!e contents o1 eac! re-ort 2a"e -'rs'ant to t!is title an" an7 in1or2ation o#taine" #7 !i2 in connection t!ere%it! con1i"ential an" s!all not 2a$e t!e sa2e -'#lic %it!o't t!e -rior %ritten consent o1 t!e controlle" ins'rer to %!ic! it -ertains 'nless t!e Co22issioner a1ter notice an" an o--ort'nit7 to #e !ear" s!all "eter2ine t!at t!e interests o1 -olic7!ol"ers0 stoc$!ol"ers or t!e -'#lic %ill #e serve" #7 t!e -'#lication t!ereo1 In an7 action or -rocee"in* #7 t!e Co22issioner a*ainst t!e -erson e3a2ine" or an7 ot!er -erson %it!in t!e sa2e !ol"in* co2-an7 s7ste2 a re-ort o1 s'c! e3a2ination -'#lis!e" #7 !i2 s!all #e a"2issi#le as evi"ence o1 t!e 1acts state" t!erein
61

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Sec +G? Transactions %it!in a !ol"in* co2-an7 s7ste2 to %!ic! a controlle" ins'rer is a -art7 s!all #e s'#:ect to t!e 1ollo%in*5c!anro#lesvirt'alla%li#rar7 (a) T!e ter2s s!all #e 1air an" e4'ita#le8 (#) c!ar*es or 1ees 1or services -er1or2e" s!all #e reasona#le8 (c) e3-enses inc'rre" an" -a72ents receive" s!all #e allocate" to t!e ins'rer on an e4'ita#le #asis in con1or2it7 %it! c'sto2ar7 ins'rance acco'ntin* -ractices consistentl7 a--lie" T!e #oo$s0 acco'nts an" recor"s o1 eac! -art7 to all s'c! transactions s!all #e 2aintaine" as to clearl7 an" acc'ratel7 "isclose t!e nat're an" "etails o1 t!e transactions incl'"in* s'c! acco'ntin* in1or2ation as is necessar7 to s'--ort t!e reasona#leness o1 t!e c!ar*es or 1ees to t!e res-ective -arties Sec +G1 T!e -rior %ritten a--roval o1 t!e Co22issioner s!all #e re4'ire" 1or t!e 1ollo%in* transactions #et%een a controlle" ins'rer an" an7 -erson in its !ol"in* co2-an7 s7ste25 sales0 -'rc!ases0 e3c!an*es0 loans or e3tensions o1 cre"it0 or invest2ents0 involvin* 1ive -er cent'2 or 2ore o1 t!e ins'rerDs a"2itte" assets as o1 t!e t!irt7-1irst "a7 o1 Dece2#er ne3t -rece"in* Sec +G+ T!e 1ollo%in* transactions #et%een a controlle" ins'rer an" an7 -erson in its !ol"in* co2-an7 s7ste2 2a7 not #e entere" into 'nless t!e ins'rer !as noti1ie" t!e Co22issioner in %ritin* o1 its intention to enter into an7 s'c! transaction at least t!irt7 "a7s -rior t!ereto0 or s'c! s!orter -erio" as !e 2a7 -er2it0 an" !e !as not "isa--rove" it %it!in s'c! -erio"5c!anro#lesvirt'alla%li#rar7 (a) sales0 -'rc!ases0 e3c!an*es0 loans or e3tensions o1 cre"it0 or invest2ents0 involvin* 2ore t!an one-!al1 o1 one -er cent'2 #'t less t!an 1ive -er cent'2 o1 t!e ins'rerDs a"2itte" assets as o1 t!e t!irt7-1irst "a7 o1 Dece2#er ne3t -rece"in*8 (#) reins'rance treaties or a*ree2ents8 (c) ren"erin* o1 services on a re*'lar or s7ste2atic #asis8 or (") an7 2aterial transaction0 s-eci1ie" #7 re*'lation0 %!ic! t!e Co22issioner "eter2ines 2a7 a"versel7 a11ect t!e interest o1 t!e ins'rerDs -olic7!ol"ers or stoc$!ol"ers or o1 t!e -'#lic Not!in* !erein containe" s!all #e "ee2e" to a't!ori9e or -er2it an7 transaction %!ic!0 in t!e case o1 a non-controlle" ins'rer0 %o'l" #e ot!er%ise contrar7 to la% Sec +G, T!e Co22issioner0 in revie%in* transactions -'rs'ant to sections t%o !'n"re" ninet7-one an" t%o !'n"re" ninet7-t%o0 s!all consi"er %!et!er t!e transactions co2-l7 %it! t!e stan"ar" set 1ort! in section t%o !'n"re" ninet7 an" %!et!er t!e7 2a7 a"versel7 a11ect t!e interests o1 -olic7!ol"ers T!is section s!all not a--l7 to transactions s'#:ect to ot!er sections o1 t!is Co"e %!ic! i2-ose notice or a--roval re4'ire2ents *reater t!an t!ose -rescri#e" #7 t!is title Sec +G. (1) No -erson0 ot!er t!an an a't!ori9e" ins'rer0 s!all ac4'ire control o1 an7 "o2estic ins'rer0 %!et!er #7 -'rc!ase o1 its sec'rities or ot!er%ise0 e3ce-t (a) a1ter t%ent7 "a7s %ritten notice to its ins'rer or s'c! s!orter -erio" as t!e Co22issioner 2a7 -er2it0 o1 its intention to ac4'ire control0 an" (#) %it! t!e -rior %ritten a--roval o1 t!e Co22issioner (+) T!e Co22issioner s!all "isa--rove t!e ac4'isition o1 control o1 a "o2estic ins'rer i1 !e "eter2ines0 a1ter notice an" an o--ort'nit7 to #e !ear"0 t!at s'c! action is reasona#l7 necessar7 to -rotect t!e interest o1 t!e -eo-le o1 t!is co'ntr7 T!e 1ollo%in* s!all #e t!e onl7 1actors to #e consi"ere" #7 !i2 in reac!in* t!e 1ore*oin* "eter2ination5c!anro#lesvirt'alla%li#rar7 (a) t!e 1inancial con"ition o1 t!e ac4'irin* -erson or an" t!e ins'rer8 (#) t!e tr'st%ort!iness o1 t!e ac4'irin* -erson or an7 o1 its o11icers or "irectors8 (c) a -lan 1or t!e -ro-er an" e11ective con"'ct o1 t!e ins'rerDs o-erations8 (") t!e so'rce o1 t!e 1'n"s or assets 1or t!e ac4'isition8 (e) t!e 1airness o1 an7 e3c!an*e o1 stoc$0 assets0 cas! or ot!er consi"eration 1or t!e stoc$ or assets to #e receive"8 (1) %!et!er t!e e11ect o1 t!e ac4'isition 2a7 #e s'#stantiall7 to lessen co2-etition in an7 line o1 co22erce in ins'rance or to ten" to create a 2ono-ol7 t!erein8 an" (*) %!et!er t!e ac4'isition is li$el7 to #e !a9ar"o's or -re:'"icial to t!e ins'rerDs -olic7!ol"ers or stoc$!ol"ers
62

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (,) T!e 1ollo%in* con"itions a11ectin* an7 controlle" ins'rer0 re*ar"less o1 %!en s'c! control !as #een ac4'ire"0 are violations o1 t!is title5 (a) t!e controllin* -erson or an7 o1 its o11icers or "irectors !ave "e2onstrate" 'ntr'st%ort!iness8 an" (#) t!e e11ect o1 retention o1 control 2a7 #e s'#stantiall7 to lessen co2-etition in an7 line o1 co22erce in ins'rance in t!is co'ntr7 or to ten" to create a 2ono-ol7 t!erein I10 a1ter notice an" an o--ort'nit7 to #e !ear"0 t!e Co22issioner "eter2ines t!at an7 o1 t!e 1ore*oin* violations e3ists0 !e s!all re"'ce !is 1in"in*s to %ritin* an" s!all iss'e an or"er #ase" t!ereon an" ca'se t!e sa2e to #e serve" '-on t!e ins'rer an" '-on all -ersons a11ecte" t!ere#7 "irectin* an7 -erson 1o'n" to #e in violation t!ereo1 to ta$e a--ro-riate action to c're s'c! violation U-on t!e 1ail're o1 an7 s'c! -erson to co2-l7 %it! s'c! or"er0 section t%o !'n"re" ninet7-ei*!t s!all #eco2e a--lica#le (.) T!e Co22issioner 2a7 re4'ire t!e s'#2ission o1 s'c! in1or2ation as !e "ee2s necessar7 to "eter2ine %!et!er an7 ac4'isition or retention o1 control co2-lies %it! t!is title an" 2a7 re4'ire0 as a con"ition o1 a--roval o1 s'c! ac4'isition or retention o1 control0 t!at all or an7 -ortion o1 s'c! in1or2ation #e "isclose" to t!e ins'rerDs stoc$!ol"ers (;) Unless s'#:ect to re*istration 'n"er section t%o !'n"re" ei*!t7-si3 or 'nless ac4'isition o1 its control is s'#:ect to -ara*ra-!s one an" t%o !ereo10 ever7 a't!ori9e" ins'rer s!all0 on or #e1ore t!e 1irst "a7 o1 J'l70 nineteen !'n"re" sevent7-1ive0 or %it!in t!irt7 "a7s a1ter an7 event re4'irin* notice !ere'n"er0 %!ic!ever is later0 noti17 t!e Co22issioner in %ritin* o1 t!e i"entit7 o1 an7 -erson %!o2 t!e ins'rer t!en $no%s or !as reason to #elieve controls or !as ta$en an7 action0 ot!er t!an -reli2inar7 ne*otiations or "isc'ssion0 to ac4'ire control o1 t!e ins'rer Sec +G; (1) Not%it!stan"in* t!e control o1 an a't!ori9e" ins'rer #7 an7 -erson0 t!e o11icers an" "irectors o1 t!e ins'rer s!all not t!ere#7 #e relieve" o1 an7 o#li*ation or lia#ilit7 to %!ic! t!e7 %o'l" ot!er%ise #e s'#:ect #7 la%0 an" t!e ins'rer s!all #e 2ana*e" so as to ass're its se-arate o-eratin* i"entit7 consistent %it! t!is title (+) Not!in* !erein s!all -recl'"e an a't!ori9e" ins'rer 1ro2 !avin* or s!arin* a co22on 2ana*e2ent or coo-erative or :oint 'se o1 -ersonnel0 -ro-ert7 or services %it! one or 2ore ot!er -ersons 'n"er arran*e2ents 2eetin* t!e stan"ar"s o1 section t%o !'n"re" ninet7 Sec +G6 To t!e e3tent t!at an7 in1or2ation or 2aterial is set 1ort! in 1or2s or ot!er 2atter on 1ile %it! an7 *overn2ent a*enc7 or in a re*istration 1or2 1ile" %it! t!e Co22issioner #7 anot!er -erson %it!in t!e sa2e !ol"in* co2-an7 s7ste20 t!e controlle" ins'rer 2a7 co2-l7 %it! t!e re*istration or re-ortin* re4'ire2ents o1 t!is title #7 re1errin* in its re*istration 1or2 or re-ort to s'c! ot!er 1ile" 2atter an" attac!in* a co-7 t!ereo1 certi1ie" #7 t!e ins'rer as a tr'e an" co2-lete co-70 to s'c! re*istration 1or2 or re-ort or0 i1 s'c! ot!er 1ile" 2atter is on 1ile %it! t!e Co22issioner0 incor-oratin* s'c! 2atter #7 re1erence Sec +GE No !ol"in* co2-an7 or controlle" -erson s!all "irectl7 or in"irectl7 or t!ro'*! anot!er -erson "o or ca'se to #e "one 1or or in #e!al1 o1 t!e controlle" ins'rer an7 act inten"e" to a11ect t!e ins'rance o-erations o1 t!e ins'rer %!ic!0 i1 "one #7 t!e ins'rer0 %o'l" violate an7 -rovision o1 t!is Co"e Sec +GF In a""ition to an7 ot!er -enalt7 -rovi"e" #7 la%0 t!e Co22issioner 2a70 '-on t!e %ill1'l 1ail're o1 an7 -erson %it!in a !ol"in* co2-an7 s7ste2 to co2-l7 %it! t!is title or an7 re*'lation or or"er -ro2'l*ate" !ere'n"er5c!anro#lesvirt'alla%li#rar7 (a) -rocee" 'n"er title 1o'rteen or title 1i1teen0 C!a-ter III0 o1 t!is Co"e %it! res-ect to ins'rer %it!in t!e !ol"in* co2-an7 s7ste28 or (#) revo$e or re1'se to rene% t!e a't!orit7 to "o #'siness in t!is co'ntr7 o1 an ins'rer %it!in t!e !ol"in* co2-an7 s7ste2 or re1'se to iss'e s'c! a't!orit7 to an7 ot!er ins'rer in t!e s7ste28 or (c) "irect t!at0 in a""ition to an7 ot!er -enalt7 -rovi"e" #7 la%0 s'c! -erson 1or1eit to t!e -eo-le o1 t!is co'ntr7 a s'2 not e3cee"in* 1ive !'n"re" -esos 1or a 1irst violation an" t%o t!o'san" 1ive !'n"re" -esos 1or an7 s'#se4'ent violation An a""itional s'2 not e3cee"in* t%o t!o'san" 1ive !'n"re" -esos s!all #e i2-ose" 1or eac! 2ont! "'rin* %!ic! an7 s'c! violation s!all contin'e C!a-ter II
63

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) SA)ES AGENCIES AND TECHNICA) SERIICES Title 1 INSURANCE AGENTS AND INSURANCE >RO@ERS Sec +GG No ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines0 nor an7 a*ent t!ereo10 s!all -a7 an7 co22ission or ot!er co2-ensation to an7 -erson 1or services in o#tainin* ins'rance0 'nless s'c! -erson s!all !ave 1irst -roc're" 1ro2 t!e Co22issioner a license to act as an ins'rance a*ent o1 s'c! co2-an7 or as an ins'rance #ro$er as !ereina1ter -rovi"e" No -erson s!all act as an ins'rance a*ent or as an ins'rance #ro$er in t!e solicitation or -roc're2ent o1 a--lications 1or ins'rance0 or receive 1or services in o#tainin* ins'rance0 an7 co22ission or ot!er co2-ensation 1ro2 an7 ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines0 or an7 a*ent t!ereo10 %it!o't 1irst -roc'rin* a license to act 1ro2 t!e Co22issioner0 %!ic! 2'st #e rene%e" ann'all7 on t!e 1irst "a7 o1 Jan'ar70 or %it!in si3 2ont!s t!erea1ter S'c! license s!all #e iss'e" #7 t!e Co22issioner onl7 '-on t!e %ritten a--lication o1 t!e -erson "esirin* it0 s'c! a--lication i1 1or a license to act as ins'rance a*ent0 #ein* a--rove" an" co'ntersi*ne" #7 t!e co2-an7 s'c! -erson "esires to re-resent0 an" s!all #e '-on a 1or2 -rescri#e" #7 t!e Co22issioner *ivin* s'c! in1or2ation as !e 2a7 re4'ire0 an" '-on -a72ent o1 t!e corres-on"in* 1ee !ereina1ter -rescri#e" T!e Co22issioner s!all satis17 !i2sel1 as to co2-etence an" tr'st%ort!iness o1 t!e a--licant an" s!all !ave t!e ri*!t to re1'se to iss'e or rene% an" to s's-en" or revo$e an7 s'c! license in !is "iscretion No s'c! license s!all #e vali" a1ter t!e t!irtiet! "a7 o1 J'ne o1 t!e 7ear 1ollo%in* its iss'ance 'nless it is rene%e" (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec ,?? An7 -erson %!o 1or co2-ensation solicits or o#tains ins'rance on #e!al1 o1 an7 ins'rance co2-an7 or trans2its 1or a -erson ot!er t!an !i2sel1 an a--lication 1or a -olic7 or contract o1 ins'rance to or 1ro2 s'c! co2-an7 or o11ers or ass'2es to act in t!e ne*otiatin* o1 s'c! ins'rance s!all #e an ins'rance a*ent %it!in t!e intent o1 t!is section an" s!all t!ere#7 #eco2e lia#le to all t!e "'ties0 re4'ire2ents0 lia#ilities an" -enalties to %!ic! an ins'rance a*ent is s'#:ect Sec ,?1 An7 -erson %!o 1or an7 co2-ensation0 co22ission or ot!er t!in* o1 val'e acts or ai"s in an7 2anner in solicitin*0 ne*otiatin* or -roc'rin* t!e 2a$in* o1 an7 ins'rance contract or in -lacin* ris$ or ta$in* o't ins'rance0 on #e!al1 o1 an ins're" ot!er t!an !i2sel10 s!all #e an ins'rance #ro$er %it!in t!e intent o1 t!is Co"e0 an" s!all t!ere#7 #eco2e lia#le to all t!e "'ties0 re4'ire2ents0 lia#ilities an" -enalties to %!ic! an ins'rance #ro$er is s'#:ect Sec ,?+ Ever7 a--licant 1or an ins'rance #ro$erDs license s!all 1ile %it! t!e a--lication an" s!all t!erea1ter 2aintain in 1orce %!ile so license"0 a #on" in 1avor o1 t!e -eo-le o1 t!e Re-'#lic o1 t!e P!ili--ines e3ec'te" #7 a co2-an7 a't!ori9e" to #eco2e s'ret7 '-on o11icial reco*ni9ances0 sti-'lations0 #on"s an" 'n"erta$in*s T!e #on" s!all #e in s'c! a2o'nt as 2a7 #e 1i3e" #7 t!e Co22issioner0 #'t in no case less t!an one !'n"re" t!o'san" -esos0 an" s!all #e con"itione" '-on 1'll acco'ntin* an" "'e -a72ent to t!e -erson entitle" t!ereto o1 1'n"s co2in* into t!e #ro$erDs -ossession t!ro'*! ins'rance transactions 'n"er license T!e #on" s!all re2ain in 1orce 'ntil release" #7 t!e Co22issioner0 or 'ntil cancelle" #7 t!e s'ret7 /it!o't -re:'"ice to an7 lia#ilit7 -revio'sl7 inc'rre" t!ere'n"er0 t!e s'ret7 2a7 cancel t!e #on" on t!irt7 "a7s a"vance %ritten notice to #ot! t!e #ro$er an" t!e Co22issioner U-on a--roval o1 t!e a--lication0 t!e a--licant 2'st also 1ile t%o errors an" o2issions (-ro1essional lia#ilit7 or -ro1essional in"e2nit7) -olicies iss'e" se-aratel7 #7 t%o ins'rance co2-anies a't!ori9e" to "o #'siness in t!e P!ili--ines0 satis1actor7 to t!e Co22issioner to in"e2ni17 t!e a--licant a*ainst an7 clai2 or clai2s 1or #reac! o1 "'t7 as ins'rance #ro$er %!ic! 2a7 #e 2a"e a*ainst !i2 #7 reason o1 an7 ne*li*ent act0 error or o2ission0 %!enever or %!erever co22itte" or alle*e" to !ave #een co22itte"0 on t!e -art o1 t!e a--licant or an7 -erson %!o !as #een0 is no%0 or 2a7 !erea1ter "'rin* t!e s'#sistence o1 t!e -olicies #e e2-lo7e" #7 t!e sai" a--licant in !is ca-acit7 as ins'rance #ro$er0 -rovi"e" t!at t!e 1ilin* o1 an7 clai2 or clai2s 'n"er one o1 s'c! -olicies s!all -recl'"e t!e 1ilin* o1 t!e sai" clai2 or clai2s 'n"er t!e ot!er -olic7 T!e sai" -olicies s!all #e in s'c! a2o'nts as 2a7 #e -rescri#e" #7 t!e Ins'rance Co22issioner0 "e-en"in* '-on t!e si9e
64

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) or a2o'nt o1 t!e #ro$in* #'siness o1 t!e a--licant0 #'t in no case s!all t!e a2o'nt o1 eac! o1 s'c! -olicies #e less t!an 1ive !'n"re" t!o'san" -esos (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec ,?, T!e Co22issioner s!all0 in or"er to "eter2ine t!e co2-etence o1 ever7 a--licant to !ave t!e $in" o1 license a--lie" 1or0 re4'ire s'c! a--licant to s'#2it to a %ritten e3a2ination an" to -ass t!e sa2e to t!e satis1action o1 t!e Co22issioner S'c! e3a2ination s!all #e !el" at s'c! ti2es an" -laces as t!e Co22issioner s!all 1ro2 ti2e to ti2e "eter2ine Sec ,?. An a--licant 1or t!e %ritten e3a2ination 2entione" in t!e -rece"in* section 2'st #e o1 *oo" 2oral c!aracter an" 2'st not !ave #een convicte" o1 an7 cri2e involvin* 2oral t'r-it'"e He 2'st satis1actoril7 s!o% to t!e Co22issioner t!at !e !as #een traine" in t!e $in" o1 ins'rance conte2-late" in t!e license a--lie" 1or S'c! e3a2ination 2a7 #e %aive" i1 it is s!o%n to t!e satis1action o1 t!e Co22issioner t!at t!e a--licant !as 'n"er*one e3tensive e"'cation an"Mor trainin* in ins'rance Sec ,?; An a--lication 1or t!e iss'ance or rene%al o1 a license to act as an ins'rance a*ent or ins'rance #ro$er 2a7 #e re1'se"0 or s'c! license0 i1 alrea"7 iss'e" or rene%e"0 s!all #e s's-en"e" or revo$e" i1 t!e Co22issioner 1in"s t!at t!e a--licant 1or0 or !ol"er o10 s'c! license5c!anro#lesvirt'alla%li#rar7 (a) !as %ill1'll7 violate" an7 -rovision o1 t!is Co"e8 or (#) !as intentionall7 2a"e a 2aterial 2isstate2ent in t!e a--lication to 4'ali17 1or s'c! license8 or (c) !as o#taine" or atte2-te" to o#tain a license #7 1ra'" or 2isre-resentation8 or (") !as #een *'ilt7 o1 1ra'"'lent or "is!onest -ractices8 or (e) !as 2isa--ro-riate" or converte" to !is o%n 'se or ille*all7 %it!!el" 2one7s re4'ire" to #e !el" in a 1i"'ciar7 ca-acit78 (1) !as not "e2onstrate" tr'st%ort!iness an" co2-etence to transact #'siness as an ins'rance a*ent or ins'rance #ro$er in s'c! 2anner as to sa1e*'ar" t!e -'#lic8 or (*) !as 2ateriall7 2isre-resente" t!e ter2s an" con"itions o1 -olicies or contracts o1 ins'rance %!ic! !e see$s to sell or !as sol"8 or (!) !as 1aile" to -ass t!e %ritten e3a2ination -rescri#e"0 i1 not ot!er%ise e3e2-t 1ro2 ta$in* t!e sa2e In a""ition to t!e 1ore*oin* ca'ses0 no license to act as ins'rance a*ent or ins'rance #ro$er s!all #e rene%e" i1 t!e !ol"er t!ereo1 !as not #een activel7 en*a*e" as s'c! a*ent or #ro$er in accor"ance %it! s'c! r'les as t!e Co22issioner 2a7 -rescri#e (As a2en"e" #7 Presi"ential Decree No 1F1.) Sec ,?6 T!e -re2i'20 or an7 -ortion t!ereo10 %!ic! an ins'rance a*ent or ins'rance #ro$er collects 1ro2 an ins're" an" %!ic! is to #e -ai" to an ins'rance co2-an7 #eca'se o1 t!e ass'2-tion o1 lia#ilit7 t!ro'*! t!e iss'ance o1 -olicies or contracts o1 ins'rance0 s!all #e !el" #7 t!e a*ent or #ro$er in a 1i"'ciar7 ca-acit7 an" s!all not #e 2isa--ro-riate" or converte" to !is o%n 'se or ille*all7 %it!!el" #7 t!e a*ent or #ro$er An7 ins'rance co2-an7 %!ic! "elivers to an ins'rance a*ent or ins'rance #ro$er a -olic7 or contract o1 ins'rance s!all #e "ee2e" to !ave a't!ori9e" s'c! a*ent or #ro$er to receive on its #e!al1 -a72ent o1 an7 -re2i'2 %!ic! is "'e on s'c! -olic7 or contract o1 ins'rance at t!e ti2e o1 its iss'ance or "eliver7 or %!ic! #eco2es "'e t!ereon Sec ,?E An7 -rovision o1 e3istin* la%s to t!e contrar7 not%it!stan"in*0 no -erson s!all0 %it!in t!e P!ili--ines0 sell or o11er 1or sale a varia#le contract or "o or -er1or2 an7 act or t!in* in t!e sale0 ne*otiation0 2a$in* or cons'22atin* o1 an7 varia#le contract ot!er t!an 1or !i2sel1 'nless s'c! -erson s!all !ave a vali" an" c'rrent license 1ro2 t!e Co22issioner a't!ori9in* s'c! -erson to act as a varia#le contract a*ent No s'c! license s!all #e iss'e" 'nless an" 'ntil t!e Co22issioner is satis1ie"0 a1ter e3a2ination t!at s'c! -erson is #7 trainin*0 $no%le"*e0 a#ilit7 an" c!aracter 4'ali1ie" to act as s'c! a*ent An7 s'c! license 2a7 #e %it!"ra%n an" cancelle" #7 t!e Co22issioner a1ter notice an" !earin*0 i1 !e s!all 1in" t!at t!e !ol"er t!ereo1 "oes not t!en !ave t!e 4'ali1ications re4'ire" 1or t!e iss'ance o1 s'c! license Sec ,?F It s!all #e 'nla%1'l 1or an7 -erson0 co2-an7 or cor-oration in t!e P!ili--ines to act as *eneral a*ent o1 an7 ins'rance co2-an7 'nless !e is
65

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) e2-o%ere" #7 a %ritten -o%er o1 attorne7 "'l7 e3ec'te" #7 s'c! ins'rance co2-an70 an" re*istere" %it! t!e Co22issioner to receive notices0 s'22ons an" le*al -rocesses 1or an" in #e!al1 o1 t!e ins'rance co2-an7 concerne" in connection %it! actions or ot!er le*al -rocee"in*s a*ainst sai" ins'rance co2-an7 It s!all #e t!e "'t7 o1 sai" *eneral a*ent to noti17 t!e Co22issioner o1 !is -ost o11ice a""ress in t!e P!ili--ines0 or an7 c!an*e t!ereo1 Notices0 s'22ons0 or -rocesses o1 an7 $in" sent #7 re*istere" 2ail to t!e last re*istere" a""ress o1 s'c! *eneral a*ent o1 t!e co2-an7 concerne" or to t!e Co22issioner s!all #e s'11icient service an" "ee2e" as i1 serve" on t!e ins'rance co2-an7 itsel1 Sec ,?G E3ce-t as ot!er%ise -rovi"e" #7 la% or treat70 it s!all #e 'nla%1'l 1or an7 -erson0 -artners!i-0 association or cor-oration in t!e P!ili--ines0 1or !i2sel1 or itsel10 or 1or so2e ot!er -erson0 -artners!i-0 association or cor-oration0 eit!er to -roc're0 receive or 1or%ar" a--lications o1 ins'rance in0 or to iss'e or to "eliver or acce-t -olicies or contracts o1 ins'rance o1 or 1or0 an7 ins'rance co2-an7 or co2-anies not a't!ori9e" to transact #'siness in t!e P!ili--ines0 coverin* ris$s0 li1e or nonli1e0 sit'ate" in t!e P!ili--ines8 an" an7 s'c! -erson0 -artners!i-0 association or cor-oration violatin* t!e -rovisions o1 t!is section s!all #e "ee2e" *'ilt7 o1 a -enal o11ense0 an" '-on conviction t!ereo10 s!all 1or eac! s'c! o11ense #e -'nis!e" #7 a 1ine o1 ten t!o'san" -esos0 or i2-rison2ent o1 si3 2ont!s0 or #ot! at t!e "iscretion o1 t!e co'rt5 Provi"e"0 T!at t!e -rovisions o1 t!is section s!all not a--l7 to reins'rance Title + REINSURANCE >RO@ERS Sec ,1? E3ce-t as -rovi"e" in t!e ne3t s'ccee"in* title0 no -erson s!all act as reins'rance #ro$er in t!e P!ili--ines 'nless !e is a't!ori9e" as s'c! #7 t!e Co22issioner A reins'rance #ro$er is one %!o0 1or co2-ensation0 not #ein* a "'l7 a't!ori9e" a*ent0 e2-lo7ee or o11icer o1 an ins'rer in %!ic! an7 reins'rance is e11ecte"0 act or ai"s in an7 2anner in ne*otiatin* contracts o1 reins'rance0 or -lacin* ris$s o1 e11ectin* reins'rance0 1or an7 ins'rance co2-an7 a't!ori9e" to "o #'siness in t!e P!ili--ines Sec ,11 U-on a--lication an" -a72ent o1 t!e corres-on"in* 1ee !ereina1ter -rescri#e"0 an" t!e 1ilin* o1 t%o errors an" o2issions (-ro1essional lia#ilit7 or -ro1essional in"e2nit7) -olicies !ereina1ter "escri#e"0 a -erson 2a70 i1 1o'n" 4'ali1ie"0 #e iss'e" a license to act as reins'rance #ro$er #7 t!e Co22issioner No s'c! license s!all #e vali" a1ter t!e t!irtiet! "a7 o1 J'ne o1 t!e 7ear 1ollo%in* its iss'ance 'nless it is rene%e" (As a2en"e" #7 Presi"ential Decree No 1.;;) T!e errors an" o2issions (-ro1essional lia#ilit7 or -ro1essional in"e2nit7) -olicies 2entione" a#ove s!all in"e2ni17 t!e a--licant a*ainst an7 clai2 or clai2s 1or #reac! o1 "'t7 as reins'rance #ro$er %!ic! 2a7 #e 2a"e a*ainst !i2 #7 reason o1 an7 ne*li*ent act0 error or o2ission0 %!enever or %!erever co22itte" or alle*e" to !ave #een co22itte"0 on t!e -art o1 t!e a--licant or an7 -erson %!o !as #een0 is no%0 or 2a7 !erea1ter "'rin* t!e s'#sistence o1 t!e -olicies #e e2-lo7e" #7 t!e sai" a--licant in !is ca-acit7 as reins'rance #ro$er8 Provi"e"0 T!at t!e 1ilin* o1 an7 clai2 or clai2s 'n"er one o1 s'c! -olicies s!all -recl'"e t!e 1ilin* o1 t!e sai" clai2 or clai2s 'n"er t!e ot!er -olic7 T!e sai" -olicies s!all #e iss'e" se-aratel7 #7 t%o ins'rance co2-anies a't!ori9e" to "o #'siness in t!e P!ili--ines an" s!all #e in s'c! a2o'nts as 2a7 #e -rescri#e" #7 t!e Ins'rance Co22issioner0 "e-en"in* '-on t!e si9e or a2o'nt o1 t!e #ro$in* #'siness o1 t!e a--licant0 #'t in no case s!all t!e a2o'nt o1 eac! o1 s'c! -olicies #e less t!an 1ive !'n"re" t!o'san" -esos (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec ,1+ T!e Co22issioner 2a7 recall0 s's-en" or revo$e t!e license *rante" to a reins'rance #ro$er 1or violation o1 an7 e3istin* la%0 r'le an" re*'lation0 or an7 -rovision o1 t!is Co"e a1ter "'e notice an" !earin* Title , RESIDENT AGENTS Sec ,1, No -erson s!all act as resi"ent a*ent0 as !ereina1ter "e1ine"0 'nless !e is re*istere" as s'c! %it! t!e Co22issioner Sec ,1. T!e ter2 6resi"ent a*ent60 as 'se" in t!is title0 is one "'l7 a--ointe" #7 a 1orei*n ins'rer or #ro$er not a't!ori9e" to "o #'siness in t!e P!ili--ines to receive in its #e!al1 notices0 s'22ons an" le*al -rocesses in

SPC )a% >atc! +?1.

66

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) connection %it! actions or ot!er le*al -rocee"in*s a*ainst s'c! 1orei*n ins'rer or #ro$er Sec ,1; T!e a--lication 1or a certi1icate o1 re*istration as resi"ent a*ent 1ile" %it! t!e Co22issioner 2'st #e acco2-anie" %it!5c!anro#lesvirt'alla%li#rar7 (a) a co-7 o1 t!e -o%er o1 attorne70 "'l7 notari9e" an" a't!enticate" #7 t!e P!ili--ine Cons'l in t!e -lace %!ere s'c! 1orei*n ins'rer or #ro$er is "o2icile"0 e2-o%erin* t!e a--licant to act as resi"ent a*ent an" to receive notices0 s'22ons an" le*al -rocesses 1or an" in #e!al1 o1 s'c! 1orei*n ins'rer or #ro$er in connection %it! an7 action or le*al -rocee"in* a*ainst s'c! 1orei*n ins'rer or #ro$er8 an" (#) a co-7 o1 t!e corres-on"in* certi1icate iss'e" #7 t!e >oar" o1 Invest2ents as re4'ire" 'n"er Section . o1 Re-'#lic Act No ;.;;0 i1 s'c! 1orei*n ins'rer or #ro$er is not ot!er%ise e3e2-t 1ro2 s'c! re4'ire2ent Sec ,16 It s!all #e t!e "'t7 o1 s'c! resi"ent a*ent to noti17 i22e"iatel7 t!e Co22issioner o1 an7 c!an*e o1 !is o11ice a""ress Sec ,1E A certi1icate o1 re*istration iss'e" to a resi"ent a*ent s!all e3-ire on t!e t!irtiet! "a7 o1 J'ne o1 t!e 7ear 1ollo%in* its iss'ance 'nless it is rene%e" T!e Co22issioner 2a70 a1ter "'e notice an" !earin*0 recall or cancel t!e certi1icate o1 re*istration iss'e" to a resi"ent a*ent 1or violation o1 an7 e3istin* la%0 r'le or re*'lation0 or an7 -rovision o1 t!is Co"e (As a2en"e" #7 Presi"ential Decree No 1.;;) Title . NON-)ICE COAPANH UNDER/RITER Sec ,1F No -erson s!all act0 an" no co2-an7 s!all e2-lo7 an7 -erson0 as non-li1e co2-an7 'n"er%riter0 %!ose "'t7 an" res-onsi#ilit7 it s!all #e to select0 eval'ate an" acce-t ris$s 1or0 an" to "eter2ine t!e ter2s an" con"itions0 incl'"in* t!ose -ertainin* to a2o'nts o1 retentions0 'n"er %!ic! s'c! ris$s are to #e acce-te" #7 t!e co2-an70 'nless s'c! 'n"er%riter is re*istere" as s'c! %it! t!e Co22issioner Sec ,1G Ever7 non-li1e ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines 2'st 2aintain at all ti2es a re*ister o1 ris$s acce-te" an" a clai2s re*ister 1or eac! line o1 ris$s en*a*e" in #7 s'c! non-li1e ins'rance co2-an7 %it! s'c! entries t!erein as are no% or as 2a7 !erea1ter #e re4'ire" #7 t!e Co22issioner0 an" it s!all #e t!e res-onsi#ilit7 o1 t!e 'n"er%riter on t!e -artic'lar line or ris$ involve" to see to it t!at t!e sai" re*isters are %ell 2aintaine" an" $e-t0 an" t!at all entries t!erein are -ro-erl7 an" correctl7 recor"e" S'c! re*isters s!all #e o-en to ins-ection an" e3a2ination o1 "'l7 a't!ori9e" re-resentative o1 t!e Co22issioner at all ti2es "'rin* #'siness !o'rs Sec ,+? No -erson s!all #e re*istere" %it! t!e Co22issioner0 'nless s'c! -erson s!all #e at least t%ent7-one 7ears o1 a*e on t!e "ate o1 s'c! re*istration8 a resi"ent o1 t!e P!ili--ines8 o1 *oo" 2oral c!aracter an" %it! no conviction o1 an7 cri2e involvin* 2oral t'r-it'"e8 !as !a" at t!e ti2e s'c! re*istration is 2a"e at least t%o 7ears o1 'n"er%ritin* %or$ in t!e -artic'lar line or ris$ involve"8 an" !as -asse" s'c! 4'ali17in* %ritten e3a2ination t!at t!e Co22issioner s!all con"'ct at s'c! ti2e an" in s'c! -lace as !e 2a7 "eci"e to !ol" 1or a--licants "esirin* to act as 'n"er%riters S'c! e3a2ination s!all not #e re4'ire" o1 an7 -erson %!o !as serve" as non-li1e co2-an7 'n"er%riter 1or a -erio" o1 at least 1ive 7ears0 i1 t!e Co22issioner is satis1ie" o1 t!e a--licantDs co2-etence as s!o%n #7 t!e res'lts o1 !is 'n"er%ritin* %or$ in t!e non-li1e ins'rance co2-an7 or co2-anies t!at e2-lo7e" !i2 in t!at ca-acit7 T!e 2ini2'2 'n"er%ritin* e3-erience !erein re4'ire" 2a7 #e re"'ce" or %aive" i1 it is s!o%n to t!e satis1action o1 t!e Co22issioner t!at t!e non-li1e co2-an7 'n"er%riter !as 'n"er*one e3tensive e"'cation an"Mor trainin* in ins'rance Sec ,+1 An7 a--licant %!o 2isre-resents or o2its an7 2aterial 1act in !is a--lication 1or re*istration as a non-li1e co2-an7 'n"er%riter0 or co22its an7 "is!onest act in ta$in* or in connection %it! t!e 4'ali17in* %ritten e3a2ination 1or 'n"er%riters0 s!all #e #arre" 1ro2 #ein* re*istere" as s'c! non-li1e co2-an7 'n"er%riter an"0 i1 alrea"7 re*istere"0 !is re*istration s!all #e cancelle" an" t!e certi1icate o1 re*istration iss'e" in !is 1avor s!all #e recalle" i22e"iatel7 #7 t!e Co22issioner In t!e event t!at t!e certi1icate o1 a't!orit7 o1 a non-li1e ins'rance co2-an7 to transact #'siness is s's-en"e" or revo$e" "'e to #'siness 1ail're arisin*
67

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) lar*el7 1ro2 t!e i2-r'"ent an" in:'"icio's acce-tance o1 ris$s #7 t!e 'n"er%riter concerne"0 t!e re*istration o1 s'c! 'n"er%riter s!all li$e%ise #e cancelle" an" !is certi1icate o1 re*istration s!all #e recalle" #7 t!e Co22issioner0 an" no si2ilar certi1icate s!all t!erea1ter #e iss'e" in !is 1avor Sec ,++ No certi1icate o1 re*istration iss'e" to an 'n"er%riter s!all #e vali" a1ter t!e t!irtiet! "a7 o1 J'ne o1 t!e 7ear 1ollo%in* its iss'ance 'nless it is rene%e" T!e Co22issioner 2a70 a1ter "'e notice an" !earin*0 also s's-en" or cancel s'c! certi1icate 1or violation o1 e3istin* la%s0 r'les an" re*'lations or o1 an7 -rovisions o1 t!is Co"e (As a2en"e" #7 Presi"ential Decree No 1.;;) Title ; ADJUSTERS Sec ,+, No -erson0 -artners!i-0 association0 or cor-oration s!all act as an a":'ster0 as !ereina1ter "e1ine"0 'nless a't!ori9e" so to act #7 virt'e o1 a license iss'e" or rene%e" #7 t!e Co22issioner -'rs'ant to t!e -rovisions o1 t!is Co"e5 Provi"e"0 T!at in t!e case o1 a nat'ral -erson0 !e 2'st #e a Cili-ino citi9en an" in t!e case o1 a -artners!i-0 association or cor-oration0 at least si3t7 -er cent'2 o1 its ca-ital 2'st #e o%ne" #7 citi9ens o1 t!e P!ili--ines Sec ,+. An a":'ster 2a7 #e an in"e-en"ent a":'ster or a -'#lic a":'ster T!e ter2 6in"e-en"ent a":'ster6 2eans an7 -erson0 -artners!i-0 association or cor-oration %!ic!0 1or 2one70 co22ission or an7 ot!er t!in* o1 val'e0 acts 1or or on #e!al1 o1 an ins'rer in t!e a":'stin* o1 clai2s arisin* 'n"er ins'rance contracts or -olicies iss'e" #7 s'c! ins'rer T!e ter2 6-'#lic a":'ster6 2eans an7 -erson0 -artners!i-0 association or cor-oration %!ic!0 1or 2one70 co22ission or an7 ot!er t!in* o1 val'e0 acts on #e!al1 o1 an ins're" in ne*otiatin* 1or0 or e11ectin*0 t!e settle2ent o1 a clai2 or clai2s o1 t!e sai" ins're" arisin* 'n"er ins'rance contracts or -olicies0 or %!ic! a"vertises 1or or solicits e2-lo72ent as an a":'ster o1 s'c! clai2s Sec ,+; Cor ever7 line o1 ins'rance clai2 a":'st2ent0 a":'sters s!all #e license" eit!er as in"e-en"ent a":'sters or as -'#lic a":'sters No a":'ster s!all act on #e!al1 o1 an ins'rer 'nless sai" a":'ster is license" as an in"e-en"ent a":'ster8 an" no a":'ster s!all act on #e!al1 o1 an ins're" 'nless sai" a":'ster is license" as a -'#lic a":'ster5 Provi"e"0 !o%ever0 T!at %!en a 1ir2 or -erson !as #een license" as -'#lic a":'ster0 !e s!all not #e *rante" anot!er license as in"e-en"ent a":'ster an" vice versa No license0 !o%ever0 s!all #e re4'ire" o1 an7 co2-an7 a":'ster %!o is a salarie" e2-lo7ee o1 an ins'rance co2-an7 1or t!e a":'st2ent o1 clai2s 1ile" 'n"er -olicies iss'e" #7 s'c! ins'rance co2-an7 Sec ,+6 S'c! license or an7 rene%al t!ereo1 2a7 #e iss'e" #7 t!e Co22issioner '-on %ritten a--lication 1ile" #7 t!e -erson intereste" on t!e 1or2 or 1or2s -rescri#e" #7 t!e Co22issioner0 %!ic! s!all contain s'c! in1or2ation as !e 2a7 re4'ire0 an" '-on -a72ent o1 t!e corres-on"in* 1ee !ereina1ter -rescri#e" Sec ,+E T!e Co22issioner s!all con"'ct0 at s'c! ti2es0 an" in s'c! -laces as !e 2a7 "eci"e to !ol"0 %ritten e3a2inations to "eter2ine t!e co2-etence an" a#ilit7 o1 a--licants "esirin* to act as a":'ster o1 ins'rance clai2s Sec ,+F Ever7 a":'sterDs license iss'e" !ere'n"er s!all #e vali" 'ntil a1ter t!e t!irtiet! "a7 o1 J'ne o1 t!e 7ear 1ollo%in* t!e iss'ance o1 s'c! license 'nless it is rene%e" (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec ,+G Not!in* containe" in t!is title s!all a--l7 to an7 "'l7 license" attorne7-at-la% %!o acts or ai"s in a":'stin* ins'rance clai2s as an inci"ent to t!e -ractice o1 !is -ro1ession an" %!o "oes not a"vertise !i2sel1 as an a":'ster Sec ,,? T!e Co22issioner 2a7 s's-en" or revo$e an7 a":'sterDs license i10 a1ter *ivin* notice an" !earin* to t!e a":'ster concerne"0 t!e Co22issioner 1in"s t!at t!e sai" a":'ster5c!anro#lesvirt'alla%li#rar7 (1) !as violate" an7 -rovision o1 t!is Co"e an" o1 t!e circ'lars0 r'lin*s an" instr'ctions o1 t!e Co22issioner or !as violate" an7 la% in t!e co'rse o1 !is "ealin*s as an a":'ster8 or (+) !as 2a"e a 2aterial 2isstate2ent in t!e a--lication 1or s'c! license8 or (,) !as #een *'ilt7 o1 1ra'"'lent or "is!onest -ractices8 or (.) !as "e2onstrate" !is inco2-etence or 'ntr'st%ort!iness to act as a":'ster8 or
68

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (;) !as 2a"e -atentl7 'n:'st val'ation o1 loss8 or (6) !as 1aile" to 2a$e a re-ort o1 t!e a":'st2ent !e -ro-ose" %it!in si3t7 "a7s 1ro2 t!e "ate o1 t!e 1ilin* o1 t!e clai2 #7 t!e ins're" %it! t!e ins'rer0 'nless -revente" so to "o #7 reasons #e7on" !is control8 or (E) !as re1'se" to allo% an e3a2ination into !is a11airs or 2et!o" o1 "oin* #'siness as !ereina1ter -rovi"e" Sec ,,1 Ever7 a":'ster s!all s'#2it to t!e Co22issioner a 4'arterl7 re-ort o1 all losses %!ic! are t!e s'#:ect o1 a":'st2ent e11ecte" #7 !i2 "'rin* eac! 2ont! in t!e 1or2 -rescri#e" #7 t!e Co22issioner T!e re-ort s!all #e 1ile" %it!in one 2ont! a1ter t!e en" o1 eac! 4'arter Sec ,,+ Ever7 a":'ster s!all $ee- !is or its #oo$s0 recor"s0 re-orts0 acco'nts0 an" vo'c!ers in s'c! 2anner t!at t!e Co22issioner or !is "'l7 a't!ori9e" re-resentatives 2a7 rea"il7 veri17 t!e 4'arterl7 re-orts o1 t!e sai" a":'ster an" ascertain %!et!er t!e sai" a":'ster !as co2-lie" %it! t!e -rovisions o1 la% or re*'lations o#li*ator7 '-on !i2 or %!et!er t!e 2et!o" o1 "oin* #'siness o1 t!e sai" a":'ster !as #een 1air0 :'st an" !onest Sec ,,, T!e Co22issioner s!all0 at least once a 7ear an" %!enever !e consi"ers t!e -'#lic interest so "e2an"s0 ca'se an e3a2ination to #e 2a"e into t!e a11airs an" 2et!o" o1 "oin* #'siness o1 ever7 a":'ster Sec ,,. An7 violation o1 an7 -rovision o1 t!is title s!all #e -'nis!e" #7 a 1ine o1 not 2ore t!an ten t!o'san" -esos0 or #7 i2-rison2ent in t!e "iscretion o1 t!e co'rt8 Provi"e"0 T!at0 in case o1 a -artners!i-0 association or cor-oration0 t!e sai" -enalt7 s!all #e i2-ose" '-on t!e -artner0 -resi"ent0 2ana*er0 2ana*in* "irector0 "irector or -erson in c!ar*e o1 its #'siness or res-onsi#le 1or t!e violation Title 6 ACTUARIES Sec ,,; No li1e ins'rance co2-an7 s!all #e license" to "o #'siness in t!e P!ili--ines nor s!all an7 li1e ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines #e allo%e" to contin'e "oin* s'c! #'siness 'nless t!e7 s!all en*a*e t!e services o1 an act'ar7 "'l7 accre"ite" %it! t!e Co22issioner %!o s!all0 "'rin* !is ten're o1 o11ice0 #e "irectl7 res-onsi#le 1or t!e "irection an" s'-ervision o1 all act'arial %or$ connecte" %it! or t!at 2a7 #e involve" in t!e #'siness o1 t!e ins'rance co2-an7 Sec ,,6 An7 -erson 2a7 #e o11iciall7 accre"ite" #7 t!e Co22issioner to act as an7 act'ar7 in an7 li1e ins'rance co2-an7 or in an7 2't'al #ene1it association a't!ori9e" to "o #'siness in t!e P!ili--ines '-on a--lication t!ere1or an" t!e -a72ent o1 t!e corres-on"in* 1ee !ereina1ter -rescri#e"5 Provi"e"0 T!at5 (1) !e is a 1ello% o1 *oo" stan"in* o1 t!e Act'rial Societ7 o1 t!e P!ili--ines at t!e ti2e o1 !is a--oint2ent an" re2ains in s'c! *oo" stan"in* "'rin* t!e ten're o1 !is en*a*e2ent8 or (+) in t!e case o1 one %!o is not a 1ello% o1 t!e Act'rial Societ7 o1 t!e P!ili--ines0 !e 2eets all t!e re4'ire2ents o1 t!e sai" Societ7 1or accre"itation as a 1ello% o1 t!e Societ70 an" !as #een *iven -er2ission #7 t!e -ertinent *overn2ent a't!orities in t!e P!ili--ines to ren"er services in t!e P!ili--ines0 in t!e event t!at !e is not a citi9en o1 t!e P!ili--ines No certi1icate o1 re*istration iss'e" 'n"er t!is title s!all #e vali" a1ter t!e t!irtiet! "a7 o1 J'ne o1 t!e 7ear 1ollo%in* its iss'ance 'nless it is rene%e" (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec ,,E T!e 1ollo%in* "oc'2ents0 %!ic! are 1ro2 ti2e to ti2e s'#2itte" to t!e Co22issioner #7 a li1e ins'rance co2-an7 a't!ori9e" to "o #'siness in t!e P!ili--ines0 s!all #e "'l7 certi1ie" #7 an accre"ite" act'ar7 e2-lo7e" #7 s'c! co2-an75c!anro#lesvirt'alla%li#rar7 1 Polic7 reserves an" net "'e an" "e1erre" -re2i'2s + State2ents o1 #ases an" net -re2i'2s0 loa"in* 1or *ross -re2i'2s0 an" on non-1or1eit're val'es an" reserves0 %!en a--l7in* 1or a--roval o1 *ross -re2i'2s0 reserves an" non-1or1eit're val'es , Policies o1 ins'rance 'n"er an7 -lan s'#2itte" to t!e Co22issioner as re4'ire" #7 la% . Ann'al state2ents an" val'ation re-orts s'#2itte" to t!e Co22issioner as re4'ire" #7 la% ; Cinancial -ro:ection s!o%in* t!e -ro#a#le inco2e an" o't*o an" reserve re4'ire2ents0 en'2eratin* t!e act'rial ass'2-tions an" #ases o1 -ro:ections 6 Ial'ation o1 ann'it7 1'n"s or retire2ent -lans
69

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) An7 li1e ins'rance co2-an7 a't!ori9e" to "o #'siness in t!e P!ili--ines 2a7 e2-lo7 an7 -erson %!o is not o11iciall7 accre"ite" 'n"er eit!er o1 t!e 4'ali1ications 1or an7 $in" o1 act'rial %or$0 -rovi"e" t!at !e s!all not0 at an7 ti2e0 !ave t!e a't!orit7 to certi17 to t!e correctness o1 t!e 1ore*oin* "oc'2ents Sec ,,F No accre"ite" act'ar7 s!all serve 2ore t!an one client or e2-lo7er at t!e sa2e ti2e Ho%ever0 one alrea"7 in t!e e2-lo7 o1 an ins'rance co2-an7 2a7 #e allo%e" #7 t!e Co22issioner to serve a 2't'al #ene1it association or an7 ot!er ins'rance co2-an70 -rovi"e" t!e 1ollo%in* con"itions are 1irst co2-lie" %it!5 (a) t!at t!e re4'est to en*a*e !is services #7 t!e ot!er e2-lo7er is in %ritin*8 (#) t!at !is -resent e2-lo7er ac4'iesce" to it in %ritin*8 an" (c) t!at !e 1'rnis!es t!e Co22issioner %it! co-ies o1 sai" re4'est an" ac4'iescence Title E RATING ORGANILATION AND RATE AA@ING Sec ,,G Ever7 or*ani9ation %!ic! no% e3ists or %!ic! 2a7 !erea1ter #e 1or2e" 1or t!e -'r-ose o1 2a$in* rates to #e 'se" #7 2ore t!an one ins'rance co2-an7 a't!ori9e" to "o #'siness in t!e P!ili--ines s!all #e $no%n as a 6ratin* or*ani9ation 6 T!e ter2 6rate6 as 'se" in t!is title s!all *enerall7 2ean t!e ratio o1 t!e -re2i'2 to t!e a2o'nt ins're" an" s!all incl'"e0 as t!e conte3t 2a7 re4'ire0 eit!er t!e consi"eration to #e -ai" or c!ar*e" 1or ins'rance contracts0 incl'"in* s'ret7 #on"s0 or t!e ele2ents an" 1actors 1or2in* t!e #asis 1or t!e "eter2ination or a--lication o1 t!e sa2e0 or #ot! Sec ,.? Ever7 ratin* or*ani9ation %!ic! no% e3ists or %!ic! 2a7 !erea1ter #e 1or2e" s!all #e s'#:ect to t!e -rovisions o1 t!is title Sec ,.1 No ratin* or*ani9ation !erea1ter 1or2e" s!all co22ence rate2a$in* o-erations 'ntil it s!all !ave o#taine" a license 1ro2 t!e Co22issioner >e1ore o#tainin* s'c! license0 s'c! ratin* or*ani9ation s!all 1ile %it! t!e Co22issioner a notice o1 its intention to co22ence rate-2a$in* o-erations0 a co-7 o1 its constit'tion0 articles o1 a*ree2ent or association0 or o1 incor-oration0 an" its #7-la%s0 a list o1 ins'rance co2-anies t!at !ave a*ree" to #eco2e 2e2#ers or s'#scri#ers0 an" s'c! ot!er in1or2ation concernin* s'c! ratin* or*ani9ation an" its o-erations as 2a7 #e re4'ire" #7 t!e Co22issioner I1 t!e Co22issioner 1in"s t!at t!e or*ani9ation !as co2-lie" %it! t!e -rovisions o1 la% an" t!at it !as a s'11icient n'2#er o1 2e2#ers or s'#scri#ers an" is ot!er%ise 4'ali1ie" to 1'nction as a ratin* or*ani9ation0 t!e Co22issioner 2a7 iss'e a license to s'c! ratin* or*ani9ation a't!ori9in* it to 2a$e rates 1or t!e $in"s o1 ins'rance or s'#"ivisions t!ereo1 as 2a7 #e s-eci1ie" in s'c! license No license iss'e" to a ratin* or*ani9ation s!all #e vali" a1ter t!e t!irtiet! "a7 o1 J'ne o1 t!e 7ear 1ollo%in* its iss'ance 'nless it is rene%e" No ratin* or*ani9ation %!ic! no% e3ists an" is not license" -'rs'ant to t!is section s!all contin'e rate-2a$in* o-erations 'ntil it s!all !ave o#taine" 1ro2 t!e Co22issioner a license %!ic! !e 2a7 iss'e i1 satis1ie" t!at s'c! or*ani9ation is co2-l7in* %it! t!e -rovisions o1 t!is title Ever7 ratin* or*ani9ation s!all noti17 t!e Co22issioner -ro2-tl7 o1 ever7 c!an*e in (1) its constit'tion0 its articles o1 a*ree2ent or association or its certi1icate o1 incor-oration0 an" its #7-la%s r'les an" re*'lations *overnin* t!e con"'ct o1 its #'siness0 an" (+) its list o1 2e2#ers an" s'#scri#ers A 62e2#er6 2eans an ins'rer %!o -artici-ates in or is entitle" to -artici-ate in t!e 2ana*e2ent o1 a ratin* or*ani9ation A 6s'#scri#er6 2eans an ins'rer %!ic! is 1'rnis!e" at its re4'est %it! rates an" ratin* 2an'als #7 a ratin* or*ani9ation o1 %!ic! it is not a 2e2#er (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec ,.+ Eac! ratin* or*ani9ation s!all 1'rnis! its ratin* service %it!o't "iscri2ination to all o1 its 2e2#ers an" s'#scri#ers0 an" s!all0 s'#:ect to reasona#le r'les an" re*'lations0 -er2it an7 ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines0 not a"2itte" to 2e2#ers!i-0 to #eco2e a s'#scri#er to its ratin* services 1or an7 $in" o1 ins'rance or s'#"ivisions t!ereo1 Notice o1 -ro-ose" c!an*es in s'c! r'les an" re*'lations s!all #e *iven to s'#scri#ers T!e reasona#leness o1 an7 r'le or re*'lation in its a--lication to s'#scri#ers0 or t!e re1'sal o1 an7 ratin* or*ani9ation to a"2it an ins'rance co2-an7 as a s'#scri#er0 s!all0 at t!e re4'est o1 an7 s'#scri#er or an7 s'c! ins'rance co2-an70 #e revie%e" #7 t!e Co22issioner at a !earin* !el" '-on at least ten "a7sD %ritten notice to s'c! ratin* or*ani9ation
70

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) an" to s'c! s'#scri#er or ins'rance co2-an7 T!e Co22issioner 2a70 a1ter s'c! !earin*0 iss'e an a--ro-riate or"er Sec ,., No ratin* or*ani9ation or an7 ot!er association s!all re1'se to "o #'siness %it!0 or -ro!i#it or -revent t!e -a72ent o1 co22issions to0 an7 -erson license" as an ins'rance #ro$er -'rs'ant to t!e -rovisions o1 title one o1 t!is c!a-ter Sec ,.. Ratin* or*ani9ation s!all #e s'#:ect to e3a2ination #7 t!e Co22issioner0 as o1ten as !e 2a7 "ee2 s'c! e3a2ination e3-e"ient0 -'rs'ant to t!e -rovisions o1 t!is Co"e a--lica#le to t!e e3a2ination o1 ins'rance co2-anies He s!all ca'se s'c! an e3a2ination o1 eac! ratin* or*ani9ation to #e 2a"e at least once in ever7 1ive 7ears Sec ,.; T!e Co22issioner 2a7 s's-en" or revo$e t!e license o1 an7 ratin* or*ani9ation %!ic! 1ails to co2-l7 %it! !is or"er %it!in t!e ti2e li2ite" #7 s'c! or"er0 or an7 e3tension t!ereo1 %!ic! !e 2a7 *rant T!e Co22issioner 2a7 "eter2ine %!en a s's-ension o1 license s!all #eco2e e11ective an" it s!all re2ain in e11ect 1or t!e -erio" 1i3e" #7 !i20 'nless !e 2o"i1ies or rescin"s s'c! s's-ension Sec ,.6 An7 ratin* or*ani9ation 2a7 s'#scri#e 1or or -'rc!ase act'rial0 tec!nical or ot!er services0 an" s'c! services s!all #e availa#le to all 2e2#ers an" s'#scri#ers %it!o't "iscri2ination Sec ,.E An7 ratin* or*ani9ation 2a7 -rovi"e 1or t!e e3a2ination o1 -olicies0 "ail7 re-orts0 #in"ers0 rene%al certi1icates0 en"orse2ents or ot!er evi"ences o1 ins'rance0 or t!e cancellation t!ereo10 an" 2a7 2a$e reasona#le r'les *overnin* t!eir s'#2ission S'c! r'les s!all contain a -rovision t!at in t!e event an ins'rance co2-an7 "oes not %it!in si3t7 "a7s 1'rnis! satis1actor7 evi"ence to t!e ratin* or*ani9ation o1 t!e correction o1 an7 error or o2ission -revio'sl7 calle" to its attention #7 t!e ratin* or*ani9ation0 it s!all #e t!e "'t7 o1 t!e ratin* or*ani9ation to noti17 t!e Co22issioner t!ereo1 All in1or2ation so s'#2itte" 1or e3a2ination s!all #e con1i"ential Sec ,.F Coo-eration a2on* ratin* or*ani9ations or a2on* ratin* or*ani9ations an" ins'rers in rate 2a$in* or in ot!er 2atters %it!in t!e sco-e o1 t!is title is !ere#7 a't!ori9e"0 -rovi"e" t!e 1ilin*s res'ltin* 1ro2 s'c! coo-eration are s'#:ect to all -rovisions o1 t!is title %!ic! are a--lica#le to 1ilin*s *enerall7 T!e Co22issioner 2a7 revie% s'c! coo-erative activities an" -ractices an" i1 !e 1in"s t!at an7 s'c! activit7 or -ractice is 'n1air or 'nreasona#le or ot!er%ise inconsistent %it! t!e -rovisions o1 t!is title0 !e 2a7 iss'e a %ritten or"er s-eci17in* in %!at res-ects s'c! activit7 or -ractice is 'n1air or 'nreasona#le or ot!er%ise inconsistent %it! t!e -rovisions o1 t!is title0 an" re4'irin* t!e "iscontin'ance o1 s'c! activit7 or -ractice Sec ,.G Ever7 ratin* or*ani9ation an" ever7 ins'rance co2-an7 %!ic! 2a$es an" 1iles its o%n rates0 s!all 2a$e rates 1or all ris$s rate" #7 s'c! or*ani9ation or ins'rance co2-an7 in accor"ance %it! t!e 1ollo%in* -rovisions5c!anro#lesvirt'alla%li#rar7 (a) >asic classi1ication0 2an'al0 2ini2'20 class0 or sc!e"'le rates or ratin* -lans0 s!all #e 2a"e an" a"o-te" 1or all s'c! ris$s An7 "e-art're 1ro2 s'c! rates s!all #e in accor"ance %it! sc!e"'les0 ratin* -lans an" r'les 1ile" %it! t!e Co22issioner8 (#) Rates s!all #e reasona#le an" a"e4'ate 1or t!e class o1 ris$s to %!ic! t!e7 a--l78 (c) No rate s!all "iscri2inate 'n1airl7 #et%een ris$s involvin* essentiall7 t!e sa2e !a9ar"s an" e3-ense ele2ents or #et%een ris$s in t!e a--lication o1 li$e c!ar*es an" cre"its8 (") Consi"eration s!all #e *iven to t!e -ast an" -ros-ective loss e3-erience0 incl'"in* t!e con1la*ration an" catastro-!e !a9ar"s0 i1 an70 to all 1actors reasona#l7 attri#'ta#le to t!e class o1 ris$s0 to a reasona#le -ro1it0 to co22issions -ai" "'rin* t!e 2ost recent ann'al -erio" an" to -ast an" -ros-ective ot!er e3-enses In case o1 1ire ins'rance rates0 consi"eration s!all #e *iven to t!e e3-erience o1 t!e 1ire ins'rance #'siness "'rin* a -erio" o1 not less t!an 1ive 7ears ne3t -rece"in* t!e 7ear in %!ic! t!e revie% is 2a"e8 (e) Ris$ 2a7 #e *ro'-e" #7 classi1ications 1or t!e esta#lis!2ent o1 rates an" 2ini2'2 -re2i'2s Classi1ication rates 2a7 #e 2o"i1ie" to -ro"'ce rates 1or in"ivi"'al ris$s in accor"ance %it! ratin* -lans %!ic! esta#lis! stan"ar"s 1or 2eas'rin* variations in !a9ar"s or e3-ense -rovisions0 or #ot! S'c! stan"ar"s 2a7 2eas're an7 "i11erence a2on* ris$s t!at can #e "e2onstrate" to !ave a -ro#a#le e11ect '-on losses or e3-enses
71

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Sec ,;? No ratin* or*ani9ation an" no ins'rance co2-an7 %!ic! 2a$es an" 1iles its o%n rates s!all 2a$e or -ro2'l*ate an7 rate or sc!e"'le o1 rates %!ic! is to #e a--lie" to an7 1ire ris$ on t!e con"ition t!at t!e %!ole a2o'nt o1 ins'rance on an7 ris$ or an7 s-eci1ie" -art t!ereo1 s!all #e -lace" %it! t!e 2e2#ers o1 or s'#scri#ers to s'c! ratin* or*ani9ation or %it! s'c! ins'rer Sec ,;1 Ever7 ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines s!all ann'all7 1ile %it! t!e ratin* or*ani9ation o1 %!ic! it is a 2e2#er or s'#scri#er0 or %it! s'c! ot!er a*enc7 as t!e Co22issioner 2a7 "esi*nate0 a statistical re-ort s!o%in* a classi1ication sc!e"'le o1 its -re2i'2s an" losses on all $in"s or t7-es o1 ins'rance #'siness to %!ic! section t!ree !'n"re" 1ort7-nine is a--lica#le0 an" s'c! ot!er in1or2ation as t!e Co22issioner 2a7 "ee2 necessar7 or e3-e"ient 1or t!e a"2inistration o1 t!e -rovisions o1 t!is title Sec ,;+ Ever7 non-li1e ratin* or*ani9ation an" ever7 non-li1e ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines s!all 1ile %it! t!e Co22issioner0 e3ce-t as to ris$s %!ic! #7 *eneral c'sto2 o1 t!e #'siness are not %ritten accor"in* to 2an'al rates or ratin* -lans0 ever7 rate 2an'al0 sc!e"'le o1 rates0 classi1ication o1 ris$s0 ratin* -lan0 an" ever7 ot!er ratin* r'le an" ever7 2o"i1ication o1 an7 o1 t!e 1ore*oin* %!ic! it -ro-oses to 'se An ins'rance co2-an7 2a7 satis17 its o#li*ation to 2a$e s'c! 1ilin*s 1or an7 $in" or t7-e o1 ins'rance #7 #eco2in* a 2e2#er o1 or s'#scri#er to a ratin* or*ani9ation %!ic! 2a$es s'c! 1ilin*s 1or s'c! $in" or t7-e o1 ins'rance0 an" #7 a't!ori9in* t!e Co22issioner to acce-t s'c! 1ilin*s o1 t!e ratin* or*ani9ation on #e!al1 o1 s'c! ins'rance co2-an7 Sec ,;, Ever7 2an'al or sc!e"'le o1 rates an" ever7 ratin* -lan 1ile" as -rovi"e" in t!e -rece"in* section s!all state or clearl7 in"icate t!e c!aracter an" e3tent o1 t!e covera*e to %!ic! an7 s'c! rate or an7 2o"i1ication t!ereo1 %ill #e a--lie" Sec ,;. T!e Co22issioner s!all revie% 1ilin*s as soon as reasona#l7 -ossi#le a1ter t!e7 !ave #een 2a"e in or"er to "eter2ine %!et!er t!e7 2eet t!e re4'ire2ents o1 t!is title /!en a 1ilin* is not acco2-anie" #7 t!e in1or2ation '-on %!ic! t!e ins'rance co2-an7 s'--orts s'c! 1ilin*0 an" t!e Co22issioner "oes not !ave s'11icient in1or2ation to "eter2ine %!et!er s'c! 1ilin* 2eets t!e re4'ire2ents o1 t!is title0 !e s!all re4'ire s'c! ins'rance co2-an7 to 1'rnis! t!e in1or2ation '-on %!ic! it s'--orts s'c! 1ilin* T!e in1or2ation 1'rnis!e" in s'--ort o1 a 1ilin* 2a7 incl'"e5 (1) t!e e3-erience or :'"*2ent o1 t!e ins'rance co2-an7 or ratin* or*ani9ation 2a$in* t!e 1ilin*8 (+) its inter-retation o1 an7 statistical "ata it relies '-on8 (,) t!e e3-erience o1 ot!er ins'rance co2-anies or ratin* or*ani9ation8 or (.) an7 ot!er relevant 1actors Sec ,;; I1 t!e Co22issioner 1in"s t!at an7 rate 1ilin*s t!ereto1ore 1ile" %it! !i2 "o not co2-l7 %it! t!e -rovisions o1 t!is title or t!at t!e7 -rovi"e rates or r'les %!ic! are ina"e4'ate0 e3cessive0 'n1airl7 "iscri2inator7 or ot!er%ise 'nreasona#le0 !e 2a7 or"er t!e sa2e %it!"ra%n an" at t!e e3-iration o1 si3t7 "a7s t!erea1ter t!e sa2e s!all #e "ee2e" no lon*er on 1ile >e1ore 2a$in* an7 s'c! 1in"in* an" or"er0 t!e Co22issioner s!all *ive notice0 not less t!an ten "a7s in a"vance0 an" a !earin*0 to t!e ratin* or*ani9ation0 or to t!e ins'rer0 %!ic! 1ile" t!e sa2e S'c! or"er s!all not a11ect an7 contract or -olic7 2a"e or iss'e" -rior to t!e e3-iration o1 s'c! si3t7 "a7 -erio" Sec ,;6 No 2e2#er or s'#scri#er o1 a ratin* or*ani9ation0 an" no ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines0 or a*ent0 e2-lo7ee or ot!er re-resentative o1 s'c! co2-an70 an" no ins'rance #ro$er s!all c!ar*e or "e2an" a rate or receive a -re2i'2 %!ic! "eviates 1ro2 t!e rates0 ratin* -lans0 classi1ications0 sc!e"'les0 r'les an" stan"ar"s0 2a"e an" last 1ile" #7 a ratin* or*ani9ation or #7 or on #e!al1 o1 t!e ins'rance co2-an70 or s!all iss'e or 2a$e an7 -olic7 or contract involvin* violation o1 s'c! rate 1ilin*s Sec ,;E Not%it!stan"in* an7 ot!er -rovisions o1 t!is title0 '-on t!e %ritten a--lication o1 t!e ins'rer0 statin* !is reasons t!ere1or0 1ile" %it! an" a--rove" #7 t!e Co22issioner0 a rate in e3cess o1 t!at -rovi"e" #7 a 1ilin* ot!er%ise a--lica#le 2a7 #e 'se" on an7 s-eci1ic ris$ Sec ,;F /!enever t!e Co22issioner s!all "eter2ine0 a1ter notice an" a !earin*0 t!at t!e rates c!ar*e" or 1ile" on an7 class o1 ris$s are e3cessive0 "iscri2inator70 ina"e4'ate or 'nreasona#le0 !e s!all or"er t!at s'c! rates #e a--ro-riatel7 a":'ste" Cor t!e -'r-ose o1 a--l7in* t!e -rovisions o1 t!is section0 t!e Co22issioner 2a7 1ro2 ti2e to ti2e a--rove reasona#le classi1ications o1 ris$s 1or an7 or all s'c! classes0 !avin* "'e re*ar" to t!e
72

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) -ast an" -ros-ective loss e3-erience0 incl'"in* con1la*ration or catastro-!e !a9ar"s0 i1 an70 to all ot!er relevant 1actors an" to a reasona#le -ro1it Sec ,;G Not!in* containe" in t!is title s!all #e constr'e" as re4'irin* an7 ins'rer to #eco2e a 2e2#er o1 or s'#scri#er to an7 ratin* or*ani9ation Sec ,6? A*ree2ents 2a7 #e 2a"e a2on* ins'rance co2-anies %it! res-ect to t!e e4'ita#le a--ortion2ent a2on* t!e2 o1 ins'rance %!ic! 2a7 #e a11or"e" a--licants %!o are in *oo" 1ait! entitle" to #'t are 'na#le to -roc're s'c! ins'rance t!ro'*! or"inar7 2et!o"s an" s'c! ins'rance co2-anies 2a7 a*ree a2on* t!e2selves on t!e 'se o1 reasona#le rates an" 2o"i1ications 1or s'c! ins'rance0 s'c! a*ree2ents an" rate 2o"i1ications to #e s'#:ect to t!e a--roval o1 t!e Co22issioner8 Provi"e"0 !o%ever0 T!at t!e -rovisions o1 t!is section s!all not #e "ee2e" to a--l7 to %or$2enDs co2-ensation ins'rance Sec ,61 No ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines or an7 a*ent t!ereo10 no ins'rance #ro$er0 an" no e2-lo7ee or ot!er re-resentative o1 an7 s'c! ins'rance co2-an70 a*ent0 or #ro$er0 s!all 2a$e0 -roc're or ne*otiate an7 contract o1 ins'rance or a*ree2ent as to -olic7 contract0 ot!er t!an is -lainl7 e3-resse" in t!e -olic7 or ot!er %ritten contract iss'e" or to #e iss'e" as evi"ence t!ereo10 or s!all "irectl7 or in"irectl70 #7 *ivin* or s!arin* a co22ission or in an7 2anner %!atsoever0 -a7 or allo% or o11er to -a7 or allo% to t!e ins're" or to an7 e2-lo7ee o1 s'c! ins're"0 eit!er as an in"'ce2ent to t!e 2a$in* o1 s'c! ins'rance or a1ter s'c! ins'rance !as #een e11ecte"0 an7 re#ate 1ro2 t!e -re2i'2 %!ic! is s-eci1ie" in t!e -olic70 or an7 s-ecial 1avor or a"vanta*e in t!e "ivi"en"s or ot!er #ene1its to accr'e t!ereon0 or s!all *ive or o11er to *ive an7 val'a#le consi"eration or in"'ce2ent o1 an7 $in"0 "irectl7 or in"irectl70 %!ic! is not s-eci1ie" in s'c! -olic7 or contract o1 ins'rance8 nor s!all an7 s'c! co2-an70 or an7 a*ent t!ereo10 as to an7 -olic7 or contract o1 ins'rance iss'e"0 2a$e an7 "iscri2ination a*ainst an7 Cili-ino in t!e sense t!at !e is *iven less a"vanta*eo's rates0 "ivi"en"s or ot!er -olic7 con"itions or -rivile*es t!an are accor"e" to ot!er nationals #eca'se o1 !is race Sec ,6+ No ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines0 an" no o11icer0 "irector0 or a*ent t!ereo10 an" no ins'rance #ro$er or an7 ot!er -erson0 -artners!i- or cor-oration s!all iss'e or circ'late or ca'se or -er2it to #e iss'e" or circ'late" an7 literat're0 ill'stration0 circ'lar or state2ent o1 an7 sort 2isre-resentin* t!e ter2s o1 an7 -olic7 iss'e" #7 an7 ins'rance co2-an7 o1 t!e #ene1its or a"vanta*es -ro2ise" t!ere#70 or an7 2islea"in* esti2ate o1 t!e "ivi"en"s or s!are o1 s'r-l's to #e receive" t!ereon0 or s!all 'se an7 na2e or title o1 an7 -olic7 or class o1 -olicies 2isre-resentin* t!e tr'e nat're t!ereo18 nor s!all an7 s'c! co2-an7 or a*ent t!ereo10 or an7 ot!er -erson0 -artners!i- or cor-oration 2a$e an7 2islea"in* re-resentation or inco2-lete co2-arison o1 -olicies to an7 -erson ins're" in s'c! co2-an7 1or t!e -'r-ose o1 in"'cin* or ten"in* to in"'ce s'c! -erson to la-se0 1or1eit0 or s'rren"er !is sai" ins'rance Sec ,6, I1 t!e Co22issioner0 a1ter notice an" !earin*0 1in"s t!at an7 ins'rance co2-an70 ratin* or*ani9ation0 a*ent0 #ro$er or ot!er -erson !as violate" an7 o1 t!e -rovisions o1 t!is title0 it s!all or"er t!e -a72ent o1 a 1ine not to e3cee" 1ive !'n"re" -esos 1or eac! s'c! o11ense0 an" s!all i22e"iatel7 revo$e t!e license iss'e" to s'c! ins'rance co2-an70 ratin* or*ani9ation0 a*ent0 or #ro$er T!e iss'ance0 -roc're2ent or ne*otiation o1 a sin*le -olic7 or contract o1 ins'rance s!all #e "ee2e" a se-arate o11ense Title F PROIISION COAAON TO AGENTS0 >RO@ERS0 AND ADJUSTERS Sec ,6. A license iss'e" to a -artners!i-0 association or cor-oration to act as an ins'rance a*ent0 *eneral a*ent0 ins'rance #ro$er0 reins'rance #ro$er0 or a":'ster s!all a't!ori9e onl7 t!e in"ivi"'al na2e" in t!e license %!o s!all 4'ali17 t!ere1or as t!o'*! an in"ivi"'al licensee T!e Co22issioner s!all c!ar*e0 an" t!e licensee s!all -a70 a 1'll a""itional license 1ee as to eac! res-ective in"ivi"'al so na2e" in s'c! license in e3cess o1 one )icenses an" certi1icates o1 re*istration iss'e" 'n"er t!e -rovisions o1 t!is c!a-ter 2a7 #e rene%e" #7 t!e 1ilin* o1 notices o1 intention on 1or2s to #e -rescri#e" #7 t!e Co22issioner an" -a72ent o1 t!e 1ees t!ere1or (As a2en"e" #7 Presi"ential Decree No 1.;;) C!a-ter I SECURITH CUND
73

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Sec ,6; T!ere is !ere#7 create" a 1'n" to #e $no%n as t!e 6Sec'rit7 C'n"6 %!ic! s!all #e 'se" in t!e -a72ent o1 allo%e" clai2s a*ainst an ins'rance co2-an7 a't!ori9e" to transact #'siness in t!e P!ili--ines re2ainin* 'n-ai" #7 reason o1 t!e solvenc7 o1 s'c! co2-an7 T!e sai" C'n" 2a7 also #e 'se" to reins're t!e -olic7 o1 t!e insolvent ins'rer in an7 solvent ins'rer a't!ori9e" to "o #'siness in t!e P!ili--ines as -rovi"e" in section t%o !'n"re" 1ort7-nine In t!e event o1 national e2er*enc7 or cala2it70 t!e C'n" 2a7 li$e%ise #e 'se" to -a7 ins're" clai2s %!ic! ot!er%ise %o'l" not #e co2-ensa#le 'n"er t!e -rovisions o1 t!e -olic7 No -a72ent 1ro2 t!e Sec'rit7 C'n" s!all0 !o%ever0 #e 2a"e to an7 -erson %!o o%ns or controls ten -er cent'2 or 2ore o1 t!e votin* s!ares o1 stoc$ o1 t!e insolvent ins'rer an" no -a72ent on an7 one clai2 s!all e3cee" t%ent7 t!o'san" -esos Sec ,66 S'c! C'n" s!all consist o1 all -a72ents 2a"e to t!e C'n" #7 ins'rance co2-anies a't!ori9e" to "o #'siness in t!e P!ili--ines Pa72ents 2a"e #7 li1e ins'rance co2-anies s!all #e treate" se-aratel7 1ro2 t!ose 2a"e #7 non-li1e ins'rance co2-anies an" t!e corres-on"in* 1'n" s!all #e calle" 6)i1e Acco'nt6 an" 6Non-)i1e Acco'nt60 res-ectivel70 an" s!all #e !el" an" a"2inistere" as s'c! #7 t!e Co22issioner in accor"ance %it! t!e -rovisions o1 t!is title T!e 6)i1e Acco'nt6 s!all #e 'tili9e" e3cl'sivel7 1or "is#'rse2ents t!at re1er to li1e ins'rance co2-anies0 %!ile t!e 6Non-)i1e Acco'nt6 s!all #e 'tili9e" e3cl'sivel7 1or "is#'rse2ents t!at re1er to non-li1e ins'rance co2-anies Sec ,6E All ins'rance co2-anies "oin* #'siness in t!e P!ili--ines s!all contri#'te to t!e Sec'rit7 C'n"0 )i1e or Non-)i1e Acco'nt0 as t!e case 2a7 #e0 on or #e1ore t!e 1i1teent! "a7 o1 J'ne0 nineteen !'n"re" an" sevent71ive0 t!e a**re*ate a2o'nt o1 1ive 2illion -esos 1or eac! Acco'nt T!e contri#'tions o1 t!e li1e ins'rance co2-anies an" o1 t!e non-li1e ins'rance co2-anies s!all #e in "irect -ro-ortion to t!e ratio #et%een a -artic'lar li1e ins'rance co2-an7 or a -artic'lar non-li1e ins'rance co2-an7Ds net %ort! an" t!e a**re*ate net %ort! o1 all li1e ins'rance co2-anies or all non-li1e ins'rance co2-anies0 as t!e case 2a7 #e0 as s!o%n in t!eir latest 1inancial state2ents a--rove" #7 t!e Co22issioner T!is -ro-ortion a--lie" to t!e 1ive 2illion -esos s!all #e t!e contri#'tion o1 a -artic'lar co2-an7 to t!e corres-on"in* Acco'nt o1 t!e Sec'rit7 C'n" T!e a2o'nt o1 1ive 2illion -esos in eac! Acco'nt s!all #e in t!e 1or2 o1 a revolvin* tr'st 1'n" T!e res-ective contri#'tions o1 t!e co2-anies s!all re2ain as a"2itte" assets in t!eir #oo$s an" an7 "is#'rse2ent t!ere1ro2 s!all #e "e"'cte" -ro-ortionatel7 1ro2 t!e contri#'tions o1 eac! co2-an7 %!ic! %ill #e allo%e" as "e"'ctions 1or inco2e ta3 -'r-oses An7 earnin*s o1 t!e C'n" s!all #e t'rne" over to t!e contri#'tin* co2-anies in -ro-ortion to t!eir contri#'tions In t!e case o1 "is#'rse2ents o1 1'n"s 1ro2 t!e C'n" as -rovi"e" in t!e 1ore*oin* -ara*ra-!0 t!e li1e an" non-li1e co2-anies0 as t!e case 2a7 #e0 s!all re-lenis! t!e a2o'nt "is#'rse" in "irect -ro-ortion to t!e in"ivi"'al co2-an7Ds net %ort! an" t!e a**re*ate net %ort! o1 t!e li1e or non-li1e co2-anies0 as t!e case 2a7 #e Ho%ever0 in no case s!all t!e C'n" e3cee" t!e a**re*ate a2o'nt o1 ten 2illion -esos0 or 1ive 2illion -esos 1or eac! Acco'nt S!o'l" t!e C'n"0 )i1e o1 Non-)i1e Acco'nt0 as t!e case 2a7 #e0 #e ina"e4'ate 1or a "is#'rse2ent as -rovi"e" 1or0 t!en t!e )i1e or Non-)i1e co2-anies0 as t!e case 2a7 #e0 s!all contri#'te to t!e C'n" t!eir res-ective s!ares in t!e -ro-ortion -revio'sl7 2entione" Sec ,6F T!e Co22issioner 2a7 a"o-t0 a2en"0 an" en1orce all reasona#le r'les an" re*'lations necessar7 1or t!e -ro-er a"2inistration o1 t!e C'n" an" o1 t!e Acco'nts In t!e event an7 ins'rer s!all 1ail to 2a$e an7 -a72ent re4'ire" #7 t!is title0 or t!at an7 -a72ent 2a"e is incorrect0 !e s!all !ave 1'll a't!orit7 to e3a2ine all t!e #oo$s an" recor"s o1 t!e ins'rer 1or t!e -'r-ose o1 ascertainin* t!e 1acts an" s!all "eter2ine t!e correct a2o'nt to #e -ai" an" 2a7 -rocee" in an7 co'rt o1 co2-etent :'ris"iction to recover 1or t!e #ene1it o1 t!e C'n" or o1 t!e Acco'nt concerne" an7 s'2 s!o%n to #e "'e '-on s'c! e3a2ination an" "eter2ination An7 ins'rer %!ic! 1ails to 2a$e an7 -a72ent to t!e C'n" or to t!e Acco'nt concerne" %!en "'e0 s!all t!ere#7 1or1eit to sai" C'n" or Acco'nt concerne" a -enalt7 o1 1ive -er cent'2 o1 t!e a2o'nt "eter2ine" to #e "'e as -rovi"e" #7 t!is title0 -l's one -er cent'2 o1 s'c! a2o'nt 1or eac! 2ont! o1 "ela7 or 1raction t!ereo10
74

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) a1ter t!e e3-iration o1 t!e 1irst 2ont! o1 s'c! "ela70 #'t t!e Co22issioner0 i1 satis1ie" t!at t!e "ela7 %as e3c'sa#le0 2a7 re2it all or an7 -art o1 s'c! -enalt7 T!e Co22issioner0 in !is "iscretion0 2a7 s's-en" or revo$e t!e certi1icate o1 a't!orit7 to "o #'siness in t!e P!ili--ines o1 an7 ins'rance co2-an7 %!ic! s!all 1ail to co2-l7 %it! t!is title or to -a7 an7 -enalt7 i2-ose" in accor"ance t!ere%it! Sec ,6G T!e Acco'nts create" #7 t!is title s!all #e se-arate an" a-art 1ro2 eac! ot!er an" 1ro2 an7 ot!er 1'n" T!e Treas'rer o1 t!e P!ili--ines s!all #e t!e c'sto"ian o1 t!e )i1e Acco'nt an" Non-)i1e Acco'nt o1 t!e Sec'rit7 C'n"8 an" all "is#'rse2ents 1ro2 an7 Acco'nt s!all #e 2a"e #7 t!e Treas'rer o1 t!e P!ili--ines '-on vo'c!ers si*ne" #7 t!e Co22issioner or !is "e-'t70 as !ereina1ter -rovi"e" T!e 2one7s o1 sai" Acco'nt 2a7 #e investe" #7 t!e Co22issioner onl7 in #on"s or ot!er evi"ences o1 "e#t o1 t!e *overn2ent o1 t!e P!ili--ines or its -olitical s'#"ivisions or instr'2entalities T!e Co22issioner 2a7 sell an7 o1 t!e sec'rities in %!ic! an Acco'nt is in veste"0 i1 a"visa#le0 1or its -ro-er a"2inistration or in t!e #est interest o1 s'c! Acco'nt Sec ,E? Pa72ents 1ro2 eit!er t!e )i1e Ins'rance Acco'nt or Non-)i1e Acco'nt0 as t!e case 2a7 #e0 s!all #e 2a"e #7 t!e Treas'rer o1 t!e P!ili--ines to t!e Co22issioner0 '-on t!e a't!orit7 o1 a--ro-riate certi1icate 1ile" %it! !i2 #7 t!e Co22issioner actin* in s'c! ca-acit7 Sec ,E1 T!e Co22issioner 2a70 in !is "iscretion0 "esi*nate or a--oint a "'l7 a't!ori9e" re-resentative or re-resentatives to a--ear an" "e1en" #e1ore an7 co'rt or ot!er #o"7 or o11icial !avin* :'ris"iction an7 or all actions or -rocee"in*s a*ainst -rinci-als or ass're"s on ins'rance -olicies or contracts iss'e" to t!e2 %!ere t!e ins'rer !as #eco2e insolvent or 'na#le to 2eet its ins'rance o#li*ations T!e Co22issioner s!all !ave0 as o1 t!e "ate o1 insolvenc7 o1 s'c! ins'rer or as o1 t!e "ate o1 its ina#ilit7 2eet its ins'rance o#li*ations0 onl7 t!e ri*!ts %!ic! s'c! ins'rer %o'l" !ave !a" i1 it !a" not #eco2e insolvent or 'na#le to 2eet its ins'rance o#li*ations Cor t!e -'r-ose o1 t!is title t!e Co22issioner s!all !ave -o%er to e2-lo7 s'c! co'nsel0 cler$s an" assistants as !e 2a7 "ee2 necessar7 Sec ,E+ T!e e3-ense o1 a"2inisterin* an Acco'nt s!all #e -ai" o't o1 t!e Acco'nt concerne" T!e Co22issioner s!all serve as a"2inistrator o1 t!e C'n" an" o1 t!e Acco'nts %it!o't a""itional co2-ensation0 #'t 2a7 #e allo%e" an" -ai" 1ro2 t!e Acco'nt concerne" e3-enses inc'rre" in t!e -er1or2ance o1 !is "'ties in connection %it! sai" Acco'nt T!e co2-ensation o1 t!ose -ersons e2-lo7e" -a7a#le 1ro2 t!e Acco'nt concerne" T!e Co22issioner s!all incl'"e in !is ann'al re-ort to t!e Secretar7 o1 Cinance a state2ent o1 t!e e3-enses o1 a"2inistration o1 t!e C'n" an" o1 t!e )i1e Acco'nt an" Non-)i1e Acco'nt 1or t!e -rece"in* 7ear C!a-ter II COAPU)SORH AOTOR IEHIC)E )IA>I)ITHINSURANCE Sec ,E, Cor -'r-oses o1 t!is c!a-ter5c!anro#lesvirt'alla%li#rar7 (a) 6Aotor Ie!icle6 is an7 ve!icle as "e1ine" in section t!ree0 -ara*ra-! (a) o1 Re-'#lic Act N'2#ere" Co'r T!o'san" One H'n"re" T!irt7-Si30 Ot!er%ise $no%n as t!e 6)an" Trans-ortation an" Tra11ic Co"e 6 (#) 6Passen*er6 is an7 1are -a7in* -erson #ein* trans-orte" an" conve7e" in an" #7 a 2otor ve!icle 1or trans-ortation o1 -assen*ers 1or co2-ensation0 incl'"in* -ersons e3-ressl7 a't!ori9e" #7 la% or #7 t!e ve!icleDs o-erator or !is a*ents to ri"e %it!o't 1are (c) 6T!ir"-Part76 is an7 -erson ot!er t!an a -assen*er as "e1ine" in t!is section an" s!all also e3cl'"e a 2e2#er o1 t!e !o'se!ol"0 or a 2e2#er o1 t!e 1a2il7 %it!in t!e secon" "e*ree o1 consan*'init7 or a11init70 o1 a 2otor ve!icle o%ner or lan" trans-ortation o-erator0 as li$e%ise "e1ine" !erein0 or !is e2-lo7ee in res-ect o1 "eat!0 #o"il7 in:'r70 or "a2a*e to -ro-ert7 arisin* o't o1 an" in t!e co'rse o1 e2-lo72ent (As a2en"e" #7 Presi"ential Decree No 1F1. an" 1GF1) (") 6O%ner6 or 62otor ve!icle o%ner6 2eans t!e act'al le*al o%ner o1 a 2otor ve!icle0 in %!ose na2e s'c! ve!icle is "'l7 re*istere" %it! t!e )an" Trans-ortation Co22ission8 (e) 6)an" trans-ortation o-erator6 2eans t!e o%ner or o%ners o1 2otor ve!icles 1or trans-ortation o1 -assen*ers 1or co2-ensation0 incl'"in* sc!ool #'ses8
75

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (1) 6Ins'rance -olic76 or 6Polic76 re1ers to a contract o1 ins'rance a*ainst -assen*er an" t!irt7--art7 lia#ilit7 1or "eat! or #o"il7 in:'ries an" "a2a*e" to -ro-ert7 arisin* 1ro2 2otor ve!icle acci"ents (As a2en"e" #7 Presi"ential Decree No 1.;; an" 1F1.) Sec ,E. It s!all #e 'nla%1'l 1or an7 lan" trans-ortation o-erator or o%ner o1 a 2otor ve!icle to o-erate t!e sa2e in t!e -'#lic !i*!%a7s 'nless t!ere is in 1orce in relation t!ereto a -olic7 o1 ins'rance or *'arant7 in cas! or s'ret7 #on" iss'e" in accor"ance %it! t!e -rovisions o1 t!is c!a-ter to in"e2ni17 t!e "eat!0 #o"il7 in:'r70 an"Mor "a2a*e to -ro-ert7 o1 a t!ir"--art7 or -assen*er0 as t!e case 2a7 #e0 arisin* 1ro2 t!e 'se t!ereo1 (As a2en"e" #7 Presi"ential Decree No 1.;; an" 1F1.) Sec ,E; T!e Co22issioner s!all 1'rnis! t!e )an" Trans-ortation Co22issioner %it! a list o1 ins'rance co2-anies a't!ori9e" to iss'e t!e -olic7 o1 ins'rance or s'ret7 #on" re4'ire" #7 t!is c!a-ter (As a2en"e" #7 Presi"ential Decree No 1F1.) Sec ,E6 T!e )an" Trans-ortation Co22ission s!all not allo% t!e re*istration or rene%al o1 re*istration o1 an7 2otor ve!icle %it!o't 1irst re4'irin* 1ro2 t!e lan" trans-ortation o-erator or 2otor ve!icle o%ner concerne" t!e -resentation an" 1ilin* o1 a s'#stantiatin* "oc'2entation in a 1or2 a--rove" #7 t!e Co22issioner evi"encin* t!at t!e -olic7 o1 ins'rance or *'arant7 in cas! or s'ret7 #on" re4'ire" #7 t!is c!a-ter is in e11ect (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec ,EE Ever7 lan" trans-ortation o-erator an" ever7 o%ner o1 a 2otor ve!icle s!all0 #e1ore a--l7in* 1or t!e re*istration or rene%al o1 re*istration o1 an7 2otor ve!icle0 at !is o-tion0 eit!er sec're an ins'rance -olic7 or s'ret7 #on" iss'e" #7 an7 ins'rance co2-an7 a't!ori9e" #7 t!e Co22issioner or 2a$e a cas! "e-osit in s'c! a2o'nt as !erein re4'ire" as li2it o1 lia#ilit7 1or -'r-oses s-eci1ie" in section t!ree !'n"re" sevent7-1o'r (1) In t!e case o1 a lan" trans-ortation o-erator0 t!e ins'rance *'arant7 in cas! or s'ret7 #on" s!all cover lia#ilit7 1or "eat! or #o"il7 in:'ries o1 t!ir"-arties an"Mor -assen*ers arisin* o't o1 t!e 'se o1 s'c! ve!icle in t!e a2o'nt not less t!an t%elve t!o'san" -esos -er -assen*er or t!ir" -art7 an" an a2o'nt0 1or eac! o1 s'c! cate*ories0 in an7 one acci"ent o1 not less t!an t!at set 1ort! in t!e 1ollo%in* scale5c!anro#lesvirt'alla%li#rar7 (a) Aotor ve!icles %it! an a't!ori9e" ca-acit7 o1 t%ent7-si3 or 2ore -assen*ers5 Ci1t7 t!o'san" -esos8 (#) Aotor ve!icles %it! an a't!ori9e" ca-acit7 o1 1ro2 t%elve to t%ent7-1ive -assen*ers5 Cort7 t!o'san" -esos8 (c) Aotor ve!icles %it! an a't!ori9e" ca-acit7 o1 1ro2 si3 to eleven -assen*ers5 T!irt7 t!o'san" -esos8 (") Aotor ve!icles %it! an a't!ori9e" ca-acit7 o1 1ive or less -assen*ers5 Cive t!o'san" -esos 2'lti-lie" #7 t!e a't!ori9e" ca-acit7 Provi"e"0 !o%ever0 T!at s'c! cas! "e-osit 2a"e to0 or s'ret7 #on" -oste" %it!0 t!e Co22issioner s!all #e resorte" to #7 !i2 in cases o1 acci"ents t!e in"e2nities 1or %!ic! to t!ir"--arties an"Mor -assen*ers are not settle" accor"in*l7 #7 t!e lan" trans-ortation o-erator an"0 in t!at event0 t!e sai" cas! "e-osit s!all #e re-lenis!e" or s'c! s'ret7 #on" s!all #e restore" %it! si3t7 "a7s a1ter i2-air2ent or e3-ir70 as t!e case 2a7 #e0 #7 s'c! lan" trans-ortation o-erator0 ot!er%ise0 !e s!all sec're t!e ins'rance -olic7 re4'ire" #7 t!is c!a-ter T!e a1oresai" cas! "e-osit 2a7 #e investe" #7 t!e Co22issioner in rea"il7 2ar$eta#le *overn2ent #on"s an"Mor sec'rities (+) In t!e case o1 an o%ner o1 a 2otor ve!icle0 t!e ins'rance or *'arant7 in cas! or s'ret7 #on" s!all cover lia#ilit7 1or "eat! or in:'r7 to t!ir" -arties in an a2o'nt not less t!an t!at set 1ort! in t!e 1ollo%in* scale in an7 one acci"ent5c!anro#lesvirt'alla%li#rar7 I Private Cars (a) >anta2 5 T%ent7 t!o'san" -esos8 (#) )i*!t 5 T%ent7 t!o'san" -esos8 (c) Heav7 5 T!irt7 t!o'san" -esos8 II Ot!er Private Ie!icles (a) Tric7cles0 2otorc7les0 an" scooters 5 T%elve t!o'san" -esos8

SPC )a% >atc! +?1.

76

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (#) Ie!icles %it! an 'nla"en %ei*!t o1 +06?? $ilos or less 5 T%ent7 t!o'san" -esos8 (c) Ie!icles %it! an 'nla"en %ei*!t o1 #et%een +06?1 $ilos an" ,0G,? $ilos 5 T!irt7 t!o'san" -esos8 (") Ie!icles %it! an 'nla"en %ei*!t over ,0G,? $ilos 5 Ci1t7 t!o'san" -esos T!e Co22issioner 2a70 i1 %arrante"0 set 1ort! sc!e"'le o1 in"e2nities 1or t!e -a72ent o1 clai2s 1or "eat! or #o"il7 in:'ries %it! t!e covera*es set 1ort! !erein (As a2en"e" #7 Presi"ential Decree No 1.;; an" 1F1.) Sec ,EF An7 clai2 1or "eat! or in:'r7 to an7 -assen*er or t!ir" -art7 -'rs'ant to t!e -rovisions o1 t!is c!a-ter s!all #e -ai" %it!o't t!e necessit7 o1 -rovin* 1a'lt or ne*li*ence o1 an7 $in"8 Provi"e"0 T!at 1or -'r-oses o1 t!is section5c!anro#lesvirt'alla%li#rar7 (i) T!e total in"e2nit7 in res-ect o1 an7 -erson s!all not e3cee" 1ive t!o'san" -esos8 (ii) T!e 1ollo%in* -roo1s o1 loss0 %!en s'#2itte" 'n"er oat!0 s!all #e s'11icient evi"ence to s'#stantiate t!e clai25c!anro#lesvirt'alla%li#rar7 (a) Police re-ort o1 acci"ent8 an" (#) Deat! certi1icate an" evi"ence s'11icient to esta#lis! t!e -ro-er -a7ee8 or (c) Ae"ical re-ort an" evi"ence o1 2e"ical or !os-ital "is#'rse2ent in res-ect o1 %!ic! re1'n" is clai2e"8 (iii) Clai2 2a7 #e 2a"e a*ainst one 2otor ve!icle onl7 In t!e case o1 an occ'-ant o1 a ve!icle0 clai2 s!all lie a*ainst t!e ins'rer o1 t!e ve!icle in %!ic! t!e occ'-ant is ri"in*0 2o'ntin* or "is2o'ntin* 1ro2 In an7 ot!er case0 clai2 s!all lie a*ainst t!e ins'rer o1 t!e "irectl7 o11en"in* ve!icle In all cases0 t!e ri*!t o1 t!e -art7 -a7in* t!e clai2 to recover a*ainst t!e o%ner o1 t!e ve!icle res-onsi#le 1or t!e acci"ent s!all #e 2aintaine" Sec ,EG No lan" trans-ortation o-erator or o%ner o1 2otor ve!icle s!all #e 'nreasona#l7 "enie" t!e -olic7 o1 ins'rance or s'ret7 #on" re4'ire" #7 t!is c!a-ter #7 t!e ins'rance co2-anies a't!ori9e" to iss'e t!e sa2e0 ot!er%ise0 t!e )an" Trans-ortation Co22ission s!all re4'ire 1ro2 sai" lan" trans-ortation o-erator or o%ner o1 t!e ve!icle0 in lie' o1 a -olic7 o1 ins'rance or s'ret7 #on"0 a certi1icate t!at a cas! "e-osit !as #een 2a"e %it! t!e Co22issioner in s'c! a2o'nt re4'ire" as li2its o1 in"e2nit7 in section t!ree !'n"re" sevent7-seven to ans%er 1or t!e -assen*er an"Mor t!ir"--art7 lia#ilit7 o1 s'c! lan" trans-ortation o-erator or o%ner o1 t!e ve!icle No ins'rance co2-an7 2a7 iss'e t!e -olic7 o1 ins'rance or s'ret7 #on" re4'ire" 'n"er t!is c!a-ter 'nless so a't!ori9e" 'n"er e3istin* la%s T!e a't!orit7 to en*a*e in t!e cas'alt7 an"Mor s'ret7 lines o1 #'siness o1 an ins'rance co2-an7 t!at re1'ses to iss'e or rene%0 %it!o't :'st ca'se0 t!e ins'rance -olic7 or s'ret7 #on" t!erein re4'ire" s!all #e %it!"ra%n i22e"iatel7 (As a2en"e" #7 Presi"ential Decree No 1.;; an" 1F1.) Sec ,F? No cancellation o1 t!e -olic7 s!all #e vali" 'nless %ritten notice t!ereo1 is *iven to t!e lan" trans-ortation o-erator or o%ner o1 t!e ve!icle an" to t!e )an" Trans-ortation Co22ission at least 1i1teen "a7s -rior to t!e inten"e" e11ective "ate t!ereo1 U-on recei-t o1 s'c! notice0 t!e )an" Trans-ortation Co22ission0 'nless it receives evi"ence o1 a ne% vali" ins'rance or *'arant7 in cas! or s'ret7 #on" as -rescri#e" in t!is c!a-ter0 or an en"orse2ent o1 revival o1 t!e cancelle" one0 s!all or"er t!e i22e"iate con1iscation o1 t!e -lates o1 t!e 2otor ve!icle covere" #7 s'c! cancelle" -olic7 T!e sa2e 2a7 #e re-iss'e" onl7 '-on -resentation o1 a ne% ins'rance -olic7 or t!at a *'arant7 in cas! or s'ret7 #an" !as #een 2a"e or -oste" %it! t!e Co22issioner an" %!ic! 2eets t!e re4'ire2ents o1 t!is c!a-ter0 or an en"orse2ent or revival o1 t!e cancelle" one (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec ,F1 I1 t!e cancellation o1 t!e -olic7 or s'ret7 #on" is conte2-late" #7 t!e lan" trans-ortation o-erator or o%ner o1 t!e ve!icle0 !e s!all0 #e1ore t!e -olic7 or s'ret7 #on" ceases to #e e11ective0 sec're a si2ilar -olic7 o1 ins'rance or s'ret7 #on" to re-lace t!e -olic7 or s'ret7 #on" to #e cancelle" or 2a$e a cas! "e-osit in s'11icient a2o'nt %it! t!e Co22issioner an" %it!o't an7 *a-0 1ile t!e re4'ire" "oc'2entation %it! t!e )an" Trans-ortation Co22ission0 an" noti17 t!e ins'rance co2-an7 concerne" o1 t!e cancellation o1 its -olic7 or s'ret7 #on" (As a2en"e" #7 Presi"ential Decree No 1.;;)
77

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Sec ,F+ In case o1 c!an*e o1 o%ners!i- o1 a 2otor ve!icle0 or c!an*e o1 t!e en*ine o1 an ins're" ve!icle0 t!ere s!all #e no nee" o1 iss'in* a ne% -olic7 'ntil t!e ne3t "ate o1 re*istration or rene%al o1 re*istration o1 s'c! ve!icle0 an" -rovi"e" t!at t!e ins'rance co2-an7 s!all a*ree to contin'e t!e -olic70 s'c! c!an*e o1 o%ners!i- or s'c! c!an*e o1 t!e en*ine s!all #e in"icate" in a corres-on"in* en"orse2ent #7 t!e ins'rance co2-an7 concerne"0 an" a si*ne" "'-licate o1 s'c! en"orse2ent s!all0 %it!in a reasona#le ti2e0 #e 1ile" %it! t!e )an" Trans-ortation Co22ission Sec ,F, In t!e settle2ent an" -a72ent o1 clai2s0 t!e in"e2nit7 s!all not #e availe" o1 #7 an7 acci"ent victi2 or clai2ant as an instr'2ent o1 enric!2ent #7 reason o1 an acci"ent0 #'t as an assistance or restit'tion inso1ar as can 1airl7 #e ascertaine" Sec ,F. An7 -erson !avin* an7 clai2 '-on t!e -olic7 iss'e" -'rs'ant to t!is C!a-ter s!all0 %it!o't an7 'nnecessar7 "ela70 -resent to t!e ins'rance co2-an7 concerne" a %ritten notice o1 clai2 settin* 1ort! t!e nat're0 e3tent an" "'ration o1 t!e in:'ries s'staine" as certi1ie" #7 a "'l7 license" -!7sician Notice o1 clai2 2'st #e 1ile" %it!in si3 2ont!s 1ro2 "ate o1 acci"ent0 ot!er%ise0 t!e clai2 s!all #e "ee2e" %aive" Action or s'it 1or recover7 o1 "a2a*e "'e to loss or in:'r7 2'st #e #ro'*!t0 in -ro-er cases0 %it! t!e Co22issioner or t!e Co'rts %it!in one 7ear 1ro2 "enial o1 t!e clai20 ot!er%ise0 t!e clai2antDs ri*!t o1 action s!all -rescri#e (As a2en"e" #7 Presi"ential Decree 1F1. an" >atas Pa2#ansa >l* FE.) Sec ,F; T!e ins'rance co2-an7 concerne" s!all 1ort!%it! ascertain t!e tr't! an" e3tent o1 t!e clai2 an" 2a$e -a72ent %it!in 1ive %or$in* "a7s a1ter reac!in* an a*ree2ent I1 no a*ree2ent is reac!e"0 t!e ins'rance co2-an7 s!all -a7 onl7 t!e 6no-1a'lt6 in"e2nit7 -rovi"e" in section t!ree !'n"re" sevent7-ei*!t %it!o't -re:'"ice to t!e clai2ant 1ro2 -'rs'in* !is clai2 1'rt!er0 in %!ic! case0 !e s!all not #e re4'ire" or co2-elle" #7 t!e ins'rance co2-an7 to e3ec'te an7 4'it clai2 or "oc'2ent releasin* it 1ro2 lia#ilit7 'n"er t!e -olic7 o1 ins'rance or s'ret7 #on" iss'e" (As a2en"e" #7 Presi"ential Decree No 1.;;) In case o1 an7 "is-'te in t!e en1orce2ent o1 t!e -rovisions o1 an7 -olic7 iss'e" -'rs'ant to t!is c!a-ter0 t!e a":'"ication o1 s'c! "is-'te s!all #e %it!in t!e ori*inal an" e3cl'sive :'ris"iction o1 t!e Co22issioner0 s'#:ect to t!e li2itations -rovi"e" in section 1o'r !'n"re" si3teen Sec ,F6 It s!all #e 'nla%1'l 1or a lan" trans-ortation o-erator or o%ner o1 2otor ve!icle to re4'ire !is or its "rivers or ot!er e2-lo7ees to contri#'te in t!e -a72ent o1 -re2i'2s Sec ,FE No *overn2ent o11ice or a*enc7 !avin* t!e "'t7 o1 i2-le2entin* t!e -rovisions o1 t!is c!a-ter nor an7 o11icial or e2-lo7ee t!ereo1 s!all act as a*ent in -roc'rin* t!e ins'rance -olic7 or s'ret7 #on" -rovi"e" 1or !erein T!e co22ission o1 an a*ent -roc'rin* t!e sai" -olic7 or #on" s!all in no case e3cee" ten -er cent'2 o1 t!e a2o'nt o1 t!e -re2i'2s t!ere1or Sec ,FF An7 lan" trans-ortation o-erator or o%ner o1 2otor ve!icle or an7 ot!er -erson violatin* an7 o1 t!e -rovisions o1 t!e -rece"in* sections s!all #e -'nis!e" #7 a 1ine o1 not less t!an 1ive !'n"re" -esos #'t not 2ore t!an one t!o'san" -esos an"Mor i2-rison2ent 1or not 2ore t!an si3 2ont!s T!e violation o1 section t!ree !'n"re" sevent7-seven #7 a lan" trans-ortation o-erator s!all #e a s'11icient ca'se 1or t!e revocation o1 t!e certi1icate o1 -'#lic convenience iss'e" #7 t!e >oar" o1 Trans-ortation coverin* t!e ve!icle concerne" Sec ,FG /!enever an7 violation o1 t!e -rovisions o1 t!is c!a-ter is co22itte" #7 a cor-oration or association0 or #7 a *overn2ent o11ice or entit70 t!e e3ec'tive o11icer or o11icers o1 sai" cor-oration0 association or *overn2ent o11ice or entit7 %!o s!all !ave $no%in*l7 -er2itte"0 or 1aile" to -revent0 sai" violation s!all #e !el" lia#le as -rinci-als C!a-ter III AUTUA) >ENECIT ASSOCIATIONS AND TRUSTS COR CHARITA>)E USES Title 1 AUTUA) >ENECIT ASSOCIATIONS Sec ,G? An7 societ70 association or cor-oration0 %it!o't ca-ital stoc$0 1or2e" or or*ani9e" not 1or -ro1it #'t 2ainl7 1or t!e -'r-ose o1 -a7in* sic$ #ene1its to 2e2#ers0 or o1 1'rnis!in* 1inancial s'--ort to 2e2#ers %!ile o't o1 e2-lo72ent0 or o1 -a7in* to relatives o1 "ecease" 2e2#ers o1 1i3e" or an7 s'2 o1 2one70 irres-ective o1 %!et!er s'c! ai2 or -'r-ose is carrie" o't
78

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) #7 2eans o1 1i3e" "'es or assess2ents collecte" re*'larl7 1ro2 t!e 2e2#ers0 or o1 -rovi"in*0 #7 t!e iss'ance o1 certi1icates o1 ins'rance0 -a72ent o1 its 2e2#ers o1 acci"ent or li1e ins'rance #ene1its o't o1 s'c! 1i3e" an" re*'lar "'es or assess2ents0 #'t in no case s!all incl'"e an7 societ70 association0 or cor-oration %it! s'c! 2't'al #ene1it 1eat'res an" %!ic! s!all #e carrie" o't -'rel7 1ro2 vol'ntar7 contri#'tions collecte" not re*'larl7 an" or no 1i3e" a2o'nt 1ro2 %!o2soever 2a7 contri#'te0 s!all #e $no%n as a 2't'al #ene1it association %it!in t!e intent o1 t!is Co"e An7 societ70 association0 or cor-oration -rinci-all7 or*ani9e" as la#or 'nion s!all #e *overne" #7 t!e )a#or Co"e not%it!stan"in* an7 2't'al #ene1it 1eat're -rovisions in its c!arter as inci"ent to its or*ani9ation In no case s!all a 2't'al #ene1it association #e or*ani9e" an" a't!ori9e" to transact #'siness as a c!arita#le or #enevolent or*ani9ation0 an" %!enever it !as t!is 1eat're as inci"ent to its e3istence0 t!e corres-on"in* c!arter -rovision s!all #e revise" to con1or2 %it! t!e -rovision o1 t!is section A't'al #ene1it association0 alrea"7 license" to transact #'siness as s'c! on t!e "ate t!is Co"e #eco2es e11ective0 !avin* c!arita#le or #enevolent 1eat're s!all a#an"on s'c! inci"ental -'r-ose '-on e11ectivit7 o1 t!is Co"e i1 t!e7 "esire to contin'e o-eratin* as s'c! 2't'al #ene1it associations (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec ,G1 A 2't'al #ene1it association0 #e1ore it 2a7 transact as s'c!0 2'st 1irst sec're a license 1ro2 t!e Co22issioner T!e a--lication 1or s'c! license s!all #e 1ile" %it! t!e Co22issioner to*et!er %it! certi1ie" tr'e co-ies o1 t!e articles o1 incor-oration or t!e constit'tion an" #7-la%s o1 t!e association0 an" all a2en"2ents t!ereto0 an" s'c! ot!er "oc'2ents or testi2onies as t!e Co22issioner 2a7 re4'ire No license s!all #e *rante" to a 2't'al #ene1it association 'ntil t!e Co22issioner s!all !ave #een satis1ie" #7 s'c! e3a2ination as 2a7 2a$e an" s'c! evi"ence as !e 2a7 re4'ire t!at t!e association is 4'ali1ie" 'n"er e3istin* la%s to o-erate an" transact #'siness as s'c! T!e Co22issioner 2a7 re1'se to iss'e a license to an7 2't'al #ene1it association i10 in !is :'"*2ent0 s'c! re1'sal %ill #est -ro2ote t!e interest o1 t!e 2e2#ers o1 s'c! association an" o1 t!e -eo-le o1 t!is co'ntr7 An7 license iss'e" s!all e3-ire on t!e last "a7 o1 J'ne o1 t!e 7ear 1ollo%in* its iss'ance an"0 '-on -ro-er a--lication0 2a7 #e rene%e" i1 t!e association is contin'in* to co2-l7 %it! e3istin* la%s0 r'les an" re*'lations0 or"ers0 instr'ctions0 r'lin*s an" "ecisions o1 t!e Co22issioner Ever7 association receivin* an7 s'c! license s!all #e s'#:ect to t!e s'-ervision o1 t!e Co22issioner5 Provi"e"0 T!at no s'c! license s!all #e *rante" to an7 s'c! association i1 s'c! association !as no act'ar7 All 2't'al #ene1it association e3istin* an" license" as s'c! 'n"er t!e -rovisions o1 Article Ei*!t0 C!a-ter Cort7-One o1 t!e Revise" A"2inistrative Co"e0 as a2en"e" #7 Act No ,61+0 s!all0 '-on e11ectivit7 o1 t!is Co"e0 s'rren"er t!eir res-ective licenses to t!e Co22issioner an" a--l7 1or ne% licenses 'n"er t!e -rovisions o1 t!is co"e i1 t!e7 still "esire to contin'e o-eratin* as s'c! 2't'al #ene1it associations Sec ,G+ No 2't'al #ene1it association s!all #e iss'e" a license to o-erate as s'c! 'nless it !as constit'te" an" esta#lis!e" a G'arant7 C'n" #7 "e-ositin* %it! t!e Co22issioner an initial 2ini2'2 a2o'nt o1 ten t!o'san" -esos in cas!0 or in *overn2ent sec'rities %it! a total val'e e4'al to s'c! a2o'nt0 to ans%er 1or an7 vali" #ene1it clai2 o1 an7 o1 its 2e2#ers All 2one7s receive" #7 t!e Co22issioner 1or t!is -'r-ose 2'st #e "e-osite" #7 !i2 in interest-#earin* "e-osits %it! an7 #an$ or #an$s a't!ori9e" to transact #'siness in t!e P!ili--ines 1or t!e acco'nt o1 t!e -artic'lar association constit'tin* t!e G'arant7 C'n" An7 accr'al to s'c! 1'n"0 #e it interest earne" or "ivi"en" a""itions on 2one7s or sec'rities so "e-osite"0 2a70 %it! t!e -rior a--roval o1 t!e Co22issioner0 #e %it!"ra%n #7 t!e association i1 t!ere is no -en"in* #ene1it clai2 a*ainst it0 incl'"in* interest t!ereon or "ivi"en" a""itions t!ereto T!e Co22issioner0 -rior to or a1ter licensin* a 2't'al #ene1it association0 2a7 re4'ire s'c! association to increase its G'arant7 C'n" 1ro2 t!e initial 2ini2'2 a2o'nt re4'ire" to an a2o'nt e4'al to at least ten -er cent'2 o1 its assets0 i1 s'c! assets e3cee" one !'n"re" t!o'san" -esos0 #'t in no case s!all s'c! increase e3cee" t!e 2a3i2'2 a2o'nt o1 ca-ital invest2ent re4'ire" o1 a "o2estic ins'rance co2-an7 'n"er section t%o !'n"re" an" t!ree o1 t!is Co"e (As a2en"e" #7 Presi"ential Decree No 1.;;)
79

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) Sec ,G, Ever7 2't'al #ene1it association license" to "o #'siness as s'c! s!all iss'e 2e2#ers!i- certi1icates to its 2e2#ers s-eci17in* t!e #ene1its to %!ic! s'c! 2e2#ers are entitle" S'c! certi1icates0 to*et!er %it! t!e articles o1 incor-oration o1 t!e association or its constit'tion an" #7-la%s0 an" all e3istin* la%s as 2a7 #e -ertinent s!all constit'te t!e a*ree2ent0 as o1 t!e "ate o1 its iss'ance0 #et%een t!e association an" t!e 2e2#er T!e 2e2#ers!i- certi1icate s!all #e in a 1or2 -revio'sl7 a--rove" #7 t!e Co22issioner Sec ,G. A 2't'al #ene1it association 2a70 #7 reins'rance a*ree2ent0 ce"e in %!ole or in -art an7 in"ivi"'al ris$ or ris$s 'n"er certi1icates o1 ins'rance iss'e" #7 it0 onl7 to a li1e ins'rance co2-an7 a't!ori9e" to transact #'siness or to a -ro1essional reins'rer a't!ori9e" to acce-t li1e ris$s in t!e P!ili--ines5 Provi"e"0 T!at co-7 o1 t!e "ra1t o1 s'c! reins'rance a*ree2ent s!all #e s'#2itte" to t!e Co22issioner 1or !is a--roval T!e association 2a7 ta$e cre"it 1or t!e reserves on s'c! ce"e" ris$s to t!e e3tent reins're" Sec ,G; T!e constit'tion or #7-la%s o1 a 2't'al #ene1it association 2'st "istinctl7 state t!e -'r-ose 1or %!ic! "'es an"Mor assess2ents are 2a"e an" collecte" an" t!e -ortion t!ereo1 %!ic! 2a7 #e 'se" 1or e3-enses Deat! #ene1it an" ot!er relie1 1'n"s s!all #e create" an" 'se" e3cl'sivel7 1or -a7in* #ene1its "'e t!e 2e2#ers 'n"er t!eir res-ective 2e2#ers!icerti1icates A *eneral 1'n" s!all li$e%ise #e create" an" 'se" 1or e3-enses o1 a"2inistration o1 t!e association Sec ,G6 Ever7 o'tstan"in* 2e2#ers!i- certi1icate 2'st !ave0 a1ter t!ree 1'll 7ears o1 #ein* contin'o'sl7 in 1orce0 an e4'it7 val'e e4'ivalent to at least 1i1t7 -er cent'2 o1 t!e total 2e2#ers!i- "'es collecte" t!ereon Sec ,GE Ever7 2't'al #ene1it association 2'st acc'2'late an" 2aintain0 o't o1 t!e -erio"ic "'es collecte" 1ro2 its 2e2#ers0 s'11icient reserves 1or t!e -a72ent o1 clai2s or o#li*ations 1or %!ic! it s!all !ol" 1'n"s in sec'rities satis1actor7 to t!e Co22issioner consistin* o1 #on"s o1 t!e Govern2ent o1 t!e P!ili--ines0 or an7 o1 its -olitical s'#"ivisions an" instr'2entalities0 or in s'c! ot!er *oo" sec'rities as 2a7 #e a--rove" #7 t!e Co22issioner T!e reserve lia#ilit7 s!all #e esta#lis!e" in accor"ance %it! act'rial -roce"'res an" s!all #e a--rove" #7 t!e Co22issioner T!e articles o1 incor-oration or t!e constit'tion an" #7-la%s o1 a 2't'al #ene1it association 2'st -rovi"e t!at i1 its reserve as to all or an7 class o1 certi1icates #eco2es i2-aire"0 its #oar" o1 "irectors or tr'stees 2a7 re4'ire t!at t!ere s!all #e -ai" #7 t!e 2e2#ers to t!e association t!e a2o'nt o1 t!e 2e2#ersD e4'ita#le -ro-ortion o1 s'c! "e1icienc7 as ascertaine" #7 sai" #oar" an" t!at i1 t!e -a72ent #e not 2a"e it s!all stan" as an in"e#te"ness a*ainst t!e 2e2#ers!i- certi1icates o1 t!e "e1a'ltin* 2e2#ers an" "ra% interest not to e3cee" 1ive -er cent'2 -er ann'2 co2-o'n"e" ann'all7 Sec ,GF A 2't'al #ene1it association 2a7 invest s'c! -ortion o1 its 1'n"s as s!all not #e re4'ire" to 2eet -en"in* clai2s an" ot!er o#li*ations in an7 o1 t!e classes o1 invest2ents or t7-es o1 sec'rities in %!ic! li1e ins'rance co2-anies "oin* #'siness in t!e P!ili--ines 2a7 invest It 2a7 also *rant loans to 2e2#ers on t!e sec'rit7 o1 a -le"*e or c!attel 2ort*a*e o1 -ersonal -ro-erties o1 t!e #orro%ers0 or in t!e a#sence t!ereo10 on t!e sec'rit7 o1 t!e 2e2#ers!i- certi1icate o1 t!e #orro%in* 2e2#ers0 in %!ic! event s'c! loan s!all #eco2e a 1irst lien on t!e -rocee" t!ereo1 Sec ,GG T!e Co22issioner or an7 o1 !is "'l7 "esi*nate" re-resentatives0 s!all !ave t!e -o%er o1 visitation0 a'"it an" e3a2ination into t!e a11airs0 1inancial con"ition0 an" 2et!o"s o1 "oin* #'siness o1 all 2't'al #ene1it associations0 an" !e s!all ca'se s'c! e3a2ination to #e 2a"e at least once ever7 t%o 7ears or %!enever it 2a7 #e "ee2e" -ro-er an" necessar7 Cree access to t!e #oo$s0 recor"s an" "oc'2ents o1 t!e association s!all #e accor"e" to t!e Co22issioner0 to !is re-resentatives0 in s'c! 2anner t!at t!e Co22issioner or !is re-resentatives 2a7 rea"il7 veri17 or "eter2ine t!e tr'e a11airs0 1inancial con"ition0 an" 2et!o" o1 "oin* #'siness o1 s'c! association In t!e co'rse o1 s'c! e3a2ination0 t!e Co22issioner or !is "'l7 "esi*nate" re-resentatives s!all !ave a't!orit7 to a"2inister oat!s an" ta$e testi2on7 or ot!er evi"ence on an7 2atter relatin* to t!e a11airs o1 t!e association All 2in'tes o1 t!e -rocee"in*s o1 t!e #oar" o1 "irectors or tr'stees o1 t!e association0 an" t!ose o1 t!e re*'lar or s-ecial 2eetin*s o1 t!e 2e2#ers0 s!all #e ta$e0 an" a co-7 t!ereo10 in En*lis! or in Pili-ino0 s!all #e s'#2itte"

SPC )a% >atc! +?1.

80

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) to t!e Co22issionerDs re-resentatives or e3a2iners in t!e co'rse o1 s'c! e3a2ination A co-7 o1 t!e 1in"in*s o1 s'c! e3a2ination0 to*et!er %it! t!e reco22en"ations o1 t!e Co22issioner0 s!all #e 1'rnis!e" t!e association 1or its in1or2ation an" co2-liance0 an" t!e sa2e s!all #e ta$en '- i22e"iatel7 in t!e 2eetin*s o1 t!e #oar" o1 "irectors or tr'stees an" o1 t!e 2e2#ers o1 t!e association Sec .?? Ever7 2't'al #ene1it association s!all0 ann'all7 on or #e1ore t!e t!irtiet! "a7 o1 A-ril o1 eac! 7ear0 ren"er to t!e Co22issioner an ann'al state2ent in s'c! 1or2 an" "etails as 2a7 #e -rescri#e" #7 t!e Co22issioner0 si*ne" an" s%orn to #7 t!e -resi"ent0 secretar70 treas'rer0 an" act'ar7 o1 t!e association0 s!o%in* t!e e3act con"ition o1 its a11airs on t!e -rece"in* t!irt7-1irst "a7 o1 Dece2#er Sec .?1 No 2one70 ai" or #ene1it to #e -ai"0 -rovi"e" or ten"ere" #7 an7 2't'al #ene1it association0 s!all #e lia#le to attac!2ent0 *arnis!2ent0 or ot!er -rocess0 or #e sei9e"0 ta$en0 a--ro-riate"0 or a--lie" #7 an7 le*al or e4'ita#le -rocess to -a7 an7 "e#t o1 lia#ilit7 o1 a 2e2#er or #ene1iciar70 or an7 ot!er -erson %!o 2a7 !ave a ri*!t t!ere'n"er0 eit!er #e1ore or a1ter -a72ent Sec .?+ An7 2e2#er o1 a 2't'al #ene1it association s!all !ave t!e ri*!t at all ti2es to c!an*e t!e #ene1iciar7 or #ene1iciaries or a"" anot!er #ene1iciar7 or ot!er #ene1iciaries in accor"ance %it! t!e r'les an" re*'lations o1 t!e association 'nless !e !as e3-ressl7 %aive" t!is ri*!t in t!e 2e2#ers!icerti1icate Ever7 association 2a70 'n"er s'c! r'les as it 2a7 a"o-t0 li2it t!e sco-e o1 #ene1iciaries an" -rovi"e t!at no #ene1iciar7 s!all !ave or o#tain an7 veste" interest in t!e -rocee"s o1 an7 certi1icate 'ntil t!e certi1icate !as #eco2e "'e an" -a7a#le 'n"er t!e ter2s o1 t!e 2e2#ers!i- certi1icate Sec .?, An7 c!a-ter a11iliate in"e-en"entl7 license" as a 2't'al #ene1it association 2a7 consoli"ate or 2er*e %it! an7 ot!er si2ilar c!a-ter a11iliate or %it! t!e 2ot!er association Sec .?. An7 2't'al #ene1it association 2a7 #e converte" into an" license" as a 2't'al li1e ins'rance co2-an7 #7 co2-l7in* %it! t!e re4'ire2ents o1 t!e -ertinent -rovisions o1 t!is Co"e an" s'#2ittin* t!e s-eci1ic -lan 1or s'c! conversion to t!e Co22issioner 1or !is a--roval S'c! -lan0 as a--rove"0 s!all t!en #e s'#2itte" to t!e 2e2#ers eit!er in t!e re*'lar 2eetin* or in a s-ecial 2eetin* calle" 1or t!e -'r-ose 1or t!eir a"o-tion T!e a11ir2ative vote o1 at least t%o-t!ir"s o1 all t!e 2e2#ers s!all #e necessar7 in or"er to consi"er s'c! -lan as a"o-te" No s'c! conversion s!all ta$e e11ect 'nless an" 'ntil a--rove" #7 t!e Co22issioner Sec .?; No 2't'al #ene1it association s!all #e "issolve" %it!o't 1irst noti17in* t!e Co22issioner an" 1'rnis!in* !i2 %it! a certi1ie" co-7 o1 t!e resol'tion a't!ori9in* t!e "issol'tion0 "'l7 a"o-te" #7 t!e a11ir2ative vote o1 t%o-t!ir"s o1 t!e 2e2#ers at a 2eetin* calle" 1or t!at -'r-ose0 t!e 1inancial state2ents as o1 t!e "ate o1 t!e resol'tion0 an" s'c! ot!er -a-ers or "oc'2ents as 2a7 #e re4'ire" #7 t!e Co22issioner No "issol'tion s!all -rocee" 'ntil an" 'nless a--rove" #7 t!e Co22issioner an" all -rocee"in*s in connection t!ere%it! s!all #e %itnesse" an" atteste" #7 !is "'l7 "esi*nate" re-resentative No 2't'al #ene1it association s!all #e o11iciall7 "eclare" as "issolve" 'ntil a1ter t!e Co22issioner so certi1ies t!at all o'tstan"in* clai2s a*ainst t!e association !ave #een "'l7 settle" an" li4'i"ate" Sec .?6 T!e Co22issioner s!all a1ter notice an" !earin*0 !ave t!e -o%er eit!er to s's-en" or revo$e t!e license" iss'e" to a 2't'al #ene1it association i1 !e 1in"s t!at t!e association !as5c!anro#lesvirt'alla%li#rar7 (a) 1aile" to co2-l7 %it! an7 -rovision o1 t!is Co"e8 (#) 1aile" to co2-l7 %it! an7 ot!er la% or re*'lation o#li*ator7 '-on it8 (c) 1aile" to co2-l7 %it! an7 or"er0 r'lin*0 instr'ction0 re4'ire2ent0 or reco22en"ation o1 t!e Co22issioner8 (") e3cee"e" its -o%er to t!e -re:'"ice o1 its 2e2#ers8 (e) con"'cte" its #'siness 1ra'"'lentl7 or !a9ar"o'sl78 (1) ren"ere" its a11airs an" con"ition to one o1 insolvenc78 or (*) 1aile" to carr7 o't its ai2s an" -'r-oses 1or %!ic! it %as or*ani9e" "'e to an7 ca'se A1ter recei-t o1 t!e or"er 1ro2 t!e Co22issioner s's-en"in* or revo$in* t!e license0 t!e association 2'st i22e"iatel7 e3ert e11orts to re2ove s'c! ca'se
81

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) or ca'ses %!ic! #ro'*!t a#o't t!e or"er0 an"0 '-on -ro-er s!o%in*0 2a7 a--l7 %it! t!e Co22issioner 1or t!e li1tin* o1 t!e or"er an" restoration or revival o1 t!e license so revo$e" or s's-en"e" Sec .?E Cor 1ail're to re2ove s'c! ca'se or ca'ses %!ic! #ro'*!t a#o't t!e s's-ension or revocation o1 t!e license o1 a 2't'al #ene1it association0 t!e Co22issioner s!all a--l7 'n"er t!is Co"e 1or an or"er 1ro2 t!e -ro-er co'rt to li4'i"ate s'c! association T!e -rovisions o1 titles 1o'rteen an" 1i1teen0 c!a-ter t!ree0 -ertainin* to t!e a--oint2ent o1 a conservator an" -rocee"in*s '-on insolvenc7 o1 an ins'rance co2-an70 s!all0 inso1ar as -ractica#le0 a--l7 to 2't'al #ene1it associations Sec .?F To sec're t!e en1orce2ent o1 an7 -rovision 'n"er t!is title0 t!e Co22issioner 2a7 iss'e s'c! r'les0 r'lin*s0 instr'ctions0 or"ers an" circ'lars0 s'#:ect to t!e a--roval o1 t!e Secretar7 o1 Cinance Sec .?G T!e violation o1 an7 -rovision o1 t!is title s!all s'#:ect t!e -erson violatin* or t!e o11icer o1 t!e association res-onsi#le t!ere1or to a 1ine o1 not e3cee"in* one t!o'san" -esos0 or i2-rison2ent o1 not e3cee"in* t!ree 7ears0 or #ot! s'c! 1ine an" i2-rison2ent0 at t!e "iscretion o1 t!e co'rt Title + TRUSTS COR CHARITA>)E USES Sec .1? T!e ter2 6tr'st 1or c!arita#le 'ses60 %it!in t!e intent o1 t!is Co"e0 s!all incl'"e0 all t!e real or -ersonal -ro-erties or 1'n"s0 as %ell as t!ose ac4'ire" %it! t!e 1r'its or inco2e t!ere1ro2 or in e3c!an*e or s'#stit'tion t!ereo10 *iven to or receive" #7 an7 -erson0 cor-oration0 association0 1o'n"ation0 or entit70 e3ce-t t!e National Govern2ent0 its instr'2entalities or -olitical s'#"ivisions0 1or c!arita#le0 #enevolent0 e"'cational0 -io's0 reli*io's0 or ot!er 'ses 1or t!e #ene1it o1 t!e -'#lic at lar*e or a -artic'lar -ortion t!ereo1 or 1or t!e #ene1it o1 an in"e1inite n'2#er o1 -ersons Sec .11 T!e ter2 6tr'stee6 s!all incl'"e an7 in"ivi"'al0 cor-oration0 association0 1o'n"ation0 or entit70 e3ce-t t!e National Govern2ent0 its instr'2entalities or -olitical s'#"ivisions0 in c!ar*e o10 or actin* 1or0 or concerne" %it! t!e a"2inistration o10 t!e tr'st re1erre" to in t!e section i22e"iatel7 -rece"in* an" %it! t!e -ro-er a--lication o1 tr'st -ro-ert7 Sec .1+ T!e ter2 6tr'st -ro-ert76 s!all incl'"e all real or -ersonal -ro-erties or 1'n"s -ertainin* to t!e tr'st as %ell as t!ose ac4'ire" %it! t!e 1r'its or inco2e t!ere1ro2 or in e3c!an*e or s'#stit'tion t!ereo1 Sec .1, All tr'stees s!all0 #e1ore enterin* in t!e -er1or2ance o1 t!e "'ties o1 t!eir tr'st0 o#tain a certi1icate o1 re*istration 1ro2 t!e Co22issioner Tr'stees %!o are alrea"7 "isc!ar*in* t!e "'ties o1 t!eir tr'st on t!e "ate t!is Co"e #eco2es e11ective 2a7 contin'e as s'c!0 s'#:ect to t!e -rovisions o1 t!is Co"e All -rovisions o1 t!is Co"e *overnin* 2't'al #ene1it associations an" s'c! ot!er -rovisions !erein0 %!enever -ractica#le an" necessar70 s!all #e a--lica#le to tr'sts 1or c!arita#le 'ses C!a-ter IIII THE INSURANCE COAAISSIONER Title 1 ADAINISTRATIIE AND ADJUDICATORH PO/ERS Sec .1. T!e Ins'rance Co22issioner s!all !ave t!e "'t7 to see t!at all la%s relatin* to ins'rance0 ins'rance co2-anies an" ot!er ins'rance 2atters0 2't'al #ene1it associations0 an" tr'sts 1or c!arita#le 'ses are 1ait!1'll7 e3ec'te" an" to -er1or2 t!e "'ties i2-ose" '-on !i2 #7 t!is Co"e0 an" s!all0 not%it!stan"in* an7 e3istin* la%s to t!e contrar70 !ave sole an" e3cl'sive a't!orit7 to re*'late t!e iss'ance an" sale o1 varia#le contracts as "e1ine" in section t%o !'n"re" t!irt7-t%o an" to -rovi"e 1or t!e licensin* o1 -ersons sellin* s'c! contracts0 an" to iss'e s'c! reasona#le r'les an" re*'lations *overnin* t!e sa2e T!e Co22issioner 2a7 iss'e s'c! r'lin*s0 instr'ctions0 circ'lars0 or"ers an" "ecision as !e 2a7 "ee2 necessar7 to sec're t!e en1orce2ent o1 t!e -rovisions o1 t!is Co"e0 s'#:ect to t!e a--roval o1 t!e Secretar7 o1 Cinance E3ce-t as ot!er%ise s-eci1ie"0 "ecisions 2a"e #7 t!e Co22issioner s!all #e a--eala#le to t!e Secretar7 o1 Cinance Sec .1; In a""ition to t!e a"2inistrative sanctions -rovi"e" else%!ere in t!is Co"e0 t!e Ins'rance Co22issioner is !ere#7 a't!ori9e"0 at !is "iscretion0 to i2-ose '-on t!e ins'rance co2-anies0 t!eir "irectors an"Mor o11icers an"Mor a*ents0 1or an7 %ill1'l 1ail're or re1'sal to co2-l7 %it!0 or
82

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) violation o1 an7 -rovision o1 t!is Co"e0 or an7 or"er0 instr'ction0 re*'lation0 or r'lin* o1 t!e Ins'rance Co22issioner0 or an7 co22ission or irre*'larities0 an"Mor con"'ctin* #'siness in an 'nsa1e or 'nso'n" 2anner as 2a7 #e "eter2ine" #7 t!e Ins'rance Co22issioner0 t!e 1ollo%in*5c!anro#lesvirt'alla%li#rar7 (a) 1ines not in e3cess o1 1ive !'n"re" -esos a "a78 an" (#) s's-ension0 or a1ter "'e !earin*0 re2oval o1 "irectors an"Mor o11icers an"Mor a*ents Sec .16 T!e Co22issioner s!all !ave t!e -o%er to a":'"icate clai2s an" co2-laints involvin* an7 loss0 "a2a*e or lia#ilit7 1or %!ic! in ins'rer 2a7 #e ans%era#le 'n"er an7 $in" o1 -olic7 or contract o1 ins'rance0 or 1or %!ic! s'c! ins'rer 2a7 #e lia#le 'n"er a contract o1 s'ret7s!i-0 or 1or %!ic! a reins'rer 2a7 #e s'e" 'n"er an7 contract o1 reins'rance it 2a7 !ave entere" into8 or 1or %!ic! a 2't'al #ene1it association 2a7 #e !el" lia#le 'n"er t!e 2e2#ers!i- certi1icates it !as iss'e" to its 2e2#ers0 %!ere t!e a2o'nt o1 an7 s'c! loss0 "a2a*e or lia#ilit70 e3cl'"in* interest0 cost an" attorne7Ds 1ees0 #ein* clai2e" or s'e" '-on an7 $in" o1 ins'rance0 #on"0 reins'rance contract0 or 2e2#ers!i- certi1icate "oes not e3cee" in an7 sin*le clai2 one !'n"re" t!o'san" -esos T!e ins'rer or s'ret7 2a70 in t!e sa2e action 1ile a co'nterclai2 a*ainst t!e ins're" or t!e o#li*ee T!e ins'rer or s'ret7 2a7 also 1ile a cross-clai2 a*ainst a -art7 1or an7 clai2 arisin* o't o1 t!e transaction or occ'rrence t!at is t!e s'#:ect 2atter o1 t!e ori*inal action or o1 a co'nterclai2 t!erein /it! leave o1 t!e Co22issioner0 an ins'rer or s'ret7 2a7 1ile a t!ir"--art7 co2-laint a*ainst its reins'rers 1or in"e2ni1ication0 contri#'tion0 s'#ro*ation or an7 ot!er relie10 in res-ect o1 t!e transaction t!at is t!e s'#:ect 2atter o1 t!e ori*inal action 1ile" %it! t!e Co22issioner T!e -art7 1ilin* an action -'rs'ant to t!e -rovisions o1 t!is section t!ere#7 s'#2its !is -erson to t!e :'ris"iction o1 t!e Co22issioner T!e Co22issioner s!all ac4'ire :'ris"iction over t!e -erson o1 t!e i2-lea"e" -art7 or -arties in accor"ance %it! an" -'rs'ant to t!e -rovisions o1 t!e R'les o1 Co'rt T!e a't!orit7 to a":'"icate *rante" to t!e Co22issioner 'n"er t!is section s!all #e conc'rrent %it! t!at o1 t!e civil co'rts0 #'t t!e 1ilin* o1 a co2-laint %it! t!e Co22issioner s!all -recl'"e t!e civil co'rts 1ro2 ta$in* co*ni9ance o1 a s'it involvin* t!e sa2e s'#:ect 2atter An7 "ecision0 or"er or r'lin* ren"ere" #7 t!e Co22issioner a1ter a !earin* s!all !ave t!e 1orce an" e11ect o1 a :'"*2ent An7 -art7 2a7 a--eal 1ro2 a 1inal or"er0 r'lin* or "ecision o1 t!e Co22issioner #7 1ilin* %it! t!e Co22issioner %it!in t!irt7 "a7s 1ro2 recei-t o1 co-7 o1 s'c! or"er0 r'lin* or "ecision a notice o1 a--eal to t!e Inter2e"iate A--ellate Co'rt in t!e 2anner -rovi"e" 1or in t!e R'les o1 Co'rt 1or a--eals 1ro2 t!e Re*ional Trial Co'rt to t!e Inter2e"iate A--ellate Co'rt (As a2en"e" #7 >atas Pa2#ansa >l* FE.) As soon as a "ecision0 or"er or r'lin* !as #eco2e 1inal an" e3ec'tor70 t!e Co22issioner s!all 2ot' -ro-rio or on 2otion o1 t!e intereste" -art70 iss'e a %rit o1 e3ec'tion re4'irin* t!e s!eri11 or t!e -ro-er o11icer to %!o2 it is "irecte" to e3ec'te sai" "ecision0 or"er or a%ar"0 -'rs'ant to R'le t!irt7nine o1 t!e R'les o1 Co'rt Cor t!e -'r-ose o1 an7 -rocee"in* 'n"er t!is section0 t!e Co22issioner0 or an7 o11icer t!ereo1 "esi*nate" #7 !i20 e2-o%ere" to a"2inister oat!s an" a11ir2ation0 s'#-oena %itnesses0 co2-el t!eir atten"ance0 ta$e evi"ence0 an" re4'ire t!e -ro"'ction o1 an7 #oo$s0 -a-ers0 "oc'2ents0 or contracts or ot!er recor"s %!ic! are relevant or 2aterial to t!e in4'ir7 In case o1 cont'2ac7 #70 or re1'sal to o#e7 a s'#-oena iss'e" to an7 -erson0 t!e Co22issioner 2a7 invo$e t!e ai" o1 an7 co'rt o1 1irst instance %it!in t!e :'ris"iction o1 %!ic! s'c! -rocee"in* is carrie" on0 %!ere s'c! -erson resi"es or carries on !is o%n #'siness0 in re4'irin* t!e atten"ance an" testi2on7 o1 %itnesses an" t!e -ro"'ction o1 #oo$s0 -a-ers0 "oc'2ents0 contracts or ot!er recor"s An" s'c! co'rt 2a7 iss'e an or"er re4'irin* s'c! -erson to a--ear #e1ore t!e Co22issioner0 or o11icer "esi*nate" #7 t!e Co22issioner0 t!ere to -ro"'ce recor"s0 i1 so or"ere" or to *ive testi2on7 to'c!in* t!e 2atter in 4'estion An7 1ail're to o#e7 s'c! or"er o1 t!e co'rt 2a7 #e -'#lis!e" #7 s'c! co'rt as a conte2-t t!ereo1

SPC )a% >atc! +?1.

83

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) A 1'll an" co2-lete recor" s!all #e $e-t o1 all -rocee"in*s !a" #e1ore t!e co22issioner0 or t!e o11icers t!ereo1 "esi*nate" #7 !i20 an" all testi2on7 s!all #e ta$en "o%n an" transcri#e" #7 a steno*ra-!er a--ointe" #7 t!e Co22issioner A transcri#e" co-7 o1 t!e evi"ence an" -rocee"in*0 or an7 s-eci1ic -art t!ereo10 o1 an7 !earin* ta$en #7 a steno*ra-!er a--ointe" #7 t!e Co22issioner0 #ein* certi1ie" #7 s'c! steno*ra-!er to #e a tr'e an" correct transcri-t o1 t!e testi2on7 on t!is !earin* o1 a -artic'lar %itness0 or o1 a s-eci1ic -roo1 t!ereo10 care1'll7 co2-are" #7 !i2 1ro2 !is ori*inal notes0 an" to #e a correct state2ent o1 evi"ence an" -rocee"in* !a" in s'c! !earin* so -'r-ortin* to #e ta$en an" s'#scri#e"0 2a7 #e receive" as evi"ence #7 t!e Co22issioner an" #7 an7 co'rt %it! t!e sa2e e11ect as i1 s'c! steno*ra-!er %ere -resent an" testi1ie" to t!e 1acts so certi1ie" (As a2en"e" #7 Presi"ential Decree No 1.;;) Title + CEES AND OTHER SOURCES OC CUNDS Sec .1E (1) Cor t!e iss'ance or rene%al o1 certi1icates o1 a't!orit70 licenses an" certi1icates o1 re*istration0 -'rs'ant to -ertinent -rovisions o1 t!is Co"e0 t!e Co22issioner s!all collect an" receive 1ees %!ic! s!all #e not less t!an t!e 1ollo%in*5c!anro#lesvirt'alla%li#rar7 Cor eac! certi1icate o1 a't!orit7 iss'e" to an ins'rance co2-an7 "oin* #'siness in t!e P!ili--ines0 t%o !'n"re" -esos Cor eac! s-ecial certi1icate o1 a't!orit7 iss'e" to a servicin* ins'rance co2-an70 one !'n"re" -esos Cor eac! license iss'e" to a *eneral a*ent o1 an ins'rance co2-an70 1i1t7 -esos Cor eac! license iss'e" to an ins'rance a*ent0 t%ent7-1ive -esos Cor eac! license iss'e" to an a*ent o1 varia#le contract -olic70 t%ent7-1ive -esos Cor eac! license iss'e" to an ins'rance #ro$er0 one !'n"re" -esos Cor eac! license iss'e" to an reins'rance #ro$er0 one !'n"re" -esos Cor eac! license iss'e" to an ins'rance a":'ster0 one !'n"re" -esos Cor eac! certi1icate o1 re*istration iss'e" to an act'ar70 1i1t7 -esos Cor eac! certi1icate o1 re*istration iss'e" to a resi"ent a*ent0 1i1t7 -esos Cor eac! license iss'e" to a ratin* or*ani9ation0 one !'n"re" -esos Cor eac! certi1icate o1 re*istration iss'e" to a non-li1e co2-an7 'n"er%riter0 1i1t7 -esos Cor eac! license iss'e" to a 2't'al #ene1it association0 ten -esos Cor eac! certi1icate o1 re*istration iss'e" to a tr'st 1or c!arita#le 'ses0 ten -esos All certi1icates o1 a't!orit7 an" all ot!er licenses0 as %ell as all certi1icates o1 re*istration0 iss'e" to an7 -erson0 -artners!i-0 association or cor-oration 'n"er t!e -ertinent -rovisions o1 t!is Co"e 1or %!ic! no e3-iration "ate !as #een -rescri#e"0 s!all e3-ire on t!e last "a7 o1 J'ne o1 eac! 7ear an" s!all #e rene%e" ann'all7 '-on a--lication t!ere1or an" -a72ent o1 t!e corres-on"in* 1ee0 i1 t!e licensee or !ol"er o1 s'c! license or certi1icate is contin'in* to co2-l7 %it! all t!e a--lica#le -rovisions o1 e3istin* la%s0 an" o1 r'les0 instr'ctions0 or"ers an" "ecisions o1 t!e Co22issioner (+) Cor t!e 1ilin* o1 t!e ann'al state2ent re1erre" to in section t%o !'n"re" t%ent7-t!ree0 t!e Co22issioner s!all collect an" receive 1ro2 t!e ins'rance co2-an7 so 1ilin* a 1ee o1 1ive !'n"re" -esos5 Provi"e"0 T!at a 1ine o1 one !'n"re" -esos s!all #e i2-ose" an" collecte" #7 t!e Co22issioner 1or eac! %ee$ o1 "ela70 or an7 1raction t!ereo10 in t!e 1ilin* o1 t!e ann'al state2ent Cor t!e 1ilin* o1 ann'al state2ent re1erre" to in section 1o'r !'n"re"0 t!e Co22issioner s!all collect an" receive 1ro2 t!e 2't'al #ene1it association so 1ilin* a 1ee o1 ten -esos5 Provi"e"0 T!at a 1ine o1 ten -esos s!all #e i2-ose" an" collecte" #7 t!e Co22issioner 1or eac! %ee$ o1 "ela70 or an7 1raction t!ereo10 in t!e 1ilin* o1 t!e ann'al state2ent (,) Cor t!e e3a2ination -rescri#e" in section t%o !'n"re" 1ort7-si30 t!e Co22issioner s!all collect an" receive 1ees accor"in* to t!e a2o'nt o1 its total assets0 in t!e case o1 a "o2estic co2-an70 or o1 its assets in t!e P!ili--ines0 in t!e case o1 a 1orei*n co2-an70 as 1ollo%s5c!anro#lesvirt'alla%li#rar7 (a) T%o 2illion -esos or 2ore #'t less t!an 1o'r 2illion -esos0 Co'r !'n"re" -esos8

SPC )a% >atc! +?1.

84

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66) (#) Co'r 2illion -esos or 2ore #'t less t!an si3 2illion -esos0 Ei*!t !'n"re" -esos8 (c) Si3 2illion -esos or 2ore #'t less t!an ei*!t 2illion -esos0 One t!o'san" t%o !'n"re" -esos8 (") Ei*!t 2illion -esos or 2ore #'t less t!an ten 2illion -esos0 One t!o'san" si3 !'n"re" -esos8 (e) Ten 2illion -esos or 2ore0 T%o t!o'san" -esos8 Provi"e"0 T!at i1 t!e sai" e3a2ination is 2a"e in -laces o'tsi"e t!e Aetro-olitan Aanila area0 #esi"es t!ese 1ees0 t!e Co22issioner s!all re4'ire o1 t!e co2-an7 e3a2ine" t!e -a72ent o1 t!e act'al an" necessar7 travellin* an" s'#sistence e3-enses o1 t!e e3a2iner or e3a2iners concerne" Cor t!e e3a2ination -rescri#e" in section t!ree !'n"re" ninet7-nine0 t!e Co22issioner s!all collect an" receive a 2ini2'2 1ee o1 one !'n"re" -esos 1ro2 t!e 2't'al #ene1it association e3a2ine"5 Provi"e"0 T!at i1 s'c! association !as total assets o1 2ore t!an one !'n"re" t!o'san" -esos0 an a""itional 1ee o1 ten -esos 1or ever7 1i1t7 t!o'san" -esos in e3cess t!ereo1 s!all #e i2-ose"5 Provi"e"0 1'rt!er0 T!at s'c! 1ee s!all not e3cee" t%o t!o'san" -esos (.) Cor t!e 1ilin* o1 an a--lication to %it!"ra% 1ro2 t!e P!ili--ines 'n"er title ei*!teen0 t!e Co22issioner s!all collect an" receive 1ro2 t!e 1orei*n co2-an7 so %it!"ra%in* a 1ee o1 one t!o'san" -esos (;) T!e Co22issioner 2a7 1i3 an" collect 1ees or c!ar*es 1or "oc'2ents0 transcri-ts0 or ot!er 2aterials %!ic! 2a7 #e 1'rnis!e" #7 !i2 not in e3cess o1 reasona#le cost (As a2en"e" #7 Presi"ential Decree No 1.;;) Sec .1F I1 t!e total e3-enses o1 t!e Ins'rance Co22issioner 1or ever7 1iscal 7ear e3cee" t!e a**re*ate a2o'nt o1 t!e 1ees collecte" 'n"er t!e -ertinent -rovisions o1 t!is Co"e0 t!e e3cess s!all #e c!ar*e" a*ainst t!e Ins'rance C'n"0 %!ic! s!all !erea1ter #e create" o't o1 t!e -rocee"s o1 ta3es on ins'rance -re2i'2s 2entione" in section t%o !'n"re" 1i1t7-1ive o1 t!e National Internal Reven'e Co"e0 as a2en"e"5 Provi"e"0 !o%ever0 T!at -en"in* t!e creation o1 sai" Ins'rance C'n"0 t!e -rovisions o1 section t%o0 t!ree an" 1o'r o1 Re-'#lic Act N'2#ere" T%o H'n"re" Sevent7-Cive0 s!all contin'e to re2ain in 1orce an" e11ect AISCE))ANEOUS PROIISIONS Sec .1G An7 -erson0 co2-an7 or cor-oration s'#:ect to t!e s'-ervision an" control o1 t!e Co22issioner %!o violates an7 -rovision o1 t!is Co"e0 1or %!ic! no -enalt7 is -rovi"e"0 s!all #e "ee2e" *'ilt7 o1 a -enal o11ense0 an" '-on conviction #e -'nis!e" #7 a 1ine not e3cee"in* ten t!o'san" -esos or i2-rison2ent o1 si3 2ont!s0 or #ot!0 at t!e "iscretion o1 t!e co'rt I1 t!e o11ense is co22itte" #7 a co2-an7 or cor-oration0 t!e o11icers0 "irectors0 or ot!er -ersons res-onsi#le 1or its o-eration0 2ana*e2ent0 or a"2inistration0 'nless it can #e -rove" t!at t!e7 !ave ta$en no -art in t!e co22ission o1 t!e o11ense0 s!all li$e%ise #e *'ilt7 o1 a -enal o11ense0 an" '-on conviction #e -'nis!e" #7 a 1ine not e3cee"in* ten t!o'san" -esos or i2-rison2ent o1 si3 2ont!s0 or #ot!0 at t!e "iscretion o1 t!e co'rt Sec .+? All cri2inal actions 1or t!e violation o1 an7 o1 t!e -rovisions o1 t!is Co"e s!all -rescri#e" a1ter t!ree 7ears 1ro2 t!e "iscover7 o1 s'c! violation5 Provi"e"0 T!at s'c! actions s!all in an7 event -rescri#e a1ter ten 7ears 1ro2 t!e co22ission o1 s'c! violation Sec .+1 An7 -erson0 -artners!i-0 association or cor-oration !ereto1ore a't!ori9e"0 license" or re*istere" #7 t!e Ins'rance Co22issioner s!all #e "ee2e" to !ave #een a't!ori9e"0 license" or re*istere" 'n"er t!e -rovisions o1 t!is Co"e an" s!all #e *overne" #7 t!e -rovisions t!ereo15 Provi"e"0 !o%ever0 T!at %!ere an7 s'c! -erson0 -artners!i-0 association or cor-oration is a11ecte" #7 t!e ne% re4'ire2ents o1 t!is Co"e0 sai" -erson0 -artners!i- association or cor-oration s!all0 'nless ot!er%ise !erein -rovi"e"0 #e *iven a -erio" o1 one 7ear 1ro2 t!e e11ectivit7 o1 t!is Co"e %it!in %!ic! to co2-l7 %it! t!e sa2e Sec .++ E3ce-t as e3-ressl7 -rovi"e" #7 t!is Co"e0 all la%s or -arts t!ereo1 inconsistent %it! an7 -rovision o1 t!is Co"e s!all #e "ee2e" re-eale" Sec .+, S!o'l" an7 -rovisions o1 t!is Co"e or an7 -art t!ereo1 #e "eclare" invali"0 t!e ot!er -rovisions0 so 1ar as t!e7 are se-ara#le 1ro2 t!e invali" ones0 s!all re2ain in 1orce Sec .+. T!is Co"e s!all ta$e e11ect i22e"iatel7 DONE in t!e Cit7 o1 Aanila0 t!is 1Ft! "a7 o1 Dece2#er0 in t!e 7ear o1 O'r )or"0 nineteen !'n"re" an" sevent7-1o'r
85

SPC )a% >atc! +?1.

THE INSURANCE CODE (General Provisions to Title 6 - Sections 1 to 66)

CERDINAND E AARCOS Presi"ent >ac$ to To- - >ac$ to Ho2e Since 1G ?E GF

SPC )a% >atc! +?1.

86

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