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CHAPTER VIII — THE INSURANCE COMMISSIONER

Title I ADMINISTRATIVE AND ADJUDICATORY POWERS

SECTION 414. The Insurance Commissioner shall have the duty to see that all laws relating to insurance, insurance companies & other insurance matters, mutual benefit associations, & trusts for charitable uses are faithfully executed & to perform the duties imposed upon him by this Code, & shall, notwithstanding any existing laws to the contrary, have sole & exclusive authority to regulate the issuance & sale of variable contracts as defined in section two hundred thirty‑two & to provide for the licensing of persons selling such contracts, & to issue such reasonable rules & regulations governing the same.

The Commissioner may issue such ruling, instructions, circulars, orders & decision as he may deem necessary to secure the enforcement of the provisions of this Code, subject to the approval of the Secretary of Finance. Except as otherwise specified, decisions made by the Commissioner shall be appealable to the Secretary of Finance.

SECTION 415. In addition to the administrative sanctions provided elsewhere in this Code, the Insurance Commissioner is hereby authorized, at his discretion, to impose upon the insurance companies, their directors &/or officers &/or agents, for any willful failure or refusal to comply w/, or violation of any provision of this Code, or any order, instruction, regulation, or ruling of the Insurance Commissioner, or any commission or irregularities, &/or conducting business in an unsafe or unsound manner as may be determined by the Insurance Commissioner, the following:

(a) fines not in excess of five hundred pesos a day; &

(b) suspension, or after due hearing, removal of directors &/or officers &/or agents.

SECTION 416. The Commissioner shall have the power to adjudicate claims & complaints involving any loss, damage or liability for w/c in insurer may be answerable under any kind of policy or contract of insurance, or for w/c such insurer may be liable under a contract of suretyship, or for w/c a reinsurer may be sued under any contract of reinsurance it may have entered into; or for w/c a mutual benefit association may be held liable under the membership certificates it has issued to its members, where the amount of any such loss, damage or liability, excluding interest, cost & attorney’s fees, being claimed or sued upon any kind of insurance, bond, reinsurance contract, or membership certificate does not exceed in any single claim one hundred thousand pesos.

The insurer or surety may, in the same action file a counterclaim against the insured or the obligee.

The insurer or surety may also file a cross‑claim against a party for any claim arising out of the transaction or occurrence that is the subject matter of the original action or of a counterclaim therein. cdasia

With leave of the Commissioner, an insurer or surety may file a third‑party complaint against its reinsurers for indemnification, contribution, subrogation or any other relief, in respect of the transaction that is the subject matter of the original action filed w/ the Commissioner.

The party filing an action pursuant to the provisions of this section thereby submits his person to the jurisdiction of the Commissioner. The Commissioner shall acquire jurisdiction over the person of the impleaded party or parties in accordance w/ & pursuant to the provisions of the Rules of Court.

The authority to adjudicate granted to the Commissioner under this section shall be concurrent w/ that of the civil courts, but the filing of a complaint w/ the Commissioner shall preclude the civil courts fr. taking cognizance of a suit involving the same subject matter.

Any decision, order or ruling rendered by the Commissioner after a hearing shall have the force & effect of a judgment. Any party may appeal fr. a final order, ruling or decision of the Commissioner by filing w/ the Commissioner within thirty days fr. receipt of copy of such order, ruling or decision a notice of appeal to the Intermediate Appellate Court in the manner provided for in the Rules of Court for appeals fr. the Regional Trial Court to the Intermediate Appellate Court. (As amended by Batasang Pambansa Blg. 874)

As soon as a decision, order or ruling has become final & executory, the Commissioner shall motu propio or on motion of the interested party, issue a writ of execution required the sheriff or the proper officer to whom it is directed to execute said decision, order or award, pursuant to Rule thirty‑nine of the Rules of Court.

For the purpose of any proceeding under this section, the Commissioner, or any officer thereof designated by him, empowered to administer oaths & affirmation, subpoena witnesses, compel their attendance, take evidence, & require the production of any books, papers, documents, or contracts or other records w/c are relevant or material to the inquiry. In case of contumacy by, or refusal to obey a subpoena issued to any person, the Commissioner may invoke the aid of any court of first instance within the jurisdiction of w/c such proceeding is carried on, where such person resides or carries on his own business, in requiring the attendance & testimony of witnesses & the production of books, papers, documents, contracts or other records. And such court may issue an order requiring such person to appear before the Commissioner, or officer designated by the Commissioner, there to produce records, if so ordered or to give testimony touching the matter in question. Any failure to obey such order of the court may be published by such court as a contempt thereof.

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

A transcribed copy of the evidence & proceeding, or any specific part thereof, of any hearing taken by a stenographer appointed by the Commissioner, being certified by such stenographer to be a true & correct transcript of the testimony on this hearing of a particular witness, or of a specific proof thereof, carefully compared by him fr. his original notes, & to be a correct statement of evidence & proceeding had in such hearing so purporting to be taken & subscribed, may be received as evidence by the Commissioner & by any court w/ the same effect as if such stenographer were present & testified to the facts so certified. (As amended by Presidential Decree No. 1455)

Title II FEES AND OTHER SOURCES OF FUNDS

SECTION 417.

(1) For the issuance or renewal of certificates of authority, licenses & certificates of registration, pursuant to pertinent provisions of this Code, the Commissioner shall collect & receive fees w/c shall be not less than the following:

v For each certificate of authority issued to an insurance company doing business in the Philippines, two hundred pesos.

v For each special certificate of authority issued to a servicing insurance company, one hundred pesos.

v For each license issued to a general agent of an insurance company, fifty pesos.

v For each license issued to an insurance agent, twenty‑five pesos.

v For each license issued to an agent of variable contract policy, twenty‑five pesos.

v For each license issued to an insurance broker, one hundred pesos.

v For each license issued to an reinsurance broker, one hundred pesos.

v For each license issued to an insurance adjuster, one hundred pesos.

v For each certificate of registration issued to an actuary, fifty pesos.

v For each certificate of registration issued to a resident agent, fifty pesos.

v For each license issued to a rating organization, one hundred pesos.

v For each certificate of registration issued to a non‑life company underwriter, fifty pesos.

v For each license issued to a mutual benefit association, ten pesos.

v For each certificate of registration issued to a trust for charitable uses, ten pesos.

All certificates of authority & all other licenses, as well as all certificates of registration, issued to any person, partnership, association or corporation under the pertinent provisions of this Code for w/c no expiration date has been prescribed, shall expire on the last day of June of each year & shall be renewed annually upon application therefor & payment of the corresponding fee, if the licensee or holder of such license or certificate is continuing to comply w/ all the applicable provisions of existing laws, & of rules, instructions, orders & decisions of the Commissioner.

(2) For the filing of the annual statement referred to in section two hundred twenty‑three, the Commissioner shall collect & receive fr. the insurance company so filing a fee of five hundred pesos; Provided, That a fine of one hundred pesos shall be imposed & collected by the Commissioner for each week of delay, or any fraction thereof, in the filing of the annual statement.

For the filing of annual statement referred to in section four hundred, the Commissioner shall collect & receive fr. the mutual benefit association so filing a fee of ten pesos; Provided, That a fine of ten pesos shall be imposed & collected by the Commissioner for each week of delay, or any fraction thereof, in the filing of the annual statement.

(3) For the examination prescribed in section two hundred forty‑six, the Commissioner shall collect & receive fees according to the amount of its total assets, in the case of a domestic company, or of its assets in the Philippines, in the case of a foreign company, as follows:

(a) Two million pesos or more but less than four million pesos, Four hundred pesos;

(b) Four million pesos or more but less than six million pesos, Eight hundred pesos;

(c) Six million pesos or more but less than eight million pesos, One thousand two hundred pesos;

(d) Eight million pesos or more but less than ten million pesos, One thousand six hundred pesos;

(e) Ten million pesos or more, Two thousand pesos;

Provided, That if the said examination is made in places outside the Metropolitan Manila area, besides these fees, the Commissioner shall require of the company examined the payment of the actual & necessary travelling & subsistence expenses of the examiner or examiners concerned.

For the examination prescribed in section three hundred ninety‑nine, the Commissioner shall collect & receive a minimum fee of one hundred pesos fr. the mutual benefit association examined; Provided, That if such association has total assets of more than one hundred thousand pesos, an additional fee of ten pesos for every fifty thousand pesos in excess thereof shall be imposed; Provided, Further, That such fee shall not exceed two thousand pesos.

(4) For the filing of an application to withdraw fr. the Philippines under title eighteen, the Commissioner shall collect & receive fr. the foreign company so withdrawing a fee of one thousand pesos.

(5) The Commissioner may fix & collect fees or charges for documents, transcripts, or other materials w/c may be furnished by him not in excess of reasonable cost. (As amended by Presidential Decree No. 1455)

SECTION 418. If the total expenses of the Insurance Commissioner for every fiscal year exceed the aggregate amount of the fees collected under the pertinent provisions of this Code, the excess shall be charged against the Insurance Fund, w/c shall hereafter be created out of the proceeds of taxes on insurance premiums mentioned in section two hundred fifty‑five of the National Internal Revenue Code, as amended; Provided, however, That pending the creation of said Insurance Fund, the provisions of section two, three & four of Republic Act Numbered Two Hundred Seventy‑Five, shall continue to remain in force & effect.

MISCELLANEOUS PROVISIONS

SECTION 419. Any person, company or corporation subject to the supervision & control of the Commissioner who violates any provision of this Code, for w/c no penalty is provided, shall be deemed guilty of a penal offense, & upon conviction be punished by a fine not exceeding ten thousand pesos or imprisonment of six months, or both, at the discretion of the court.

If the offense is committed by a company or corporation, the officers, directors, or other persons responsible for its operation, management, or administration, unless it can be proved that they have taken no part in the commission of the offense, shall likewise be guilty of a penal offense, & upon conviction be punished by a fine not exceeding ten thousand pesos or imprisonment of six months, or both, at the discretion of the court.

SECTION 420. All criminal actions for the violation of any of the provisions of this Code shall prescribed after three years fr. the discovery of such violation: Provided, That such actions shall in any event prescribe after ten years fr. the commission of such violation.

SECTION 421. Any person, partnership, association or corporation heretofore authorized, licensed or registered by the Insurance Commissioner shall be deemed to have been authorized, licensed or registered under the provisions of this Code & shall be governed by the provisions thereof: Provided, however, That where any such person, partnership, association or corporation is affected by the new requirements of this Code, said person, partnership association or corporation shall, unless otherwise herein provided, be given a period of one year fr. the effectivity of this Code within w/c to comply w/ the same.

SECTION 422. Except as expressly provided by this Code, all laws or parts thereof inconsistent w/ any provision of this Code shall be deemed repealed.

SECTION 423. Should any provisions of this Code or any part thereof be declared invalid, the other provisions, so far as they are separable fr. the invalid ones, shall remain in force.

SECTION 424. This Code shall take effect immediately.

CHAPTER VII — MUTUAL BENEFIT ASSOCIATIONS AND TRUSTS FOR CHARITABLE USES

Title I MUTUAL BENEFIT ASSOCIATIONS

SECTION 390. Any society, association or corporation, without capital stock, formed or organized not for profit but mainly for the purpose of paying sick benefits to members, or of furnishing financial support to members while out of employment, or of paying to relatives of deceased members of fixed or any sum of money, irrespective of whether such aim or purpose is carried out by means of fixed dues or assessments collected regularly fr. the members, or of providing, by the issuance of certificates of insurance, payment of its members of accident or life insurance benefits out of such fixed & regular dues or assessments, but in no case shall include any society, association, or corporation w/ such mutual benefit features & w/c shall be carried out purely fr. voluntary contributions collected not regularly & or no fixed amount fr. whomsoever may contribute, shall be known as a mutual benefit association within the intent of this Code.

Any society, association, or corporation principally organized as labor union shall be governed by the Labor Code notwithstanding any mutual benefit feature provisions in its charter as incident to its organization.

In no case shall a mutual benefit association be organized & authorized to transact business as a charitable or benevolent organization, & whenever it has this feature as incident to its existence, the corresponding charter provision shall be revised to conform w/ the provision of this section. Mutual benefit association, already licensed to transact business as such on the date this Code becomes effective, having charitable or benevolent feature shall abandon such incidental purpose upon effectivity of this Code if they desire to continue operating as such mutual benefit associations. (As amended by Presidential Decree No. 1455)

SECTION 391. A mutual benefit association, before it may transact as such, must first secure a license fr. the Commissioner. The application for such license shall be filed w/ the Commissioner together w/ certified true copies of the articles of incorporation or the constitution & by‑laws of the association, & all amendments thereto, & such other documents or testimonies as the Commissioner may require.

No license shall be granted to a mutual benefit association until the Commissioner shall have been satisfied by such examination as may make & such evidence as he may require that the association is qualified under existing laws to operate & transact business as such. The Commissioner may refuse to issue a license to any mutual benefit association if, in his judgment, such refusal will best promote the interest of the members of such association & of the people of this country. Any license issued shall expire on the last day of June of the year following its issuance &, upon proper application, may be renewed if the association is continuing to comply w/ existing laws, rules & regulations, orders, instructions, rulings & decisions of the Commissioner. Every association receiving any such license shall be subject to the supervision of the Commissioner; Provided, That no such license shall be granted to any such association if such association has no actuary.

All mutual benefit association existing & licensed as such under the provisions of Article Eight, Chapter Forty‑One of the Revised Administrative Code, as amended by Act No. 3612, shall, upon effectivity of this Code, surrender their respective licenses to the Commissioner & apply for new licenses under the provisions of this code if they still desire to continue operating as such mutual benefit associations.

SECTION 392. No mutual benefit association shall be issued a license to operate as such unless it has constituted & established a Guaranty Fund by depositing w/ the Commissioner an initial minimum amount of ten thousand pesos in cash, or in government securities w/ a total value equal to such amount, to answer for any valid benefit claim of any of its members.

All moneys received by the Commissioner for this purpose must be deposited by him in interest‑bearing deposits w/ any bank or banks authorized to transact business in the Philippines for the account of the particular association constituting the Guaranty Fund.

Any accrual to such fund, be it interest earned or dividend additions on moneys or securities so deposited, may, w/ the prior approval of the Commissioner, be withdrawn by the association if there is no pending benefit claim against it, including interest thereon or dividend additions thereto.

The Commissioner, prior to or after licensing a mutual benefit association, may require such association to increase its Guaranty Fund fr. the initial minimum amount required to an amount equal to at least ten per centum of its assets, if such assets exceed one hundred thousand pesos, but in no case shall such increase exceed the maximum amount of capital investment required of a domestic insurance company under section two hundred & three of this Code. (As amended by Presidential Decree No. 1455)

SECTION 393. Every mutual benefit association licensed to do business as such shall issue membership certificates to its members specifying the benefits to w/c such members are entitled.

Such certificates, together w/ the articles of incorporation of the association or its constitution & by‑laws, & all existing laws as may be pertinent shall constitute the agreement, as of the date of its issuance, between the association & the member. The membership certificate shall be in a form previously approved by the Commissioner.

SECTION 394. A mutual benefit association may, by reinsurance agreement, cede in whole or in part any individual risk or risks under certificates of insurance issued by it, only to a life insurance company authorized to transact business or to a professional reinsurer authorized to accept life risks in the Philippines; Provided, That copy of the draft of such reinsurance agreement shall be submitted to the Commissioner for his approval. The association may take credit for the reserves on such ceded risks to the extent reinsured.

SECTION 395. The constitution or by‑laws of a mutual benefit association must distinctly state the purpose for w/c dues &/or assessments are made & collected & the portion thereof w/c may be used for expenses.

Death benefit & other relief funds shall be created & used exclusively for paying benefits due the members under their respective membership certificates. A general fund shall likewise be created & used for expenses of administration of the association.

SECTION 396. Every outstanding membership certificate must have, after three full years of being continuously in force, an equity value equivalent to at least fifty per centum of the total membership dues collected thereon.

SECTION 397. Every mutual benefit association must accumulate & maintain, out of the periodic dues collected fr. its members, sufficient reserves for the payment of claims or obligations for w/c it shall hold funds in securities satisfactory to the Commissioner consisting of bonds of the Government of the Philippines, or any of its political subdivisions & instrumentalities, or in such other good securities as may be approved by the Commissioner.

The reserve liability shall be established in accordance w/ acturial procedures & shall be approved by the Commissioner.

The articles of incorporation or the constitution & by‑laws of a mutual benefit association must provide that if its reserve as to all or any class of certificates becomes impaired, its board of directors or trustees may require that there shall be paid by the members to the association the amount of the members’ equitable proportion of such deficiency as ascertained by said board & that if the payment be not made it shall stand as an indebtedness against the membership certificates of the defaulting members & draw interest not to exceed five per centum per annum compounded annually.

SECTION 398. A mutual benefit association may invest such portion of its funds as shall not be required to meet pending claims & other obligations in any of the classes of investments or types of securities in w/c life insurance companies doing business in the Philippines may invest.

It may also grant loans to members on the security of a pledge or chattel mortgage of personal properties of the borrowers, or in the absence thereof, on the security of the membership certificate of the borrowing members, in w/c event such loan shall become a first lien on the proceed thereof.

SECTION 399. The Commissioner or any of his duly designated representatives, shall have the power of visitation, audit & examination into the affairs, financial condition, & methods of doing business of all mutual benefit associations, & he shall cause such examination to be made at least once every two years or whenever it may be deemed proper & necessary. Free access to the books, records & documents of the association shall be accorded to the Commissioner, to his representatives, in such manner that the Commissioner or his representatives may readily verify or determine the true affairs, financial condition, & method of doing business of such association. In the course of such examination, the Commissioner or his duly designated representatives shall have authority to administer oaths & take testimony or other evidence on any matter relating to the affairs of the association.

All minutes of the proceedings of the board of directors or trustees of the association, & those of the regular or special meetings of the members, shall be take, & a copy thereof, in English or in Pilipino, shall be submitted to the Commissioner’s representatives or examiners in the course of such examination.

A copy of the findings of such examination, together w/ the recommendations of the Commissioner, shall be furnished the association for its information & compliance, & the same shall be taken up immediately in the meetings of the board of directors or trustees & of the members of the association.

SECTION 400. Every mutual benefit association shall, annually on or before the thirtieth day of April of each year, render to the Commissioner an annual statement in such form & details as may be prescribed by the Commissioner, signed & sworn to by the president, secretary, treasurer, & actuary of the association, showing the exact condition of its affairs on the preceding thirty‑first day of December.

SECTION 401. No money, aid or benefit to be paid, provided or tendered by any mutual benefit association, shall be liable to attachment, garnishment, or other process, or be seized, taken, appropriated, or applied by any legal or equitable process to pay any debt of liability of a member or beneficiary, or any other person who may have a right thereunder, either before or after payment.

SECTION 402. Any member of a mutual benefit association shall have the right at all times to change the beneficiary or beneficiaries or add another beneficiary or other beneficiaries in accordance w/ the rules & regulations of the association unless he has expressly waived this right in the membership certificate. Every association may, under such rules as it may adopt, limit the scope of beneficiaries & provide that no beneficiary shall have or obtain any vested interest in the proceeds of any certificate until the certificate has become due & payable under the terms of the membership certificate.

SECTION 403. Any chapter affiliate independently licensed as a mutual benefit association may consolidate or merge w/ any other similar chapter affiliate or w/ the mother association.

SECTION 404. Any mutual benefit association may be converted into & licensed as a mutual life insurance company by complying w/ the requirements of the pertinent provisions of this Code & submitting the specific plan for such conversion to the Commissioner for his approval. Such plan, as approved, shall then be submitted to the members either in the regular meeting or in a special meeting called for the purpose for their adoption. The affirmative vote of at least two‑thirds of all the members shall be necessary in order to consider such plan as adopted.

No such conversion shall take effect unless & until approved by the Commissioner.

SECTION 405. No mutual benefit association shall be dissolved without first notifying the Commissioner & furnishing him w/ a certified copy of the resolution authorizing the dissolution, duly adopted by the affirmative vote of two‑thirds of the members at a meeting called for that purpose, the financial statements as of the date of the resolution, & such other papers or documents as may be required by the Commissioner.

No dissolution shall proceed until & unless approved by the Commissioner & all proceedings in connection therewith shall be witnessed & attested by his duly designated representative.

No mutual benefit association shall be officially declared as dissolved until after the Commissioner so certifies that all outstanding claims against the association have been duly settled & liquidated.

SECTION 406. The Commissioner shall after notice & hearing, have the power either to suspend or revoke the licensed issued to a mutual benefit association if he finds that the association has:

(a) failed to comply w/ any provision of this Code;

(b) failed to comply w/ any other law or regulation obligatory upon it;

(c) failed to comply w/ any order, ruling, instruction, requirement, or recommendation of the Commissioner;

(d) exceeded its power to the prejudice of its members;

(e) conducted its business fraudulently or hazardously;

(f) rendered its affairs & condition to one of insolvency; or

(g) failed to carry out its aims & purposes for w/c it was organized due to any cause.

After receipt of the order fr. the Commissioner suspending or revoking the license, the association must immediately exert efforts to remove such cause or causes w/c brought about the order, &, upon proper showing, may apply w/ the Commissioner for the lifting of the order & restoration or revival of the license so revoked or suspended.

SECTION 407. For failure to remove such cause or causes w/c brought about the suspension or revocation of the license of a mutual benefit association, the Commissioner shall apply under this Code for an order fr. the proper court to liquidate such association.

The provisions of titles fourteen & fifteen, chapter three, pertaining to the appointment of a conservator & proceedings upon insolvency of an insurance company, shall, insofar as practicable, apply to mutual benefit associations.

SECTION 408. To secure the enforcement of any provision under this title, the Commissioner may issue such rules, rulings, instructions, orders & circulars, subject to the approval of the Secretary of Finance.

SECTION 409. The violation of any provision of this title shall subject the person violating or the officer of the association responsible therefor to a fine of not exceeding one thousand pesos, or imprisonment of not exceeding three years, or both such fine & imprisonment, at the discretion of the court.

Title II TRUSTS FOR CHARITABLE USES

SECTION 410. The term “trust for charitable uses”, within the intent of this Code, shall include, all the real or personal properties or funds, as well as those acquired w/ the fruits or income therefr. or in exchange or substitution thereof, given to or received by any person, corporation, association, foundation, or entity, except the National Government, it instrumentalities or political subdivisions, for charitable, benevolent, educational, pious, religious, or other uses for the benefit of the public at large or a particular portion thereof or for the benefit of an indefinite number of persons.

SECTION 411. The term “trustee” shall include any individual, corporation, association, foundation, or entity, except the National Government, its instrumentalities or political subdivisions, in charge of, or acting for, or concerned w/ the administration of, the trust referred to in the section immediately preceding & w/ the proper application of trust property.

SECTION 412. The term “trust property” shall include all real or personal properties or funds pertaining to the trust as well as those acquired w/ the fruits or income therefr. or in exchange or substitution thereof.

SECTION 413. All trustees shall, before entering in the performance of the duties of their trust, obtain a certificate of registration fr. the Commissioner.

Trustees who are already discharging the duties of their trust on the date this Code becomes effective may continue as such, subject to the provisions of this Code.

All provisions of this Code governing mutual benefit associations & such other provisions herein, whenever practicable & necessary, shall be applicable to trusts for charitable uses.

CHAPTER VI — COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE

SECTION 373. For purposes of this chapter:

(a) “Motor Vehicle” is any vehicle as defined in section three, paragraph (a) of Republic Act Numbered Four Thousand One Hundred Thirty‑Six, Otherwise known as the “Land Transportation & Traffic Code.”

(b) “Passenger” is any fare paying person being transported & conveyed in & by a motor vehicle for transportation of passengers for compensation, including persons expressly authorized by law or by the vehicle’s operator or his agents to ride without fare.

(c) “Third‑Party” is any person other than a passenger as defined in this section & shall also exclude a member of the household, or a member of the family within the second degree of consanguinity or affinity, of a motor vehicle owner or land transportation operator, as likewise defined herein, or his employee in respect of death, bodily injury, or damage to property arising out of & in the course of employment. (As amended by Presidential Decree No. 1814 & 1981)

(d) “Owner” or “Motor vehicle owner” means the actual legal owner of a motor vehicle, in whose name such vehicle is duly registered w/ the Land Transportation Commission;

(e) “Land transportation operator” means the owner or owners of motor vehicles for transportation of passengers for compensation, including school buses;

(f) “Insurance policy” or “Policy” refers to a contract of insurance against passenger & thirty‑party liability for death or bodily injuries & damaged to property arising fr. motor vehicle accidents. (As amended by Presidential Decree No. 1455 & 1814)

SECTION 374. It shall be unlawful for any land transportation operator or owner of a motor vehicle to operate the same in the public highways unless there is in force in relation thereto a policy of insurance or guaranty in cash or surety bond issued in accordance w/ the provisions of this chapter to indemnify the death, bodily injury, &/or damage to property of a third‑party or passenger, as the case may be, arising fr. the use thereof. (As amended by Presidential Decree No. 1455 & 1814)

SECTION 375. The Commissioner shall furnish the Land Transportation Commissioner w/ a list of insurance companies authorized to issue the policy of insurance or surety bond required by this chapter. (As amended by Presidential Decree No. 1814)

SECTION 376. The Land Transportation Commission shall not allow the registration or renewal of registration of any motor vehicle without first requiring fr. the land transportation operator or motor vehicle owner concerned the presentation & filing of a substantiating documentation in a form approved by the Commissioner evidencing that the policy of insurance or guaranty in cash or surety bond required by this chapter is in effect. (As amended by Presidential Decree No. 1455)

SECTION 377. Every land transportation operator & every owner of a motor vehicle shall, before applying for the registration or renewal of registration of any motor vehicle, at his option, either secure an insurance policy or surety bond issued by any insurance company authorized by the Commissioner or make a cash deposit in such amount as herein required as limit of liability for purposes specified in section three hundred seventy‑four.

(1) In the case of a land transportation operator the insurance guaranty in cash or surety bond shall cover liability for death or bodily injuries of third‑parties &/or passengers arising out of the use of such vehicle in the amount not less than twelve thousand pesos per passenger or third party & an amount, for each of such categories, in any one accident of not less than that set forth in the following scale —

(a) Motor vehicles w/ an authorized capacity of twenty‑six or more passengers: Fifty thousand pesos;

(b) Motor vehicles w/ an authorized capacity of fr. twelve to twenty‑five passengers: Forty thousand pesos;

(c) Motor vehicles w/ an authorized capacity of fr. six to eleven passengers: Thirty thousand pesos;

(d) Motor vehicles w/ an authorized capacity of five or less passengers: Five thousand pesos multiplied by the authorized capacity.

Provided, however, That such cash deposit made to, or surety bond posted w/, the Commissioner shall be resorted to by him in cases of accidents the indemnities for w/c to third‑parties &/or passengers are not settled accordingly by the land transportation operator &, in that event, the said cash deposit shall be replenished or such surety bond shall be restored w/ sixty days after impairment or expiry, as the case may be, by such land transportation operator, otherwise, he shall secure the insurance policy required by this chapter. The aforesaid cash deposit may be invested by the Commissioner in readily marketable government bonds &/or securities.

(2) In the case of an owner of a motor vehicle, the insurance or guaranty in cash or surety bond shall cover liability for death or injury to third parties in an amount not less than that set forth in the following scale in any one accident:

I. Private Cars

(a) Bantam : Twenty thousand pesos;

(b) Light : Twenty thousand pesos;

(c) Heavy : Thirty thousand pesos;

II. Other Private Vehicles

(a) Tricycles, motorcycles, & scooters : Twelve thousand pesos;

(b) Vehicles w/ an unladen weight of 2,600 kilos or less : Twenty thousand pesos;

(c) Vehicles w/ an unladen weight of between 2,601 kilos & 3,930 kilos : Thirty thousand pesos;

(d) Vehicles w/ an unladen weight over 3,930 kilos : Fifty thousand pesos.

The Commissioner may, if warranted, set forth schedule of indemnities for the payment of claims for death or bodily injuries w/ the coverages set forth herein. (As amended by Presidential Decree No. 1455 & 1814)

SECTION 378. Any claim for death or injury to any passenger or third party pursuant to the provisions of this chapter shall be paid without the necessity of proving fault or negligence of any kind; Provided, That for purposes of this section —

(a) The total indemnity in respect of any person shall not exceed five thousand pesos;

(ii) The following proofs of loss, when submitted under oath, shall be sufficient evidence to substantiate the claim:

(a) Police report of accident; &

(b) Death certificate & evidence sufficient to establish the proper payee; or

(c) Medical report & evidence of medical or hospital disbursement in respect of w/c refund is claimed.

(iii) Claim may be made against one motor vehicle only. In the case of an occupant of a vehicle, claim shall lie against the insurer of the vehicle in w/c the occupant is riding, mounting or dismounting fr.. In any other case, claim shall lie against the insurer of the directly offending vehicle. In all cases, the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained.

SECTION 379. No land transportation operator or owner of motor vehicle shall be unreasonably denied the policy of insurance or surety bond required by this chapter by the insurance companies authorized to issue the same, otherwise, the Land Transportation Commission shall require fr. said land transportation operator or owner of the vehicle, in lieu of a policy of insurance or surety bond, a certificate that a cash deposit has been made w/ the Commissioner in such amount required as limits of indemnity in section three hundred seventy‑seven to answer for the passenger &/or third‑party liability of such land transportation operator or owner of the vehicle.

No insurance company may issue the policy of insurance or surety bond required under this chapter unless so authorized under existing laws.

The authority to engage in the casualty &/or surety lines of business of an insurance company that refuses to issue or renew, without just cause, the insurance policy or surety bond therein required shall be withdrawn immediately. (As amended by Presidential Decree No. 1455 & 1814)

SECTION 380. No cancellation of the policy shall be valid unless written notice thereof is given to the land transportation operator or owner of the vehicle & to the Land Transportation Commission at least fifteen days prior to the intended effective date thereof.

Upon receipt of such notice, the Land Transportation Commission, unless it receives evidence of a new valid insurance or guaranty in cash or surety bond as prescribed in this chapter, or an endorsement of revival of the cancelled one, shall order the immediate confiscation of the plates of the motor vehicle covered by such cancelled policy. The same may be re‑issued only upon presentation of a new insurance policy or that a guaranty in cash or surety band has been made or posted w/ the Commissioner & w/c meets the requirements of this chapter, or an endorsement or revival of the cancelled one. (As amended by Presidential Decree No. 1455)

SECTION 381. If the cancellation of the policy or surety bond is contemplated by the land transportation operator or owner of the vehicle, he shall, before the policy or surety bond ceases to be effective, secure a similar policy of insurance or surety bond to replace the policy or surety bond to be cancelled or make a cash deposit in sufficient amount w/ the Commissioner & without any gap, file the required documentation w/ the Land Transportation Commission, & notify the insurance company concerned of the cancellation of its policy or surety bond. (As amended by Presidential Decree No. 1455)

SECTION 382. In case of change of ownership of a motor vehicle, or change of the engine of an insured vehicle, there shall be no need of issuing a new policy until the next date of registration or renewal of registration of such vehicle, & provided that the insurance company shall agree to continue the policy, such change of ownership or such change of the engine shall be indicated in a corresponding endorsement by the insurance company concerned, & a signed duplicate of such endorsement shall, within a reasonable time, be filed w/ the Land Transportation Commission.

SECTION 383. In the settlement & payment of claims, the indemnity shall not be availed of by any accident victim or claimant as an instrument of enrichment by reason of an accident, but as an assistance or restitution insofar as can fairly be ascertained.

SECTION 384. Any person having any claim upon the policy issued pursuant to this Chapter shall, without any unnecessary delay, present to the insurance company concerned a written notice of claim setting forth the nature, extent & duration of the injuries sustained as certified by a duly licensed physician. Notice of claim must be filed within six months fr. date of accident, otherwise, the claim shall be deemed waived. Action or suit for recovery of damage due to loss or injury must be brought, in proper cases, w/ the Commissioner or the Courts within one year fr. denial of the claim, otherwise, the claimant’s right of action shall prescribe. (As amended by Presidential Decree 1814 & Batasang Pambansa Blg. 874)

SECTION 385. The insurance company concerned shall forthwith ascertain the truth & extent of the claim & make payment within five working days after reaching an agreement. If no agreement is reached, the insurance company shall pay only the “no‑fault” indemnity provided in section three hundred seventy‑eight without prejudice to the claimant fr. pursuing his claim further, in w/c case, he shall not be required or compelled by the insurance company to execute any quit claim or document releasing it fr. liability under the policy of insurance or surety bond issued. (As amended by Presidential Decree No. 1455)

In case of any dispute in the enforcement of the provisions of any policy issued pursuant to this chapter, the adjudication of such dispute shall be within the original & exclusive jurisdiction of the Commissioner, subject to the limitations provided in section four hundred sixteen.

SECTION 386. It shall be unlawful for a land transportation operator or owner of motor vehicle to require his or its drivers or other employees to contribute in the payment of premiums.

SECTION 387. No government office or agency having the duty of implementing the provisions of this chapter nor any official or employee thereof shall act as agent in procuring the insurance policy or surety bond provided for herein. The commission of an agent procuring the said policy or bond shall in no case exceed ten per centum of the amount of the premiums therefor.

SECTION 388. Any land transportation operator or owner of motor vehicle or any other person violating any of the provisions of the preceding sections shall be punished by a fine of not less than five hundred pesos but not more than one thousand pesos &/or imprisonment for not more than six months. The violation of section three hundred seventy‑seven by a land transportation operator shall be a sufficient cause for the revocation of the certificate of public convenience issued by the Board of Transportation covering the vehicle concerned.

SECTION 389. Whenever any violation of the provisions of this chapter is committed by a corporation or association, or by a government office or entity, the executive officer or officers of said corporation, association or government office or entity who shall have knowingly permitted, or failed to prevent, said violation shall be held liable as principals.

CHAPTER V — SECURITY FUND

SECTION 365. There is hereby created a fund to be known as the “Security Fund” w/c shall be used in the payment of allowed claims against an insurance company authorized to transact business in the Philippines remaining unpaid by reason of the solvency of such company. The said Fund may also be used to reinsure the policy of the insolvent insurer in any solvent insurer authorized to do business in the Philippines as provided in section two hundred forty‑nine. In the event of national emergency or calamity, the Fund may likewise be used to pay insured claims w/c otherwise would not be compensable under the provisions of the policy. No payment fr. the Security Fund shall, however, be made to any person who owns or controls ten per centum or more of the voting shares of stock of the insolvent insurer & no payment on any one claim shall exceed twenty thousand pesos.

SECTION 366. Such Fund shall consist of all payments made to the Fund by insurance companies authorized to do business in the Philippines. Payments made by life insurance companies shall be treated separately fr. those made by non‑life insurance companies & the corresponding fund shall be called “Life Account” & “Non‑Life Account”, respectively, & shall be held & administered as such by the Commissioner in accordance w/ the provisions of this title. The “Life Account” shall be utilized exclusively for disbursements that refer to life insurance companies, while the “Non‑Life Account” shall be utilized exclusively for disbursements that refer to non‑life insurance companies.

SECTION 367. All insurance companies doing business in the Philippines shall contribute to the Security Fund, Life or Non‑Life Account, as the case may be, on or before the fifteenth day of June, nineteen hundred & seventy‑five, the aggregate amount of five million pesos for each Account. The contributions of the life insurance companies & of the non‑life insurance companies shall be in direct proportion to the ratio between a particular life insurance company or a particular non‑life insurance company’s net worth & the aggregate net worth of all life insurance companies or all non‑life insurance companies, as the case may be, as shown in their latest financial statements approved by the Commissioner. This proportion applied to the five million pesos shall be the contribution of a particular company to the corresponding Account of the Security Fund.

The amount of five million pesos in each Account shall be in the form of a revolving trust fund. The respective contributions of the companies shall remain as admitted assets in their books & any disbursement therefr. shall be deducted proportionately fr. the contributions of each company w/c will be allowed as deductions for income tax purposes. Any earnings of the Fund shall be turned over to the contributing companies in proportion to their contributions.

In the case of disbursements of funds fr. the Fund as provided in the foregoing paragraph, the life & non‑life companies, as the case may be, shall replenish the amount disbursed in direct proportion to the individual company’s net worth & the aggregate net worth of the life or non‑life companies, as the case may be. However, in no case shall the Fund exceed the aggregate amount of ten million pesos, or five million pesos for each Account.

Should the Fund, Life of Non‑Life Account, as the case may be, be inadequate for a disbursement as provided for, then the Life or Non‑Life companies, as the case may be, shall contribute to the Fund their respective shares in the proportion previously mentioned.

SECTION 368. The Commissioner may adopt, amend, & enforce all reasonable rules & regulations necessary for the proper administration of the Fund & of the Accounts. In the event any insurer shall fail to make any payment required by this title, or that any payment made is incorrect, he shall have full authority to examine all the books & records of the insurer for the purpose of ascertaining the facts & shall determine the correct amount to be paid & may proceed in any court of competent jurisdiction to recover for the benefit of the Fund or of the Account concerned any sum shown to be due upon such examination & determination. Any insurer w/c fails to make any payment to the Fund or to the Account concerned when due, shall thereby forfeit to said Fund or Account concerned a penalty of five per centum of the amount determined to be due as provided by this title, plus one per centum of such amount for each month of delay or fraction thereof, after the expiration of the first month of such delay, but the Commissioner, if satisfied that the delay was excusable, may remit all or any part of such penalty. The Commissioner, in his discretion, may suspend or revoke the certificate of authority to do business in the Philippines of any insurance company w/c shall fail to comply w/ this title or to pay any penalty imposed in accordance therewith.

SECTION 369. The Accounts created by this title shall be separate & apart fr. each other & fr. any other fund. The Treasurer of the Philippines shall be the custodian of the Life Account & Non‑Life Account of the Security Fund; & all disbursements fr. any Account shall be made by the Treasurer of the Philippines upon vouchers signed by the Commissioner or his deputy, as hereinafter provided. The moneys of said Account may be invested by the Commissioner only in bonds or other evidences of debt of the government of the Philippines or its political subdivisions or instrumentalities. The Commissioner may sell any of the securities in w/c an Account is in vested, if advisable, for its proper administration or in the best interest of such Account.

SECTION 370. Payments fr. either the Life Insurance Account or Non‑Life Account, as the case may be, shall be made by the Treasurer of the Philippines to the Commissioner, upon the authority of appropriate certificate filed w/ him by the Commissioner acting in such capacity.

SECTION 371. The Commissioner may, in his discretion, designate or appoint a duly authorized representative or representatives to appear & defend before any court or other body or official having jurisdiction any or all actions or proceedings against principals or assureds on insurance policies or contracts issued to them where the insurer has become insolvent or unable to meet its insurance obligations. The Commissioner shall have, as of the date of insolvency of such insurer or as of the date of its inability meet its insurance obligations, only the rights w/c such insurer would have had if it had not become insolvent or unable to meet its insurance obligations. For the purpose of this title the Commissioner shall have power to employ such counsel, clerks & assistants as he may deem necessary.

SECTION 372. The expense of administering an Account shall be paid out of the Account concerned. The Commissioner shall serve as administrator of the Fund & of the Accounts without additional compensation, but may be allowed & paid fr. the Account concerned expenses incurred in the performance of his duties in connection w/ said Account. The compensation of those persons employed payable fr. the Account concerned. The Commissioner shall include in his annual report to the Secretary of Finance a statement of the expenses of administration of the Fund & of the Life Account & Non‑Life Account for the preceding year.

CHAPTER IV — SALES AGENCIES AND TECHNICAL SERVICES

Title I INSURANCE AGENTS AND INSURANCE BROKERS

SECTION 299. No insurance company doing business in the Philippines, nor any agent thereof, shall pay any commission or other compensation to any person for services in obtaining insurance, unless such person shall have first procured fr. the Commissioner a license to act as an insurance agent of such company or as an insurance broker as hereinafter provided.

No person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications for insurance, or receive for services in obtaining insurance, any commission or other compensation fr. any insurance company doing business in the Philippines, or any agent thereof, without first procuring a license to act fr. the Commissioner, w/c must be renewed annually on the first day of January, or within six months thereafter. Such license shall be issued by the Commissioner only upon the written application of the person desiring it, such application if for a license to act as insurance agent, being approved & countersigned by the company such person desires to represent, & shall be upon a form prescribed by the Commissioner giving such information as he may require, & upon payment of the corresponding fee hereinafter prescribed. The Commissioner shall satisfy himself as to competence & trustworthiness of the applicant & shall have the right to refuse to issue or renew & to suspend or revoke any such license in his discretion. No such license shall be valid after the thirtieth day of June of the year following its issuance unless it is renewed. (As amended by Presidential Decree No. 1455)

SECTION 300. Any person who for compensation solicits or obtains insurance on behalf of any insurance company or transmits for a person other than himself an application for a policy or contract of insurance to or fr. such company or offers or assumes to act in the negotiating of such insurance shall be an insurance agent within the intent of this section & shall thereby become liable to all the duties, requirements, liabilities & penalties to w/c an insurance agent is subject.

SECTION 301. Any person who for any compensation, commission or other thing of value acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance contract or in placing risk or taking out insurance, on behalf of an insured other than himself, shall be an insurance broker within the intent of this Code, & shall thereby become liable to all the duties, requirements, liabilities & penalties to w/c an insurance broker is subject.

SECTION 302. Every applicant for an insurance broker’s license shall file w/ the application & shall thereafter maintain in force while so licensed, a bond in favor of the people of the Republic of the Philippines executed by a company authorized to become surety upon official recognizances, stipulations, bonds & undertakings. The bond shall be in such amount as may be fixed by the Commissioner, but in no case less than one hundred thousand pesos, & shall be conditioned upon full accounting & due payment to the person entitled thereto of funds coming into the broker’s possession through insurance transactions under license. The bond shall remain in force until released by the Commissioner, or until cancelled by the surety. Without prejudice to any liability previously incurred thereunder, the surety may cancel the bond on thirty days advance written notice to both the broker & the Commissioner.

Upon approval of the application, the applicant must also file two errors & omissions (professional liability or professional indemnity) policies issued separately by two insurance companies authorized to do business in the Philippines, satisfactory to the Commissioner to indemnify the applicant against any claim or claims for breach of duty as insurance broker w/c may be made against him by reason of any negligent act, error or omission, whenever or wherever committed or alleged to have been committed, on the part of the applicant or any person who has been, is now, or may hereafter during the subsistence of the policies be employed by the said applicant in his capacity as insurance broker, provided that the filing of any claim or claims under one of such policies shall preclude the filing of the said claim or claims under the other policy. The said policies shall be in such amounts as may be prescribed by the Insurance Commissioner, depending upon the size or amount of the broking business of the applicant, but in no case shall the amount of each of such policies be less than five hundred thousand pesos. (As amended by Presidential Decree No. 1455)

SECTION 303. The Commissioner shall, in order to determine the competence of every applicant to have the kind of license applied for, require such applicant to submit to a written examination & to pass the same to the satisfaction of the Commissioner. Such examination shall be held at such times & places as the Commissioner shall fr. time to time determine.

SECTION 304. An applicant for the written examination mentioned in the preceding section must be of good moral character & must not have been convicted of any crime involving moral turpitude. He must satisfactorily show to the Commissioner that he has been trained in the kind of insurance contemplated in the license applied for.

Such examination may be waived if it is shown to the satisfaction of the Commissioner that the applicant has undergone extensive education &/or training in insurance.

SECTION 305. An application for the issuance or renewal of a license to act as an insurance agent or insurance broker may be refused, or such license, if already issued or renewed, shall be suspended or revoked if the Commissioner finds that the applicant for, or holder of, such license:

(a) has willfully violated any provision of this Code; or

(b) has intentionally made a material misstatement in the application to qualify for such license; or

(c) has obtained or attempted to obtain a license by fraud or misrepresentation; or

(d) has been guilty of fraudulent or dishonest practices; or

(e) has misappropriated or converted to his own use or illegally withheld moneys required to be held in a fiduciary capacity;

(f) has not demonstrated trustworthiness & competence to transact business as an insurance agent or insurance broker in such manner as to safeguard the public; or

(g) has materially misrepresented the terms & conditions of policies or contracts of insurance w/c he seeks to sell or has sold; or

(h) has failed to pass the written examination prescribed, if not otherwise exempt fr. taking the same.

In addition to the foregoing causes, no license to act as insurance agent or insurance broker shall be renewed if the holder thereof has not been actively engaged as such agent or broker in accordance w/ such rules as the Commissioner may prescribe. (As amended by Presidential Decree No. 1814)

SECTION 306. The premium, or any portion thereof, w/c an insurance agent or insurance broker collects fr. an insured & w/c is to be paid to an insurance company because of the assumption of liability through the issuance of policies or contracts of insurance, shall be held by the agent or broker in a fiduciary capacity & shall not be misappropriated or converted to his own use or illegally withheld by the agent or broker.

Any insurance company w/c delivers to an insurance agent or insurance broker a policy or contract of insurance shall be deemed to have authorized such agent or broker to receive on its behalf payment of any premium w/c is due on such policy or contract of insurance at the time of its issuance or delivery or w/c becomes due thereon.

SECTION 307. Any provision of existing laws to the contrary notwithstanding, no person shall, within the Philippines, sell or offer for sale a variable contract or do or perform any act or thing in the sale, negotiation, making or consummating of any variable contract other than for himself unless such person shall have a valid & current license fr. the Commissioner authorizing such person to act as a variable contract agent. No such license shall be issued unless & until the Commissioner is satisfied, after examination that such person is by training, knowledge, ability & character qualified to act as such agent. Any such license may be withdrawn & cancelled by the Commissioner after notice & hearing, if he shall find that the holder thereof does not then have the qualifications required for the issuance of such license.

SECTION 308. It shall be unlawful for any person, company or corporation in the Philippines to act as general agent of any insurance company unless he is empowered by a written power of attorney duly executed by such insurance company, & registered w/ the Commissioner to receive notices, summons & legal processes for & in behalf of the insurance company concerned in connection w/ actions or other legal proceedings against said insurance company. It shall be the duty of said general agent to notify the Commissioner of his post office address in the Philippines, or any change thereof. Notices, summons, or processes of any kind sent by registered mail to the last registered address of such general agent of the company concerned or to the Commissioner shall be sufficient service & deemed as if served on the insurance company itself.

SECTION 309. Except as otherwise provided by law or treaty, it shall be unlawful for any person, partnership, association or corporation in the Philippines, for himself or itself, or for some other person, partnership, association or corporation, either to procure, receive or forward applications of insurance in, or to issue or to deliver or accept policies or contracts of insurance of or for, any insurance company or companies not authorized to transact business in the Philippines, covering risks, life or nonlife, situated in the Philippines; & any such person, partnership, association or corporation violating the provisions of this section shall be deemed guilty of a penal offense, & upon conviction thereof, shall for each such offense be punished by a fine of ten thousand pesos, or imprisonment of six months, or both at the discretion of the court; Provided, That the provisions of this section shall not apply to reinsurance.

Title II REINSURANCE BROKERS

SECTION 310. Except as provided in the next succeeding title, no person shall act as reinsurance broker in the Philippines unless he is authorized as such by the Commissioner.

A reinsurance broker is one who, for compensation, not being a duly authorized agent, employee or officer of an insurer in w/c any reinsurance is effected, act or aids in any manner in negotiating contracts of reinsurance, or placing risks of effecting reinsurance, for any insurance company authorized to do business in the Philippines.

SECTION 311. Upon application & payment of the corresponding fee hereinafter prescribed, & the filing of two errors & omissions (professional liability or professional indemnity) policies hereinafter described, a person may, if found qualified, be issued a license to act as reinsurance broker by the Commissioner. No such license shall be valid after the thirtieth day of June of the year following its issuance unless it is renewed. (As amended by Presidential Decree No. 1455)

The errors & omissions (professional liability or professional indemnity) policies mentioned above shall indemnify the applicant against any claim or claims for breach of duty as reinsurance broker w/c may be made against him by reason of any negligent act, error or omission, whenever or wherever committed or alleged to have been committed, on the part of the applicant or any person who has been, is now, or may hereafter during the subsistence of the policies be employed by the said applicant in his capacity as reinsurance broker; Provided, That the filing of any claim or claims under one of such policies shall preclude the filing of the said claim or claims under the other policy. The said policies shall be issued separately by two insurance companies authorized to do business in the Philippines & shall be in such amounts as may be prescribed by the Insurance Commissioner, depending upon the size or amount of the broking business of the applicant, but in no case shall the amount of each of such policies be less than five hundred thousand pesos. (As amended by Presidential Decree No. 1455)

SECTION 312. The Commissioner may recall, suspend or revoke the license granted to a reinsurance broker for violation of any existing law, rule & regulation, or any provision of this Code after due notice & hearing.

Title III RESIDENT AGENTS

SECTION 313. No person shall act as resident agent, as hereinafter defined, unless he is registered as such w/ the Commissioner.

SECTION 314. The term “resident agent”, as used in this title, is one duly appointed by a foreign insurer or broker not authorized to do business in the Philippines to receive in its behalf notices, summons & legal processes in connection w/ actions or other legal proceedings against such foreign insurer or broker.

SECTION 315. The application for a certificate of registration as resident agent filed w/ the Commissioner must be accompanied w/: (a) a copy of the power of attorney, duly notarized & authenticated by the Philippine Consul in the place where such foreign insurer or broker is domiciled, empowering the applicant to act as resident agent & to receive notices, summons & legal processes for & in behalf of such foreign insurer or broker in connection w/ any action or legal proceeding against such foreign insurer or broker; & (b) a copy of the corresponding certificate issued by the Board of Investments as required under Section 4 of Republic Act No. 5455, if such foreign insurer or broker is not otherwise exempt fr. such requirement.

SECTION 316. It shall be the duty of such resident agent to notify immediately the Commissioner of any change of his office address.

SECTION 317. A certificate of registration issued to a resident agent shall expire on the thirtieth day of June of the year following its issuance unless it is renewed.

The Commissioner may, after due notice & hearing, recall or cancel the certificate of registration issued to a resident agent for violation of any existing law, rule or regulation, or any provision of this Code. (As amended by Presidential Decree No. 1455).

Title IV NON‑LIFE COMPANY UNDERWRITER

SECTION 318. No person shall act, & no company shall employ any person, as non‑life company underwriter, whose duty & responsibility it shall be to select, evaluate & accept risks for, & to determine the terms & conditions, including those pertaining to amounts of retentions, under w/c such risks are to be accepted by the company, unless such underwriter is registered as such w/ the Commissioner.

SECTION 319. Every non‑life insurance company doing business in the Philippines must maintain at all times a register of risks accepted & a claims register for each line of risks engaged in by such non‑life insurance company w/ such entries therein as are now or as may hereafter be required by the Commissioner, & it shall be the responsibility of the underwriter on the particular line or risk involved to see to it that the said registers are well maintained & kept, & that all entries therein are properly & correctly recorded. Such registers shall be open to inspection & examination of duly authorized representative of the Commissioner at all times during business hours.

SECTION 320. No person shall be registered w/ the Commissioner, unless such person shall be at least twenty‑one years of age on the date of such registration; a resident of the Philippines; of good moral character & w/ no conviction of any crime involving moral turpitude; has had at the time such registration is made at least two years of underwriting work in the particular line or risk involved; & has passed such qualifying written examination that the Commissioner shall conduct at such time & in such place as he may decide to hold for applicants desiring to act as underwriters.

Such examination shall not be required of any person who has served as non‑life company underwriter for a period of at least five years, if the Commissioner is satisfied of the applicant’s competence as shown by the results of his underwriting work in the non‑life insurance company or companies that employed him in that capacity. The minimum underwriting experience herein required may be reduced or waived if it is shown to the satisfaction of the Commissioner that the non‑life company underwriter has undergone extensive education &/or training in insurance.

SECTION 321. Any applicant who misrepresents or omits any material fact in his application for registration as a non‑life company underwriter, or commits any dishonest act in taking or in connection w/ the qualifying written examination for underwriters, shall be barred fr. being registered as such non‑life company underwriter &, if already registered, his registration shall be cancelled & the certificate of registration issued in his favor shall be recalled immediately by the Commissioner.

In the event that the certificate of authority of a non‑life insurance company to transact business is suspended or revoked due to business failure arising largely fr. the imprudent & injudicious acceptance of risks by the underwriter concerned, the registration of such underwriter shall likewise be cancelled & his certificate of registration shall be recalled by the Commissioner, & no similar certificate shall thereafter be issued in his favor.

SECTION 322. No certificate of registration issued to an underwriter shall be valid after the thirtieth day of June of the year following its issuance unless it is renewed.

The Commissioner may, after due notice & hearing, also suspend or cancel such certificate for violation of existing laws, rules & regulations or of any provisions of this Code. (As amended by Presidential Decree No. 1455)

Title V ADJUSTERS

SECTION 323. No person, partnership, association, or corporation shall act as an adjuster, as hereinafter defined, unless authorized so to act by virtue of a license issued or renewed by the Commissioner pursuant to the provisions of this Code; Provided, That in the case of a natural person, he must be a Filipino citizen & in the case of a partnership, association or corporation, at least sixty per centum of its capital must be owned by citizens of the Philippines.

SECTION 324. An adjuster may be an independent adjuster or a public adjuster.

The term “independent adjuster” means any person, partnership, association or corporation w/c, for money, commission or any other thing of value, acts for or on behalf of an insurer in the adjusting of claims arising under insurance contracts or policies issued by such insurer.

The term “public adjuster” means any person, partnership, association or corporation w/c, for money, commission or any other thing of value, acts on behalf of an insured in negotiating for, or effecting, the settlement of a claim or claims of the said insured arising under insurance contracts or policies, or w/c advertises for or solicits employment as an adjuster of such claims.

SECTION 325. For every line of insurance claim adjustment, adjusters shall be licensed either as independent adjusters or as public adjusters. No adjuster shall act on behalf of an insurer unless said adjuster is licensed as an independent adjuster; & no adjuster shall act on behalf of an insured unless said adjuster is licensed as a public adjuster: Provided, however, That when a firm or person has been licensed as public adjuster, he shall not be granted another license as independent adjuster & vice versa.

No license, however, shall be required of any company adjuster who is a salaried employee of an insurance company for the adjustment of claims filed under policies issued by such insurance company.

SECTION 326. Such license or any renewal thereof may be issued by the Commissioner upon written application filed by the person interested on the form or forms prescribed by the Commissioner, w/c shall contain such information as he may require, & upon payment of the corresponding fee hereinafter prescribed.

SECTION 327. The Commissioner shall conduct, at such times, & in such places as he may decide to hold, written examinations to determine the competence & ability of applicants desiring to act as adjuster of insurance claims.

SECTION 328. Every adjuster’s license issued hereunder shall be valid until after the thirtieth day of June of the year following the issuance of such license unless it is renewed. (As amended by Presidential Decree No. 1455)

SECTION 329. Nothing contained in this title shall apply to any duly licensed attorney‑at‑law who acts or aids in adjusting insurance claims as an incident to the practice of his profession & who does not advertise himself as an adjuster.

SECTION 330. The Commissioner may suspend or revoke any adjuster’s license if, after giving notice & hearing to the adjuster concerned, the Commissioner finds that the said adjuster (1) has violated any provision of this Code & of the circulars, rulings & instructions of the Commissioner or has violated any law in the course of his dealings as an adjuster; or (2) has made a material misstatement in the application for such license; or (3) has been guilty of fraudulent or dishonest practices; or (4) has demonstrated his incompetence or untrustworthiness to act as adjuster; or (5) has made patently unjust valuation of loss; or (6) has failed to make a report of the adjustment he proposed within sixty days fr. the date of the filing of the claim by the insured w/ the insurer, unless prevented so to do by reasons beyond his control; or has refused to allow an examination into his affairs or method of doing business as hereinafter provided.

SECTION 331. Every adjuster shall submit to the Commissioner a quarterly report of all losses w/c are the subject of adjustment effected by him during each month in the form prescribed by the Commissioner. The report shall be filed within one month after the end of each quarter.

SECTION 332. Every adjuster shall keep his or its books, records, reports, accounts, & vouchers in such manner that the Commissioner or his duly authorized representatives may readily verify the quarterly reports of the said adjuster & ascertain whether the said adjuster has complied w/ the provisions of law or regulations obligatory upon him or whether the method of doing business of the said adjuster has been fair, just & honest.

SECTION 333. The Commissioner shall, at least once a year & whenever he considers the public interest so demands, cause an examination to be made into the affairs & method of doing business of every adjuster.

SECTION 334. Any violation of any provision of this title shall be punished by a fine of not more than ten thousand pesos, or by imprisonment in the discretion of the court; Provided, That, in case of a partnership, association or corporation, the said penalty shall be imposed upon the partner, president, manager, managing director, director or person in charge of its business or responsible for the violation.

Title VI ACTUARIES

SECTION 335. No life insurance company shall be licensed to do business in the Philippines nor shall any life insurance company doing business in the Philippines be allowed to continue doing such business unless they shall engage the services of an actuary duly accredited w/ the Commissioner who shall, during his tenure of office, be directly responsible for the direction & supervision of all actuarial work connected w/ or that may be involved in the business of the insurance company.

SECTION 336. Any person may be officially accredited by the Commissioner to act as any actuary in any life insurance company or in any mutual benefit association authorized to do business in the Philippines upon application therefor & the payment of the corresponding fee hereinafter prescribed, Provided that: (1) he is a fellow of good standing of the Acturial Society of the Philippines at the time of his appointment & remains in such good standing during the tenure of his engagement; or (2) in the case of one who is not a fellow of the Acturial Society of the Philippines, he meets all the requirements of the said Society for accreditation as a fellow of the Society, & has been given permission by the pertinent government authorities in the Philippines to render services in the Philippines, in the event that he is not a citizen of the Philippines.

No certificate of registration issued under this title shall be valid after the thirtieth day of June of the year following its issuance unless it is renewed. (As amended by Presidential Decree No. 1455)

SECTION 337. The following documents, w/c are fr. time to time submitted to the Commissioner by a life insurance company authorized to do business in the Philippines, shall be duly certified by an accredited actuary employed by such company:

1. Policy reserves & net due & deferred premiums.

2. Statements of bases & net premiums, loading for gross premiums, & on non‑forfeiture values & reserves, when applying for approval of gross premiums, reserves & non‑forfeiture values.

3. Policies of insurance under any plan submitted to the Commissioner as required by law.

4. Annual statements & valuation reports submitted to the Commissioner as required by law.

5. Financial projection showing the probable income & outgo & reserve requirements, enumerating the acturial assumptions & bases of projections.

6. Valuation of annuity funds or retirement plans.

Any life insurance company authorized to do business in the Philippines may employ any person who is not officially accredited under either of the qualifications for any kind of acturial work, provided that he shall not, at any time, have the authority to certify to the correctness of the foregoing documents.

SECTION 338. No accredited actuary shall serve more than one client or employer at the same time. However, one already in the employ of an insurance company may be allowed by the Commissioner to serve a mutual benefit association or any other insurance company, provided the following conditions are first complied w/: (a) that the request to engage his services by the other employer is in writing; (b) that his present employer acquiesced to it in writing; & (c) that he furnishes the Commissioner w/ copies of said request & acquiescence.

Title VII RATING ORGANIZATION AND RATE MAKING

SECTION 339. Every organization w/c now exists or w/c may hereafter be formed for the purpose of making rates to be used by more than one insurance company authorized to do business in the Philippines shall be known as a “rating organization.” The term “rate” as used in this title shall generally mean the ratio of the premium to the amount insured & shall include, as the context may require, either the consideration to be paid or charged for insurance contracts, including surety bonds, or the elements & factors forming the basis for the determination or application of the same, or both.

SECTION 340. Every rating organization w/c now exists or w/c may hereafter be formed shall be subject to the provisions of this title.

SECTION 341. No rating organization hereafter formed shall commence rate‑making operations until it shall have obtained a license fr. the Commissioner. Before obtaining such license, such rating organization shall file w/ the Commissioner a notice of its intention to commence rate‑making operations, a copy of its constitution, articles of agreement or association, or of incorporation, & its by‑laws, a list of insurance companies that have agreed to become members or subscribers, & such other information concerning such rating organization & its operations as may be required by the Commissioner. If the Commissioner finds that the organization has complied w/ the provisions of law & that it has a sufficient number of members or subscribers & is otherwise qualified to function as a rating organization, the Commissioner may issue a license to such rating organization authorizing it to make rates for the kinds of insurance or subdivisions thereof as may be specified in such license. No license issued to a rating organization shall be valid after the thirtieth day of June of the year following its issuance unless it is renewed. No rating organization w/c now exists & is not licensed pursuant to this section shall continue rate‑making operations until it shall have obtained fr. the Commissioner a license w/c he may issue if satisfied that such organization is complying w/ the provisions of this title. Every rating organization shall notify the Commissioner promptly of every change in (1) its constitution, its articles of agreement or association or its certificate of incorporation, & its by‑laws rules & regulations governing the conduct of its business, & (2) its list of members & subscribers.

A “member” means an insurer who participates in or is entitled to participate in the management of a rating organization.

A “subscriber” means an insurer w/c is furnished at its request w/ rates & rating manuals by a rating organization of w/c it is not a member. (As amended by Presidential Decree No. 1455)

SECTION 342. Each rating organization shall furnish its rating service without discrimination to all of its members & subscribers, & shall, subject to reasonable rules & regulations, permit any insurance company doing business in the Philippines, not admitted to membership, to become a subscriber to its rating services for any kind of insurance or subdivisions thereof. Notice of proposed changes in such rules & regulations shall be given to subscribers. The reasonableness of any rule or regulation in its application to subscribers, or the refusal of any rating organization to admit an insurance company as a subscriber, shall, at the request of any subscriber or any such insurance company, be reviewed by the Commissioner at a hearing held upon at least ten days’ written notice to such rating organization & to such subscriber or insurance company. The Commissioner may, after such hearing, issue an appropriate order.

SECTION 343. No rating organization or any other association shall refuse to do business w/, or prohibit or prevent the payment of commissions to, any person licensed as an insurance broker pursuant to the provisions of title one of this chapter.

SECTION 344. Rating organization shall be subject to examination by the Commissioner, as often as he may deem such examination expedient, pursuant to the provisions of this Code applicable to the examination of insurance companies. He shall cause such an examination of each rating organization to be made at least once in every five years.

SECTION 345. The Commissioner may suspend or revoke the license of any rating organization w/c fails to comply w/ his order within the time limited by such order, or any extension thereof w/c he may grant. The Commissioner may determine when a suspension of license shall become effective & it shall remain in effect for the period fixed by him, unless he modifies or rescinds such suspension.

SECTION 346. Any rating organization may subscribe for or purchase acturial, technical or other services, & such services shall be available to all members & subscribers without discrimination.

SECTION 347. Any rating organization may provide for the examination of policies, daily reports, binders, renewal certificates, endorsements or other evidences of insurance, or the cancellation thereof, & may make reasonable rules governing their submission. Such rules shall contain a provision that in the event an insurance company does not within sixty days furnish satisfactory evidence to the rating organization of the correction of any error or omission previously called to its attention by the rating organization, it shall be the duty of the rating organization to notify the Commissioner thereof. All information so submitted for examination shall be confidential.

SECTION 348. Cooperation among rating organizations or among rating organizations & insurers in rate making or in other matters within the scope of this title is hereby authorized, provided the filings resulting fr. such cooperation are subject to all provisions of this title w/c are applicable to filings generally. The Commissioner may review such cooperative activities & practices & if he finds that any such activity or practice is unfair or unreasonable or otherwise inconsistent w/ the provisions of this title, he may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent w/ the provisions of this title, & requiring the discontinuance of such activity or practice.

SECTION 349. Every rating organization & every insurance company w/c makes & files its own rates, shall make rates for all risks rated by such organization or insurance company in accordance w/ the following provisions:

(a) Basic classification, manual, minimum, class, or schedule rates or rating plans, shall be made & adopted for all such risks. Any departure fr. such rates shall be in accordance w/ schedules, rating plans & rules filed w/ the Commissioner; aisa dc

(b) Rates shall be reasonable & adequate for the class of risks to w/c they apply;

(c) No rate shall discriminate unfairly between risks involving essentially the same hazards & expense elements or between risks in the application of like charges & credits;

(d) Consideration shall be given to the past & prospective loss experience, including the conflagration & catastrophe hazards, if any, to all factors reasonably attributable to the class of risks, to a reasonable profit, to commissions paid during the most recent annual period & to past & prospective other expenses. In case of fire insurance rates, consideration shall be given to the experience of the fire insurance business during a period of not less than five years next preceding the year in w/c the review is made;

(e) Risk may be grouped by classifications for the establishment of rates & minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance w/ rating plans w/c establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any difference among risks that can be demonstrated to have a probable effect upon losses or expenses.

SECTION 350. No rating organization & no insurance company w/c makes & files its own rates shall make or promulgate any rate or schedule of rates w/c is to be applied to any fire risk on the condition that the whole amount of insurance on any risk or any specified part thereof shall be placed w/ the members of or subscribers to such rating organization or w/ such insurer.

SECTION 351. Every insurance company doing business in the Philippines shall annually file w/ the rating organization of w/c it is a member or subscriber, or w/ such other agency as the Commissioner may designate, a statistical report showing a classification schedule of its premiums & losses on all kinds or types of insurance business to w/c section three hundred forty‑nine is applicable, & such other information as the Commissioner may deem necessary or expedient for the administration of the provisions of this title.

SECTION 352. Every non‑life rating organization & every non‑life insurance company doing business in the Philippines shall file w/ the Commissioner, except as to risks w/c by general custom of the business are not written according to manual rates or rating plans, every rate manual, schedule of rates, classification of risks, rating plan, & every other rating rule & every modification of any of the foregoing w/c it proposes to use. An insurance company may satisfy its obligation to make such filings for any kind or type of insurance by becoming a member of or subscriber to a rating organization w/c makes such filings for such kind or type of insurance, & by authorizing the Commissioner to accept such filings of the rating organization on behalf of such insurance company.

SECTION 353. Every manual or schedule of rates & every rating plan filed as provided in the preceding section shall state or clearly indicate the character & extent of the coverage to w/c any such rate or any modification thereof will be applied.

SECTION 354. The Commissioner shall review filings as soon as reasonably possible after they have been made in order to determine whether they meet the requirements of this title. When a filing is not accompanied by the information upon w/c the insurance company supports such filing, & the Commissioner does not have sufficient information to determine whether such filing meets the requirements of this title, he shall require such insurance company to furnish the information upon w/c it supports such filing. The information furnished in support of a filing may include: (1) the experience or judgment of the insurance company or rating organization making the filing, (2) its interpretation of any statistical data it relies upon, (3) the experience of other insurance companies or rating organization, or (4) any other relevant factors.

SECTION 355. If the Commissioner finds that any rate filings theretofore filed w/ him do not comply w/ the provisions of this title or that they provide rates or rules w/c are inadequate, excessive, unfairly discriminatory or otherwise unreasonable, he may order the same withdrawn & at the expiration of sixty days thereafter the same shall be deemed no longer on file. Before making any such finding & order, the Commissioner shall give notice, not less than ten days in advance, & a hearing, to the rating organization, or to the insurer, w/c filed the same. Such order shall not affect any contract or policy made or issued prior to the expiration of such sixty day period.

SECTION 356. No member or subscriber of a rating organization, & no insurance company doing business in the Philippines, or agent, employee or other representative of such company, & no insurance broker shall charge or demand a rate or receive a premium w/c deviates fr. the rates, rating plans, classifications, schedules, rules & standards, made & last filed by a rating organization or by or on behalf of the insurance company, or shall issue or make any policy or contract involving violation of such rate filings.

SECTION 357. Notwithstanding any other provisions of this title, upon the written application of the insurer, stating his reasons therefor, filed w/ & approved by the Commissioner, a rate in excess of that provided by a filing otherwise applicable may be used on any specific risk.

SECTION 358. Whenever the Commissioner shall determine, after notice & a hearing, that the rates charged or filed on any class of risks are excessive, discriminatory, inadequate or unreasonable, he shall order that such rates be appropriately adjusted. For the purpose of applying the provisions of this section, the Commissioner may fr. time to time approve reasonable classifications of risks for any or all such classes, having due regard to the past & prospective loss experience, including conflagration or catastrophe hazards, if any, to all other relevant factors & to a reasonable profit.

SECTION 359. Nothing contained in this title shall be construed as requiring any insurer to become a member of or subscriber to any rating organization.

SECTION 360. Agreements may be made among insurance companies w/ respect to the equitable apportionment among them of insurance w/c may be afforded applicants who are in good faith entitled to but are unable to procure such insurance through ordinary methods & such insurance companies may agree among themselves on the use of reasonable rates & modifications for such insurance, such agreements & rate modifications to be subject to the approval of the Commissioner; Provided, however, That the provisions of this section shall not be deemed to apply to workmen’s compensation insurance.

SECTION 361. No insurance company doing business in the Philippines or any agent thereof, no insurance broker, & no employee or other representative of any such insurance company, agent, or broker, shall make, procure or negotiate any contract of insurance or agreement as to policy contract, other than is plainly expressed in the policy or other written contract issued or to be issued as evidence thereof, or shall directly or indirectly, by giving or sharing a commission or in any manner whatsoever, pay or allow or offer to pay or allow to the insured or to any employee of such insured, either as an inducement to the making of such insurance or after such insurance has been effected, any rebate fr. the premium w/c is specified in the policy, or any special favor or advantage in the dividends or other benefits to accrue thereon, or shall give or offer to give any valuable consideration or inducement of any kind, directly or indirectly, w/c is not specified in such policy or contract of insurance; nor shall any such company, or any agent thereof, as to any policy or contract of insurance issued, make any discrimination against any Filipino in the sense that he is given less advantageous rates, dividends or other policy conditions or privileges than are accorded to other nationals because of his race.

SECTION 362. No insurance company doing business in the Philippines, & no officer, director, or agent thereof, & no insurance broker or any other person, partnership or corporation shall issue or circulate or cause or permit to be issued or circulated any literature, illustration, circular or statement of any sort misrepresenting the terms of any policy issued by any insurance company of the benefits or advantages promised thereby, or any misleading estimate of the dividends or share of surplus to be received thereon, or shall use any name or title of any policy or class of policies misrepresenting the true nature thereof; nor shall any such company or agent thereof, or any other person, partnership or corporation make any misleading representation or incomplete comparison of policies to any person insured in such company for the purpose of inducing or tending to induce such person to lapse, forfeit, or surrender his said insurance.

SECTION 363. If the Commissioner, after notice & hearing, finds that any insurance company, rating organization, agent, broker or other person has violated any of the provisions of this title, it shall order the payment of a fine not to exceed five hundred pesos for each such offense, & shall immediately revoke the license issued to such insurance company, rating organization, agent, or broker. The issuance, procurement or negotiation of a single policy or contract of insurance shall be deemed a separate offense.

Title VIII PROVISION COMMON TO AGENTS, BROKERS, AND ADJUSTERS

SECTION 364. A license issued to a partnership, association or corporation to act as an insurance agent, general agent, insurance broker, reinsurance broker, or adjuster shall authorize only the individual named in the license who shall qualify therefor as though an individual licensee. The Commissioner shall charge, & the licensee shall pay, a full additional license fee as to each respective individual so named in such license in excess of one.

Licenses & certificates of registration issued under the provisions of this chapter may be renewed by the filing of notices of intention on forms to be prescribed by the Commissioner & payment of the fees therefor. (As amended by Presidential Decree No. 1455)