WHEREAS,
Presidential Decree No. 612, otherwise known as the Insurance Code, was
promulgated primarily to promote and develop a strong national
insurance industry and to provide the necessary operating conditions
for its integration in the economic and social development of the
Philippines;chanroblesvirtualawlibrary
WHEREAS, the prevailing economic conditions necessitate the amendment
of said Decree to further assure the solvency of insurance companies
doing business in the Philippines in the interest of the sound
development of the national economy;chanroblesvirtualawlibrary
WHEREAS, there is a need to amend the said Decree to further ensure
that faithful performance of insurance contracts for the protection of
the interests of the policy-holders and the public.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby
decree and order the amendment of Presidential Decree No. 612,
otherwise known as the Insurance Code, as follows:cralaw:red
Section 1. Section 176 of Presidential Decree No.
612, otherwise known as the Insurance Code is hereby amended to read as
follows:cralaw:red
"Sec. 176. The liability of the surety or sureties
shall be joint and several with the obligor and shall be limited to the
amount of the bond. It is determined strictly by the terms or the
contract of suretyship in relation to the principal contract between
the obligor and the obligee." chanroblesvirtualawlibrary
Section 2. Section 187 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 187. No Insurance Company shall transact any
insurance business in the Philippines until after it shall have
obtained a certificate of authority for that purpose from the
Commissioner upon application therefor and payment by the company
concerned of the fees hereinafter prescribed. chanroblesvirtualawlibrary
The Commissioner may refuse to issue a certificate of authority to any
insurance company if, in his judgment, such refusal will best promote
the interest of the people of this country. No such certificate of
authority shall be granted to any such company until the Commissioner
shall have satisfied himself by such examination as he may make and
such evidence as he may require that such company is qualified by the
laws of the Philippines to transact business therein, that the grant of
such authority appears to be justified in the light of local economic
requirements, and that the direction and administration, as well as the
integrity and responsibility of the organizers and administrators, the
financial organization and the amount of capital, notwithstanding the
provisions of section one hundred eighty-eight, reasonably assure the
safety of the interests of the policy-holders and the public. chanroblesvirtualawlibrary
In order to maintain the quality of the management of insurance
companies and afford better protection to policy-holders and the public
in general, any person of good moral character, unquestioned integrity
and recognized competence may be elected or appointed director or
officer of insurance companies. The Commissioner shall prescribe the
qualifications of the executive officers and other key officials of
insurance companies for purposes of this section.
No person shall concurrently be a Director and/or Officer of an
insurance company and an adjustment company.
Incumbent Directors and/or Officers affected by the above provisions
are hereby allowed to hold on to their positions until the end of their
terms, or two years from the effectivity of this Decree, whichever is
shorter.
Before issuing such certificate of authority, the Commissioner must be
satisfied that the name of the company is not that of any other known
company transacting a similar business in the Philippines, or a name so
similar as to be calculated to mislead the public.
Such certificate of authority shall expire on the last day of June of
each year and shall be renewed annually if the company is continuing to
comply with the provisions of the Code or the circulars, instructions,
rulings, or decisions of the Commissioner. Every company receiving any
such certificates of authority shall be subject to the provisions of
this Code and other related laws and to the jurisdiction and
supervision of the Commissioner. chanroblesvirtualawlibrary
No insurance company may be authorized to transact in the Philippines
the business of life and non-life insurance concurrently, unless
specifically authorized to do so; Provided, that the terms "life" and
"non-life" insurance shall be deemed to include health, accident and
disability insurance. chanroblesvirtualawlibrary
No insurance company shall have any equity in an adjustment company and
either shall an adjustment company have any equity in an insurance
company.
Insurance companies and adjustment companies presently affected by the
above provision shall have two years from the effectivity of this
Decree within which to divest of their stockholdings."
Section 3. Section 188 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 188. Except as provided in section two hundred
eighty-one, no domestic insurance company shall, in a stock
corporation, engage in business in the Philippines unless possessed of
a paid-up capital equal to at least five million pesos; Provided, That
a domestic insurance company already doing business in the Philippines
with a paid-up capital stock which is less than a five million pesos
shall have a paid-up capital stock of at least three million pesos by
December thirty-one, nineteen hundred seventy-eight, four million pesos
by December thirty-one, nineteen hundred seventy-nine and five million
pesos by December thirty-one, nineteen hundred eighty; Provided,
Further, That the Secretary of Finance may, upon recommendation of the
Insurance Commissioner, increase such minimum paid-up capital stock
requirement, under such terms and conditions as he may impose, to an
amount which in his opinion, would reasonably assure the safety of the
interests of the policy-holders and the public.
The Commissioner may, as pre-licensing requirement of a new insurance
company, in addition to the paid-up capital stock, require the
stockholders to pay in cash to the company in proportion to their
subscription interests a contributed surplus fund of not less than one
million pesos, in the case of a life insurance company, or not less
than five hundred thousand pesos, in any case of insurance company
other than life. He may also require such company to submit to him a
business plan showing the company's estimated receipts and
disbursements, as well as the basis therefor, for the next succeeding
three years.
If organized as a mutual company, in lieu of such capital stock, it
must have available cash assets of at least five million pesos above
all liabilities for losses reported, expenses, taxes, legal reserve,
and reinsurance of all outstanding risks, and the contributed surplus
fund equal to the amounts required of stock corporations. A stock
insurance company doing business in the Philippines may, subject to the
pertinent law and regulation which now are or hereafter may be in
force, alter its organization and transform itself into a mutual
insurance company."
Section 4. Section 194 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 194. An insurance company doing business in the
Philippines shall at all times maintain a margin of solvency which
shall be an excess of the value of its admitted assets exclusive of its
paid- up capital, in the case of a domestic company, or an excess of
the value of its admitted assets in the Philippines, exclusive of its
security deposits, in the case of a foreign company, over the amount of
its liabilities, unearned premium and reinsurance reserves in the
Philippines of at least two per mille of the total amount of the
insurance in force as of the preceding calendar year on all policies
except term insurance, in the case of a life insurance company, or of
at least ten per centum of the total amount of its net premium written
during the preceding calendar year, in the case of a company other than
a life insurance company: Provided, That, in either case, such margin
shall in no event be less than five hundred thousand pesos; and
Provided, Further, That the term "paid-up capital" shall not include
contributed surplus and capital paid in excess of par value. Such
assets, liabilities and reserves shall exclude assets, liabilities and
reserves included in separate accounts established in accordance with
section two hundred thirty-seven. Whenever the aforementioned margin be
found to be less than that herein required to be maintained, the
Commissioner shall forthwith direct the company to make good any such
deficiency by cash, to be contributed by all stockholders of record in
proportion to their respective interests, and paid to the treasurer of
the company, within fifteen days from receipt of the order; Provided,
That the company in the interim shall not be permitted to take any risk
of any kind of character unless and until it make good such deficiency;
Provided, Further, That a stockholder who aside from paying the
contribution due from him, pays the contribution due from another
stockholder by reason of the failure or refusal of the latter to do so,
shall have a lien on the certificates of stock of the insurance company
concerned appearing in its books in the name of the defaulting
stockholder on the date of default, as well as on any interests or
dividends that have accrued or will accrue to the said certificates of
stock, until the corresponding payment or reimbursement is made by the
defaulting stockholder."
Section 5. Section 203 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 203. Every domestic insurance company shall, to
the extent of an amount equal in value to twenty-five per centum of the
minimum paid-up capital required under section one hundred
eighty-eight, invest its funds only in securities, satisfactory to the
Commissioner, consisting of bonds or other evidences of debt of the
Government of the Philippines or its political subdivisions or
instrumentalities, or of government-owned or controlled corporations
and entities, including the Central Bank of the Philippines; Provided,
That such investments shall at all times be maintained free from any
lien or encumbrances and Provided, Further, That such securities shall
be deposited with and held by the Commissioner for the faithful
performance by the depositing insurer of all its obligations under its
insurance contracts. The provisions of section one hundred ninety-two
shall, so far as practicable, apply to the securities deposited under
this section.
Except as otherwise provided in this Code, no judgment creditor or
other claimant shall have the right to levy upon any of the securities
of the insurer held on deposit under this section or held on deposit
under this section or held deposit pursuant to the requirement of the
Commissioner."
Section 6. Section 204 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 204. After satisfying the requirements
contained in the preceding section, any domestic non-life insurance
company, shall invest, to an amount prescribed below, its funds in, or
otherwise, acquire or loan upon, only the classes of investments
described in section two hundred including securities issued by any
"registered enterprise" as this term is defined in Republic Act No.
5186, otherwise known as the Investment Incentives Act, and such other
classes on investments as may be authorized by the Commissioner for
purposes of this Section; Provided, That (a) no more than twenty per
centum of the net worth of such company as shown by its latest
financial statement approved by the Commissioner shall be invested in
the lot and building in which the insurance company conducts its
business and (b) the total investment of an insurance company in any
registered enterprise shall not exceed twenty per centum of the paid-
up capital of the registered enterprise excluding the intended
investment, unless previously authorized by the Commissioner; and,
Provided, Further, That such investments, free from any lien or
encumbrance, shall be at least equal in amount to the aggregated amount
of (a) its legal reserves, as provided in section two hundred thirteen,
and (b) its reserve fund held for reinsurance as provided for in the
pertinent treaty provision in the case of reinsurance ceded to
authorized insurers."
Section 7. Section 247 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 247. If the Commissioner is of the opinion upon
examination or other evidence that any domestic or foreign insurance
company is in an unsound condition, or that it has failed to comply
with the provisions of law or regulations obligatory upon it, or that
its condition or methods of business is such as to render its
proceedings hazardous to the public or to its policy-holders or that
its paid-up capital stock, in the case of a domestic stock company, or
its available cash assets, in the case of a domestic mutual company, or
its security deposits, in the case of a foreign company is impaired or
deficient, or that the margin of solvency required of such company is
deficient, the Commissioner is authorized to suspend or revoke all
certificates of authority granted to such insurance company, its
officers and agents, and no new business shall thereafter be done by
such company or for such company by its agent in the Philippines while
such suspension, revocation or disability continues or until its
authority to do business is restored by the Commissioner. Before
restoring such authority, the Commissioner shall require the company
concerned to submit to him a business plan showing the company's
estimated receipts and disbursements, as well as the basis therefor,
for the next succeeding three years."
Section 8. Section 249 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 249. Whenever, upon examination or other
evidence, it shall be disclosed that the condition of any insurance
company doing business in the Philippines is one of insolvency, or that
its continuance in business would be hazardous to the policy-holders
and creditors, the Commissioner shall forthwith order the company to
cease and desist from transacting business in the Philippines and shall
designate a receiver to immediately take charge of its assets and
liabilities, as expeditiously as possible collect and gather all the
assets and administer the same for the benefit of its policy-holders
and creditors and exercise all the powers necessary for those purposes
including, but not limited to, bringing suits and foreclosing mortgages
in the name of the insurance company.
The Commissioner shall thereupon determine within thirty days whether
the insurance company may be reorganized or otherwise placed in such
condition so that it may be permitted to resume business with safety to
its policy-holders and creditors and shall prescribed the conditions
under which such resumption of business shall take place as well as the
time fulfillment of such conditions. In such case, the expenses and
fees in the collection and administration of the insurance company
shall be determined by the Commissioner and shall be paid out of the
assets of such company.
If the Commissioner shall determine and confirm within the said period
that the insurance company is insolvent, as defined hereunder, or
cannot resume business with safety to its policy-holders and creditors,
he shall, if the public interest requires, order its liquidation plan
and implement immediately. The Commissioner shall designate a competent
and qualified person as liquidator who shall take over the functions of
the receiver previously designated and, with all convenient speed,
reinsure all its outstanding policies, convert the assets of the
insurance company to cash, or sell, assign or otherwise dispose of the
same to the policy-holders, creditors and other parties for the purpose
of settling the liabilities or paying the debts of such company and he
may, in the name of the company, institute such actions as may be
necessary in the appropriate Court to collect and recover accounts and
assets of the insurance company, and to do such other acts as may be
necessary to complete the liquidation as ordered by the Commissioner.
The provision of any law to the contrary notwithstanding the actions of
the Commissioner under this Section shall be final and executory, and
can be set aside by the Court upon petition by the company and only if
there is convincing proof that the action is plainly arbitrary and made
in bad faith. The Commissioner, through the Solicitor General, shall
then file the corresponding answer reciting the proceeding taken and
praying the assistance of the Court in the liquidation of the company.
No restraining order or injunction shall be issued by the Court
enjoining the Commissioner from implementing his actions under this
Section, unless there is convincing proof that the action of the
Commissioner is plainly arbitrary and made in bad faith and the
petitioner or plaintiff files with the clerk or Judge of the Court in
which the action is pending a bond executed in favor of the
Commissioner in an amount to be fixed by the Court. The restraining
order or injunction shall be refused or, if granted, shall be dissolved
upon filing by the Commissioner, if he so desires, of a bond in an
amount twice the amount of the bond of the petitioner or plaintiff
conditioned that is will pay the damages which the petitioner of
plaintiff may suffer by the refusal or the dissolution of the
injunction. The provisions of Rule 58 of the New Rules of Court insofar
as they are applicable shall govern the issuance and dissolution of the
restraining order or injunction contemplated in this Section.
All proceedings under this Title shall be given preference in the
Courts. The Commissioner shall not be required to pay any fee to any
public officer for filing, recording, or in any manner authenticating
any paper or instrument relating to the proceedings.
As used in this Title, the term "Insolvency" shall mean the inability
of an insurance company to pay its lawful obligations as they fall due
in the usual and ordinary course of business as may be shown by its
failure to maintain the margin of solvency required under Section 194
of this Code."
*Section 8. Section 281 of the same Decree is hereby
amended to read as follows: chanroblesvirtualawlibrary
"Sec. 281. Any person, partnership, association, or
corporation authorized to transact solely reinsurance business must
have a paid-up capital stock of at least ten million pesos, twenty-five
per centum of which must be invested in securities satisfactory to the
Commissioner consisting of bonds or other evidences of debt of the
Government of the Philippines or its political subdivisions or
instrumentalities or of government-owned or controlled corporations and
entities, including the Central Bank of the Philippines, and deposited
with the Commissioner, and the remaining seventy-five per centum in
such other securities as may be allowed and permitted by the
Commissioner, which securities shall at all times be maintained free
from any lien or encumbrance; Provided, That reinsurers already doing
business as such in the Philippines shall comply with the requirement
of this section by increasing their respective capital as herein
provided not later than December thirty-one, nineteen hundred eighty;
Provided, Further, That the provisions of this chapter applicable to
insurance companies shall so far as practicable be likewise applicable
to professional reinsurers."
Section 9. Section 299 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 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 from 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 from any insurance company doing business in the
Philippines or any agent thereof, without first procuring a license so
to act from the Commissioner, which 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 and countersigned by the company such
person desires to represent, and shall be upon a form prescribed by the
Commissioner giving such information as he may require and upon payment
of the corresponding fee hereinafter prescribed. The Commissioner shall
satisfy himself as to the competence and trustworthiness of the
applicant and shall have the right to refuse to issue or renew and 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." chanroblesvirtualawlibrary
Section 10. Section 302 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 302. Every applicant for an insurance broker's
license shall file with the application and 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 and
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, and
shall be conditioned upon full accounting and 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 and the Commissioner.
Upon approval of the application, the applicant must also file two
errors and 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 which 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 not 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."
Section 11. Section 311 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 311. Upon application and payment of the
corresponding fee hereinafter prescribed, and the filing of two errors
and 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 or the year
following its issuance unless it is renewed.
The errors and 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
which may be made against him be reason of any negligent act, error or
omissions, whenever or wherever committed or alleged to have been
committed, on the part of the applicant of 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 policy. The said policies shall be issued separately by two
insurance companies authorized to do business in the Philippines and
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 be amount of each of such
policies be less than five hundred thousand pesos."
Section 12. Section 317 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 317. No certificate of registration issued to a
resident agent 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 and hearing, recall or cancel
the certificate of registration issued to a resident agent for
violation of any existing laws, rule or regulation or any provision of
this Code.
Section 13. Section 322 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 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 after due notice and hearing, also suspend or cancel
such certificate for violation of existing laws, rules and regulations
or of any provisions of this Code."
Section 14. Section 328 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 328. No 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."
Section 15. Section 336 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 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 and the payment of the
corresponding fee hereinafter prescribed, Provided, That: (1) he is a
fellow of good standing of the Actuarial Society of the Philippines at
the time of this appointment and 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 Actuarial Society of the Philippines, he meets all the
requirements of the said Society for accreditation as a fellow of the
Society, and has been given permission by the pertinent government
authorities in the Philippines to render service in the Philippines, in
the event the 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."
Section 16. Section 341 of the same Decree is hereby
amended to read as follows: chanroblesvirtualawlibrary
"Sec. 341. No rating organizational hereafter formed
shall commence rate-making operations until is shall have obtained a
license from the Commissioner. Before obtaining such license, such
rating organization shall file with the Commissioner a notice of its
intention to commerce rate-making operations, a copy of its
constitution, articles of agreement or association, or of
incorporation, and its by-laws, a list of insurance companies that have
agreed to become members of subscribers, and such other information
concerning such rating organization and its operations as may be
required by the Commissioner. If the Commissioner finds that the
organization has complied with the provisions of law and that it has a
sufficient number of members or subscribers and 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 which now exists and is
not licensed pursuant to this section shall continue rate-making
operation until it shall have obtained from the Commissioner a license
which he may issue if satisfied that such organization is complying
with 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, and its by-laws rules and regulations
governing the conduct of its business, and (2) its list of members and
subscribers. chanroblesvirtualawlibrary
A "Member" means an insurer who participates in or is entitled to
participate in the management of a rating organization. chanroblesvirtualawlibrary
A "Subscriber" means an insurer which is furnished at its request with
rates and rating manuals by a rating organization of which it is not a
member."
Section 17. Section 364 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 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
through as individual licensee. The Commissioner shall charge, and the
licensee shall pay, a full additional license fee as to each respective
individual so named in such license in excess of one.
Licenses and 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 and payment of the fees
therefor."
Section 18. Section 373 of the same Decree is hereby
amended to read as follows:cralaw:red
(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 and
Traffic Code."
(b) "Passenger" is any fare paying person being
transported and conveyed in and by a motor vehicle for transportation
of passengers for compensation, including persons expressly authorized
by law or by the vehicles operator or his agents to ride without fare.
(c) "Thirty-party" is any person other than a
passenger as defined in this section and shall also exclude a member of
the household, or a member, of the family within the second degree of
consanguinity or affinity, or 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
and in the course of employment.
(d) "Owner" or "Motor vehicle owner" means the actual
legal owner of a motor vehicle, in whose name such vehicle is duly
registered with the Land Transportation Commission.
(e) "Land transportation operator" means the owner or
owners of motor vehicles for transportation or passenger for
compensation, including school buses.
(f) "Insurance policy" or "Policy" refers to a
contract of insurance against passenger and third- party liability for
death of bodily injuries and damage to property arising from motor
vehicle accidents."
Section 19. Section 374 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 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 with the provisions of this chapter to indemnify the death,
bodily injury, and/or damage to property of a third-party or passenger,
as the case may be, arising from the use thereof."
Section 20. Section 375 of the same Decree is hereby
amended to read as follows: chanroblesvirtualawlibrary
"Sec. 375. The Commissioner shall furnish the Land
Transportation Commissioner with a list of insurance companies
authorized to issue the policy of insurance or surety bond required by
this chapter."
Section 21. Section 376 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 376. The Land Transportation Commission shall
about not allow the registration or renewal of registration of any
motor vehicle without first requiring from the land transportation
operator or motor vehicle owner concerned the presentation and 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.
Section 22. Section 377 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 377. Every land transportation operator and
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. chanroblesvirtualawlibrary
(l) in the case of a land transportation operator the
insurance or guaranty in cash or surety bond shall cover liability for
death, bodily injuries, or damage to property of third-parties and/or
passengers arising out of the use of such vehicle in the amount not
less than twelve thousand pesos per passenger or third-party and an
amount, for each of such categories, in any one accident, of not less
than that set forth in the following scale:cralaw:red
(a) Motor vehicles with an authorized capacity of
twenty-six or more passengers: Fifty thousand pesos;chanroblesvirtualawlibrary
(b) Motor vehicles with an authorized capacity from
twelve to twenty-five passengers: Forty thousand pesos;chanroblesvirtualawlibrary
(c) Motor vehicles with an authorized capacity of
from six to eleven passengers: Thirty thousand pesos;chanroblesvirtualawlibrary
(d) Motor vehicles with 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 with, the Commissioner shall be resorted to by him in cases of
accidents the indemnities for which to third-parties and/or passengers
are not settled accordingly by the land transportation operator and, in
that event, the said cash deposit shall be replenished or such surety
bond shall be restored within 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 to readily
marketable government bonds and/or securities. chanroblesvirtualawlibrary
(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 and for loss of damage to property of
said third-parties in an amount not less than the set forth in the
following scale in any one accident:cralaw:red
I. Private Cars
(a) Bantam: Twenty thousand pesos;
(b) Light: Twenty thousand pesos;
(c) Heavy; Thirty thousand pesos;chanroblesvirtualawlibrary
II. Other Private Vehicles
(a) Tricycles, motorcycles, and scooters; Twelve
thousand pesos;
(b) Vehicles with an unladen weight of 2,600 kilos or
less: Twenty thousand pesos;
(c) Vehicles with an unladen weight of between 2,601
kilos and 3,980 kilos; Thirty thousand pesos;
(d) Vehicles with an unladen weight over 3,980 kilos:
Fifty thousand pesos.
Provided, That for purposes of this section, in the event of liability
both for death or bodily injury on one hand, and property damage on the
other hand, the claim for death and/or bodily injury shall have
priority over the latter type of claim in the settlement. chanroblesvirtualawlibrary
Section 23. Section 379 of the same Decree is hereby
amended to read as follows: chanroblesvirtualawlibrary
"Sec. 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 from said land transportation operator or
owner of vehicle, in lieu of a policy of insurance or surety bond, a
certificate that a cash deposit has been made with the Commissioner in
such amount required as limits of indemnity in section three hundred
seventy-seven to answer for the passengers and/or third-party liability
of such land transportation operator or owner or the vehicle.
No insurance company may issue the policy of insurance or surety bond
required under this Chapter unless so authorized under existing laws
and subject to the further condition that any such risk written or
assumed shall be ceded fully to a unified pooling system to be composed
of and formed by all insurance companies authorized to engage in
casualty and/or surety lines of business which risk, in turn, shall be
retroceded to and distributed equally among all such members.
The authority to engage in the casualty and/or surety lines of business
of an insurance company that refuses to join with, or withdraws or is
expelled from, the pooling system licensed by the Commissioner to
operate as such, shall be withdrawn immediately."
Section 24. Section 380 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 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 and 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 bond has been made or posted with the
Commissioner and which meets the requirements of this chapter, or an
endorsement or revival of the cancelled one."
Section 25. Section 381 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 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 with the Commissioner and without any gap,
file the required documentation with the land Transportation
Commission, and notify the insurance company concerned of the
cancellation of its policy or surety bond."
Section 26. Section 385 of the same Decree is hereby
amended to read as follows: chanroblesvirtualawlibrary
"Sec. 385. The insurance company concerned shall
forthwith the ascertain the truth and extent of the claim and 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 from pursuing his claim further, in
which case, he shall not be required or compelled by the insurance
company to execute any suit-claim or document releasing it from
liability under the policy or insurance or surety bond issued."
Section 27. Section 390 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 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 suchm or purpose is carried out by means of
fixed dues or assessments collected regularly from 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 and
regular dues or assessments, but in no case shall include any society,
association, or corporation with such mutual benefit features and which
shall be carried out purely from voluntary contributions collected not
regularly and or no fixed amount from 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 a
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 and
authorized to transact business as a charitable or benevolent
organization, and whenever it has this feature as incident to its
existence, the corresponding charter provision shall be revised to
conform with the provision of this section. Mutual benefit association,
already licensed to transact business as such as 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." chanroblesvirtualawlibrary
Section 28. Section 392 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 392. No mutual benefit association shall be
issued a license to operate as such unless it has constituted and
established a Guaranty Fund by depositing with the Commissioner an
initial minimum amount of ten thousand pesos in cash, or in government
securities with 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 with any bank or banks
authorized to transact business in the Philippines for the account of
the particular association constituting the Guaranty Bond.
Any accrual to such fund, be it interest earned or dividend additions
or moneys or securities so deposited, may, with the prior approval of
the Commissioner be withdrawn by the association if there is no pending
benefit claim against it, included 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
from 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 and three of this Code." chanroblesvirtualawlibrary
Section 29. Section 416 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 416. The Commissioner shall have the power to
adjudicate claims and complaints involving any loss, damage or
liability for which an insurer may be answerable under any kind of
policy or contract of insurance, or for which such insurer may be
liable under a contract of suretyship, or for which a reinsurer may be
sued under any contract or reinsurance it may have entered into, or for
which a mutual benefit association may be held liable under the
membership certificates it has issued to its members, where the amount
of any such loss, damage or liability, excluding interests, cost and
attorney's fees, being claimed or sued upon any kind of insurance,
bond, reinsurance contract, or membership certificate does not exceed
in any single claim one hundred thousand pesos.
The insurer or surety may, in the same action file a counter-claim
against the insured or the obligee. chanroblesvirtualawlibrary
The insurer or surety may also file a cross-claim against a co-party
for any claim arising out of the transaction or occurrence that is the
subject matter of the original action, or of counter-claim
therein. chanroblesvirtualawlibrary
With leave of the Commissioner, an insurer or surety may file a
third-party complaint against its reinsurers for indemnification,
contribution, subrogation of any other relief, in respect of the
transaction that is the subject matter of the original action filed
with the Commissioner.
The party filing an action pursuant to the provision 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 with and pursuant to the
provisions of the Rules of Court.
The authority to adjudicate granted to the Commissioner under this
section shall be concurrent with that of the civil courts, but the
filing of a complaint with the Commissioner shall preclude the civil
courts from taking cognizance of a suit involving same subject matter.
Any decision, order or ruling rendered by the Commissioner after a
hearing shall have the force and effect of a judgment. Any party may
appeal from a final order, ruling or decision of the Commissioner by
filing with the Commissioner within thirty days from receipt a copy of
such order, ruling or decision a notice of appeal and with the Supreme
Court twelve printed or mimeographed copies of a petition for
certiorari or review of such order, ruling or decision, as the case may
be. A copy of the petition shall be served upon the Commissioner and
upon the adverse party, and proof of service thereof attached to the
original of the petition.
As soon as a decision, order or ruling has become final and executory,
the Commissioner shall motu propio or on motion of the interested
party, issue writ of execution requiring the sheriff or the proper
office to whom it is directed to execute said decision, order or award,
pursuant to Rule thirty-one 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
and affirmation, subpoena witnesses, compel their attendance, take
evidence, and require the production of any books, papers, documents,
or contracts, or other records which are relevant or material to the
inquiry. In case of contumacy by, or refusal to obey a subpoena issued
to, any person, the Commissioner may invoke thed of any court of first
instance within the jurisdiction of which such proceeding is carried
on, where such person resides or carries on his own business, in
requiring the attendance and testimony of witnesses and 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
punished by such court as a contempt thereof.
A full and complete record shall be kept of all proceedings had before
the Commissioner, or the officers thereof designated by him, and all
testimony shall be taken down and transcribed by a stenographer
appointed by the Commissioner. chanroblesvirtualawlibrary
A transcribed copy of the evidence and proceedings, 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 and
correct transcript of the testimony on this hearing of a particular
witness, or of a specific proof thereof, carefully compared by him from
his original notes, and to be a correct statement of evidence and
proceeding had in such hearing so purporting to be taken and
subscribed, may be received as evidence by the Commissioner and by any
court with the same effect as if such stenographer were present and
testified to the facts so certified."
Section 30. Section 417 of the same Decree is hereby
amended to read as follows:cralaw:red
"Sec. 417. (1) For the issuance or renewal of
certificates of authority, licenses and certificates of registration,
pursuant to pertinent provisions of this Code, the Commissioner shall
collect and receive fees which shall be not less than the following:cralaw:red
For each certificate of authority issued to an insurance company doing
business in the Philippines, two hundred pesos.
For each special certificate of authority issued to a servicing
insurance company, one hundred pesos.
For each license issued to a general agent of an insurance company,
fifty pesos.
For each license issued to an insurance agent, twenty-five pesos.
For each license issued to an agent for variable contract policy,
twenty-five pesos.
For each license issued to an insurance broker, one hundred pesos.
For each license insured to a reinsurance broker, one hundred pesos.
For each license issued to an insurance adjuster, one hundred pesos.
For each certificate of registration issued to an actuary, fifty pesos.
For each certificate of registration issued to a resident agent, fifty
pesos.
For each license issued to a rating organization, one hundred pesos.
For each certificate of registration issued to a non-life company
underwriter, fifty pesos.
For each license issued to a mutual benefit association, ten pesos.
For each certificate of registration issued to a trust for charitable
uses, ten pesos.
All certificates of authority and 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 which no expiration date has been prescribed, shall expire on the
last day of June of each year and shall be renewed annually upon
application therefor and payment of the corresponding fee, if the
licensee or holder of such license or certificate is continuing to
comply with all the applicable provisions of existing laws, and of
rules, instructions, orders and decisions of the Commissioner. chanroblesvirtualawlibrary
(2) For the filing of the annual statement referred
to in section two hundred twenty-three, the Commissioner shall collect
and receive from the insurance company so filing a fee of five hundred
pesos; Provided, That a fine of one hundred pesos shall be imposed and
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 and receive from the mutual benefit
association so filing a fee of ten pesos; Provided, That a fine of ten
pesos shall be imposed and 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 and 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:cralaw:red
(a) Two million pesos or more but less than four
million pesos, Four hundred pesos;chanroblesvirtualawlibrary
(b) Four million pesos or more but less than six
million pesos, Eight hundred pesos;chanroblesvirtualawlibrary
(c) Six million pesos or more but less than eight
million pesos, one thousand two hundred pesos;chanroblesvirtualawlibrary
(d) Eight million pesos or more but less than two
million pesos, One Thousand six hundred pesos; chanroblesvirtualawlibrary
(e) Ten million pesos or more, Two thousand pesos.
Provided, That if the said examination is made in places outside the
Metropolitan Manila areas, besides these fees, the Commissioner shall
require of the company examined the payment of the actual and necessary
travelling and subsistence expenses of the examiner or examiners
concerned.
For the examination prescribed in section three hundred ninety-nine,
the Commissioner shall collect and receive a minimum fee of one hundred
pesos from the mutual benefit association examined; Provided, That if
such association has total assets of more than one hundred thousand
pesos, and 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 from
the Philippines under title eighteen, the Commissioner shall collect
and receive from the foreign company so withdrawing a fee of one
thousand pesos.
(5) The Commissioner may fix and collect fees or
charges for documents, transcripts, or other materials which may be
furnished by him not in excess of reasonable cost."
Section 31. All laws, decrees, rules and regulations
which are inconsistent herewith are hereby repealed or modified
accordingly.
Section 32. This Decree shall take effect immediately.
Done in the City of Manila this
11th day of June, in the year of Our Lord, nineteen hundred and
seventy-eight.
* Copied verbatim from documents obtained directly
from Central Book Supply, Inc. (duplicity of Section 8)
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