Section 1.
Section one hundred ninety-seven of Act Numbered Two thousand four
hundred twenty-seven as amended by Republic Act Numbered Two hundred
seventy-three, is amended to read:
"Section 197. No insurance corporation shall loan any
of its money or deposits to any person, corporation or association,
except upon first mortgages or deeds of trust of unencumbered, improved
or unimproved real estate, in cities and centers of population of
municipalities in the Philippines when the amount of such loan is not
in excess of sixty per centum of the market value of such real estate;
or upon the security of first mortgages or deeds of trust of actually
cultivated, improved and unencumbered agricultural lands in the
Philippines when the amount of such loans is not in excess of forty per
centum of the market value of such land; or upon the purchase money
mortgages or like securities received by it upon the sale or exchange
of real property acquired pursuant to section two hundred or section
two hundred-A of this Act; or upon bonds or other evidences of debt of
the Government of the Philippines or its political subdivisions
authorized by law to issue bonds, or upon bonds or other evidences of
debt of government-owned or controlled corporations and
instrumentalities including the Central Bank; or upon obligations
issued or guaranteed by the International Bank for Reconstruction and
Development; or upon stocks, bonds or other evidences of debt as are
specified in section two hundred of this Act: Provided, however, That a
life insurance corporation may lend to any of its policyholders upon
the security of the value of its policy a sum not exceeding the legal
reserve which it is required to maintain thereon: Provided, further,
That no loan upon the security of real estate shall have a maturity in
excess of fifteen years: And provided, finally, That where such loans
upon the security of real estate are granted for a period of longer
than five years, payments thereof shall be made in monthly, quarterly,
semi-annual or annual installments.
"The phrase "improved real estate" used above is hereby defined to mean
land with permanent building or buildings erected or being erected
thereon. In case the building or buildings on the land do not belong to
the owner of the latter, no loan shall be granted on the security of
the real estate in question unless both the owner of the building or
buildings and the owner of the land sign the deed of mortgage, and
unless the owner of the land is the Government of the Philippines or
one of its political subdivisions, in which the event the owner is not
required to sign the deed of mortgage."
Sec. 2. Section two hundred of the same Act, as
amended by Republic Act Numbered Two hundred seventy-three is hereby
further amended to read as follows:
"Sec. 200. (1) An insurance corporation, domestic
or foreign, may purchase, hold, own and convey such property, real and
personal, as may have been mortgaged, pledged, or conveyed to it in
good faith in trust for its benefit by reason of money loaned by it in
pursuance of the regular business of the corporation, and such real or
personal property as may have been purchased by it at sales under
pledges, mortgages or deeds of trust for its benefit on account of
money loaned by it; and such real and personal property as may have
been conveyed to it by borrowers in satisfaction and discharge of loans
made by the corporation to them: Provided, however, That in the case of
any foreign insurance corporation, any real estate purchased by said
corporation in payment or by reason of any loan made by said
corporation shall be sold by the corporation within twenty years after
the title thereto has been vested in it.
"(2) Insurance corporations may purchase, hold, own
and convey real and personal property as follows:
"(a) The lot with the building thereon in which the
corporation conducts and carries on its business.
"(b) Bonds and other evidences of debt of the
Government of the Philippines or its political subdivisions authorized
by law to issue bonds at the reasonable market value thereof.
"(c) Bonds or other evidences of debt of
government-owned or controlled corporations and entities, including the
Central Bank.
"(d) Bonds, debentures or other evidences of
indebtedness of any solvent corporation or institution created or
existing under the laws of the Philippines: Provided, however, That the
issuing, assuming or guaranteeing entity or its predecessors shall not
have defaulted in the payment of interest on any of its securities and
that during each of any three including the last two of the five fiscal
years next preceding the date of acquisition by such insurance
corporation of such bonds, debentures or other evidences of
indebtedness, the net earnings of the issuing, assuming or guaranteeing
institution available for its fixed charges, as hereinafter defined,
shall have been not less than one and one-quarter times the total of
its fixed charges for such year: And provided, further, That no life
insurance company shall invest in or loan upon the obligations of any
one institution in the kinds permitted under this subsection an amount
in excess of twenty-five per centum of the total admitted assets of
such insurer as of December thirty-first next preceding the date of
such investment.
"As used in this subsection the term "net earnings available for fixed
charges" shall mean net income after deducting operating and
maintenance expenses, taxes other than income taxes, depreciation and
depletion, but excluding extraordinary non-recurring items of income or
expense appearing in the regular financial statement of the issuing,
assuming or guaranteeing institution. The term "fixed charges" shall
include interest on funded and unfunded debt, amortization of debt
discount, and rentals for leased properties.
"(e) Preferred or guaranteed stocks of any solvent
corporation or institution created or existing under the laws of the
Philippines: Provided, however, That the issuing, assuming or
guaranteeing entity or its predecessors has paid regular dividends upon
its preferred or guaranteed stocks for a period of at least three years
next preceding the date of investment in such preferred or guaranteed
stocks: Provided, further, That if the stocks are guaranteed, the
amount of stocks so guaranteed is not in excess of fifty per centum of
the amount of the preferred or common stocks, as the case may be, of
the guaranteeing corporation: And provided, finally, That no life
insurance company shall invest in or loan upon obligations of any one
institution in the kinds permitted under this subsection an amount in
excess of ten per centum of the total admitted assets of such insurer
as of December thirty-first next preceding the date of such investment.
"(f) Common stocks of any solvent corporation or
institution created or existing under the laws of the Philippines upon
which regular dividends shall have been paid for the three years next
preceding the purchase of such stocks: Provided, however, That no life
insurance company shall invest in or loan upon the obligations of any
one corporation or institution in the kinds permitted under this
subsection an amount in excess of ten per centum of the total admitted
assets of such insurer as of December thirty-first next preceding the
date of such investment.
"(g) Certificates, notes and other obligations issued
by trustees or receivers of any institution created or existing under
the laws of the Philippines which, or the assets of which, are being
administered under the direction of any court having jurisdiction:
Provided, however, That such certificates, notes or other obligations
are adequately secured as to principal and interest.
"(h) Equipment trust obligations or certificates
which are adequately secured or other adequately secured instruments
evidencing an interest in equipment wholly or in part within the
Philippines: Provided, however, That there is a right to receive
determined portions of rental, purchase or other fixed obligatory
payments for the use or purchase of such equipment.
"(i) Any obligation of a corporation or institution
created or existing under the laws of the Philippines which is, on the
date of acquisition by the insurer, adequately secured and has
qualities and characteristics wherein the speculative elements are not
predominant.
"(j) Such other securities as may be approved by the
Insurance Commissioner.
"(3) Any domestic insurer which has outstanding
insurance, annuity or reinsurance contracts in currencies other than
the National currency of the Philippines may invest in, or otherwise
acquire or loan upon securities and investments in such currency which
are substantially of the same kinds, classes and investment grades as
those eligible for investment under the foregoing subdivisions of this
Act; but the aggregate amount of such investments and of cash in such
currency which is at any time held by such insurer shall not exceed one
and one-half times the amount of its reserves and other obligations
under such contracts or the amount which such insurer is required by
the law of any country or possession outside the Republic of the
Philippines to invest in such country or possession, whichever shall be
greater."
Sec. 3. Act Numbered Two thousand four hundred
twenty-seven, as amended by Republic Act Numbered Two hundred
seventy-three, is hereby further amended by inserting between sections
two hundred and two hundred one thereof the following new section:
"Sec. 200-A. Any life insurance company may:
"(a) Acquire or construct housing projects and, in
connection with any such project, may acquire land or any interest
therein by purchase, lease or otherwise, or use land acquired pursuant
to any other provision of this Act. Such companies may thereafter own,
maintain, manage, collect or receive income from, or sell and convey,
any land or interest therein so acquired and any improvements thereon.
The aggregate book value of the investments of any such company in all
such projects shall not exceed at the time of such investment
twenty-five per centum of the total admitted assets of such company on
the thirty-first day of December next preceding.
"(b) Acquire real property, other than property to be
used primarily for providing housing and property for accommodation of
its own business , as an investment for the production of income, or
may acquire real property to be improved or developed for such
investment purpose pursuant to a program therefor, subject to the
following condition and limitation: the cost of each parcel of real
property so acquired under the authority of this paragraph (b),
including the estimated cost to the company of the improvement or
development thereof, when added to the book value of all other real
property held by it pursuant to this paragraph (b), shall not exceed
twenty-five per centum of its admitted assets as of thirty-first day of
December next preceding."
Sec. 4. This Act shall take effect upon its
approval.
Approved: June 11, 1950
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