Presidential Decree No. 1455 (PD 1455) — Amending Certain Sections of Presidential Decree No. 612 Otherwise Known as the Insurance Code
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;
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;
WHEREAS, there is a need to amend the said Decree to further
ensure the faithful performance of insurance contracts for the protection of the
interests of the policyholders 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:
SECTION 1. Section 176 of Presidential Decree No. 612,
otherwise known as the Insurance Code is hereby amended to read as follows:
"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."
SEC. 2. Section 187 of the same Decree is hereby amended to
read as follows:
"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.
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 policyholders and the public.
In order to maintain the quality of the management of insurance companies and
afford better protection to policyholders and the public in general, any person
of good moral character, unquestioned integrity and recognized competence nay 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 this 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.
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.
No insurance company shall have any equity in an adjustment company and
neither 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."
SEC. 3. Section 188 of the same Decree is hereby amended to
read as follows:
"SEC. 188. Except as provided in section two hundred
eighty-one, no domestic insurance company shall, if a stock corporation, engage
in business in the Philippines unless possessed of a paid-up capital stock 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 policyholders 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 an 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 regulations which now are or
hereafter may be in force, alter its organization and transform itself into a
mutual insurance company."
SEC. 4. Section 194 of the same Decree is hereby amended to
read as follows:
"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 its 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 new risk of any
kind or 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."
SEC. 5. Section 203 of the same Decree is hereby amended to
read as follows:
"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 encumbrance; 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 pursuant to the
requirement of the Commissioner."
SEC. 6. Section 204 of the same Decree is hereby amended to
read as follows:
"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 of 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 aggregate amount of (a)
its legal reserve, 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."
SEC. 7. Section 247 of the same Decree is hereby amended to
read as follows:
"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
policyholders 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."
SEC. 8. Section 249 of the same Decree is hereby amended to
read as follows:
"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 its policyholders 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 policyholders and
creditors and exercise all the powers necessary for these 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 policyholders
and creditors and shall prescribed the conditions under which such resumption of
business shall take place as well as the time for 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 policyholders 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 designate 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 policyholders, 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 provisions 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 thin 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 or 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
issuance and dissolution of the restraining order or injunction contemplated
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."
SEC. 9. Section 299 of the same Decree is hereby amended to
read as follows:
"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."
SEC. 10. Section 302 of the same Decree is hereby amended to
read as follows:
"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 allege 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."
SEC. 11. Section 311 of the same Decree is hereby amended to
read as follows:
"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 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 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 other 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 the amount of each of such
policies be less than five hundred thousand pesos."
SEC. 12. Section 317 of the same Decree is hereby amended to
read as follows:
"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."
SEC. 13. Section 322 of the same Decree is hereby amended to
read as follows:
"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
provision of this Code."
SEC. 14. Section 328 of the same Decree is hereby amended to
read as follows:
"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."
SEC. 15. Section 336 of the same Decree is hereby amended to
read as follows:
"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 his 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 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."
SEC. 16. Section 341 of the same Decree is hereby amended to
read as follows:
"SEC. 341. Corporating organizational hereafter formed shall
commence rate-making operations until it 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 commence 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 or 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 in 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 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.
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 which is furnished at its request with rates
and rating manuals by a rating organization of which it is not a
member."
SEC. 17. Section 364 of the same Decree is hereby amended to
read as follows:
"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 though an 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."
SEC. 18. Section 373 of the same Decree is hereby amended to
read as follows:
"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."
"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.
"Third-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, 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 and in the course of employment.
"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.
"Land transportation operator" means the owner or owners of motor vehicles
for transportation of passengers for compensation, including school buses.
"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."
SEC. 19. Section 374 of the same Decree is hereby amended to
read as follows:
"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."
SEC. 20. Section 375 of the same Decree is hereby amended to
read as follows:
"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."
SEC. 21. Section 376 of the same Decree is hereby amended to
read as follows:
"SEC. 376. The Land Transportation Commission shall 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.
SEC. 22. Section 377 of the same Decree is hereby amended to
read as follows:
"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.
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:
Motor vehicle with an authorized capacity of twenty-six or more passengers:
Fifty thousand pesos;
Motor vehicles with an authorized capacity from twelve to twenty-five
passengers: Forty thousand pesos;
Motor vehicles with an authorized capacity of from six to eleven passengers:
Thirty thousand pesos;
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 in readily marketable government bond and/or securities.
In the case of an owner of a motor vehicle, the insurance or guaranty in
cash and surety bond shall cover liability for death or injury to third parties
for loss or damage to property of said third-parties in an amount not less than
the set forth in the following scale in any one accident:
Private Cars
Bantam: Twelve thousand pesos;
Light: Twenty thousand pesos;
Heavy: Thirty thousand pesos.
Other Private Vehicles
Tricycles, motorcycles, and scooters: Twelve thousand pesos;
Vehicles with an unladen weight of 2,600 kilos or less: Twenty thousand
pesos;
Vehicles with an unladen weight of between 2,601 kilos and 3,930 kilos
Thirty thousand pesos;
Vehicles with an unladen weight over 3,930 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."
SEC. 23. Section 379 of the same Decree is hereby amended to
read as follows:
"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 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 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."
SEC. 24. Section 380 of the same Decree is hereby amended to
read as follows:
"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."
SEC. 25. Section 381 of the same Decree is hereby amended to
read as follows:
"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."
SEC. 26. Section 385 of the same Decree is hereby amended to
read as follows:
"SEC. 385. The insurance company concerned shall forthwith
the as certain 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 suitclaim or document releasing it from
liability under the policy or insurance or surety bond issued."
SEC. 27. Section 390 of the same Decree is hereby amended to
read as follows:
"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 such aim 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."
SEC. 28. Section 392 of the same Decree is hereby amended to
read as follows:
"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 Fund.
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."
SEC. 29. Section 416 of the same Decree is hereby amended to
read as follows:
"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.
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 counterclaim therein.
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 the 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 of 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 a
writ of execution requiring the sheriff or the proper officer 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
the aid 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.
A transcribed copy of the evidence and 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 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."
SEC. 30. Section 417 of the same Decree is hereby amended to
read as follows:
"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 not be less than the following:
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 of variable contract policy, twenty-five
pesos.
For each license issued to an insurance broker, one hundred pesos.
For each license issued 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.
(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:
Two million pesos or more but less than four million pesos, Four hundred
pesos;
Four million pesos or more but less than six million pesos, Eight hundred
pesos;
Six million pesos or more but less than eight million pesos, One thousand
two hundred pesos;
Eight million pesos or more but less than two million pesos, One thousand
six hundred pesos;
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 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, 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 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 costs."
SEC. 31. All laws, decrees, rules and regulations which are
inconsistent herewith are hereby repealed or modified accordingly.
SEC. 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.
(Sgd.) FERDINAND E. MARCOS
President of the
Philippines
By the President:
(Sgd.) JACOBO C. CLAVE
Presidential Executive
Assistant
SEC. 8. Section 281 of the same Decree is hereby amended to
read as follows:
"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."
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
