SEC. 5. Section One hundred seventy-five (A) to
Section One hundred seventy-five (U), of the same Act, is further
amended to read as follows:
"SEC. 175(A). Grounds for Liquidation. —
The Insurance Commission shall apply under this Act for an order
directing it to liquidate any domestic insurance company or a Philippine
branch of a foreign insurance company having security deposits or
trusted assets in the country, whenever it finds that the company cannot
be permitted to resume business with safety to its policyholders, or to
its creditors, or to the public, or, upon the ground that the company
has consented to such proceeding through a majority of its directors,
stockholders, or members.
"SEC. 175(B). Order of Liquidation: Rights and
Liabilities. — An order to liquidate the business of an insurance
company shall direct the Insurance Commission to continue in possession,
as the case may be, of the property of the company and to liquidate the
business of the same and to deal with the property and business of the
company in the name of the Insurance Commission or in the name of the
company as the Court may direct, and to give notice to all creditors who
may have claims against the company to present their claims.
"The Commission shall be vested by operation of law with the title
to all of the property, contracts, rights of action, and all of the
books and records of the insurance company as of the date of the entry
of the order so directing them to liquidate. The filing or recording of
such order in any office where instruments affecting title to property
are required to be filed or recorded shall impart the same notice that a
deed, contract of sale or other evidence of title duly filed or
recorded would have imparted. The rights and liabilities of the company
and of its creditors, policyholders, stockholders, members and all other
persons interested in its estate shall, unless otherwise directed by
the court, be fixed as of the date of the entry of the order directing
the liquidation of such insurance company in the office of the clerk of
court where the company had its principal office for the transaction of
business upon the date of the institution of proceedings under this Act.
The right of claimants holding contingent claims on said date to share
in an insolvent estate shall be determined by this Act.
"The Insurance Commission shall reinsure all the policy obligations
of the company in any solvent insurance company authorized to do
business, if the unearned premium reserve of such company is sufficient
to effect such reinsurance. If such unearned premium reserve is
insufficient for the purpose, the Insurance Commission shall reinsure a
percentage of each policy of such company outstanding to the extent that
its unearned premium reserve may be sufficient for the purpose. No
contract of reinsurance shall be entered into by the Insurance
Commission except in the pursuance of an order of the court directing
the reinsurance and establishing the general form of the contract for
the same.
"SEC. 175(C). Grounds for Dissolution of
Domestic Insurance Company. —The Insurance Commission may apply
under this Act for an order dissolving the corporate existence of a
domestic insurance company at any time after an order of liquidation has
been granted, or at any time upon the grounds specified in this Act.
"SEC. 175(D). Commencement of a Proceeding.
— The Insurance Commission may, the Solicitor-General representing it,
commence any proceeding under this Act by an application to the Court of
competent jurisdiction, in the Judicial District in which the principal
office of the insurance company involved is located, for an order
directing such company to show cause why, the Insurance Commission
should not have the relief prayed for. On the return of such order to
show cause, and after a full hearing, which shall be held by the court
without delay such court or judge shall either deny the application or
grant the same together with such other relief as the nature of the case
and the interest of policyholders, creditors, stockholders, members,
and the public may require. All proceedings under this Act shall be
given preference in the courts.
"SEC. 175(E). Service of Order to Show Cause. —
The order to show cause and the papers upon which the same is made in
any proceedings under this Act shall be served upon the insurance
company named in such order by delivering them to the president, or
other head of the corporation, the secretary or clerk to the
corporation, the cashier, the treasurer or a director or managing agent;
if it be a voluntary, unincorporated or a joint stock association,
order or society, by delivering them to the president, vice-president,
treasurer, director, trustee or other officer or a member with
managerial powers.
"SEC. 175(F). Injunctions. — Upon
application by the Insurance Commission for an order to show cause under
this Act, or at any time thereafter, the Court in which such order is
made, or any judge thereof may without notice, issue an injunction
restraining the company named in the order, its officers, directors,
stockholders, members, trustees, agents, servants, employees,
policyholders, attorneys, managers, and all other persons from the
transaction of its business or the waste or disposition of its property
until further order of the court.
"Such court or judge may at any time during a proceeding under this
Act issue such other injunctions or orders as may be deemed necessary
to prevent interference with the Insurance Commission or the preceding,
or waste of the assets of the company, or the prosecution of any action,
or the obtaining of preferences, judgments, attachment or other liens,
or the making of any levy against the corporation or against its assets
or any part thereof.
"SEC. 175(G). Annual Report. — The
Insurance Commission shall transmit to the Secretary of Finance in its
annual report, the names of all insurance companies proceeded against
under this article together with such facts as shall acquaint the
policyholders, creditors, stockholders, and the public with all
proceedings. To that end the officer in charge of any such company shall
file annually with the Insurance Commission a report of the affairs of
such company.
"SEC. 175(H). Appointment of Deputies;
Employment of Assistants; Payment of Salaries and Expenses. — For
the purpose of this Act, the Insurance Commission shall have the power
to appoint under its hand and official seal, one or more
officers-in-charge as its agent or agents, and to employ such counsel,
clerks and assistants as may be deemed necessary, and to give these
persons such powers as may be considered wise.
"The compensation of such officers-in-charge, counsels, clerks and
assistants, and all expenses of conducting any proceeding under this Act
shall be fixed by the Insurance Commission, subject to the approval of
the court, and may, on certificate of the Insurance Commission, be paid
out of the funds or assets of such company.
"SEC. 175(I). Examinations; Immunity; Action
upon Refusal to be Examined. — At any time during the progress of
any proceeding taken under this Act, the Insurance Commission shall have
the powers, either by itself or by its duly authorized representatives
to subpoena witnesses, to compel their attendance, to administer oaths,
and to examine any person under oath, and in connection therewith to
require the production of any books or papers relevant to the inquiry.
If a person subpoenaed to attend such inquiry fails to obey to the
command of a subpoena without reasonable excuse, or if a person in
attendance upon such inquiry, shall, without reasonable cause, refuse to
be sworn, or to be examined, or to answer a question, or to produce a
book or papers when ordered to do so by the officer duly conducting such
inquiry, or if a corporation, association, partnership, or individual
fails to perform any act required hereunder to be performed, he shall be
required by the court to comply with the order of the officer duly
conducting such inquiry.
"If any person shall ask to be excused from testifying or producing
any book or paper or other document before the Insurance Commission or
before any person duly designated by it to conduct any such
investigation upon the ground or for the reason that the testimony or
evidence, documentary or otherwise, required of him may tend to
incriminate him to or degrade him to subject him to a penalty or
forfeiture, and shall notwithstanding be directed by the Insurance
Commission or by the person duly designated by the Insurance Commission
to conduct any such inquiry to testify or to produce any book, paper or
document, he must nonetheless comply with such direction but in such
event he shall not thereafter be prosecuted or subjected to any penalty
or forfeiture for or on account of any transaction, matter or thing
concerning which he may testify or produce, documentary or otherwise,
pursuant thereto and no testimony so given or produced shall be received
against him upon any criminal action, suit or proceeding, investigation
or inquiry. No person testifying shall be exempt from prosecution or
punishment for any perjury or other false statement committed or made by
him in his testimony given as herein provided for.
"SEC. 175(J). Exemption from Filing Fees.
— The Insurance Commission shall not be required to pay fee to any
public officer for filing, recording, or in any manner authenticating
any paper or instrument relating to any proceeding under this Act.
"SEC. 175(K). Deposit of Monies Collected:
Preference. — The monies collected by the Commission in a
proceeding under this Act, shall be, from time to time, deposited in one
or more banks, savings banks, or trust companies authorized by the
Central Bank of the Philippines to do business in the Philippines.
"SEC. 175(L). Voidable Transfer. — Any
transfer of, or lien upon, the property of an insurance company made or
created within four months prior to the granting of an order to show
cause under this Act, with the intent of giving to any creditor or of
enabling him to obtain greater percentage of his debt than any other
creditor of the same class which is accepted by such creditor having
reasonable cause to believe that such preference will occur, shall be
voidable.
"The Insurance Commission as liquidator may avoid any transfer or
lien upon the property of an insurance company which any creditor,
stockholder or member of the company might have avoided and may recover
the property so transferred or its value from the person to whom it was
transferred unless he was a bona fide holder for value prior to the date
of the entry of the order of liquidation. The property may be recovered
or its value collected from whomever may have received it except a bona
fide holder for value.
"SEC. 175(M). Priority of Claims for Wages. —
All wages actually owing to clerical employees of the insurance company
against whom a proceeding under this Act is commenced, for services
rendered within three months prior to the commencement of such
proceedings, not exceeding one thousand five hundred pesos to each
employee, shall be paid prior to the payment of every other debt or
claim, and in the discretion of the Insurance Commission may be paid as
soon as possible after the proceeding has been commenced. At all times,
sufficient funds shall be reserved for the expenses of administration.
"SEC. 175(N). Offset. — In all cases of
.mutual debts or mutual credits between the insurance company and
another person, such credits and debts shall be offset and the balance
only shall be allowed or paid.
"No offset shall be allowed in favor of any such person, however,
where (a) the obligation of the company to such person would not then
entitle him to share as a claimant in the assets of such insurance
company, or (b) the obligation of the company to such person was
purchased by or transferred to such person with a view of its being used
as an offset, or (c) the obligation of such person is to pay an
assessment levied against the members of a mutual insurance company or
to pay a balance upon a subscription to the capital stock of a stock
insurance corporation.
"SEC. 175(O). Sale or Other Disposition of
Assets and Compromise Claims. — The Insurance Commission may,
subject to the approval of the Court, (a) sell or otherwise dispose of
the real and personal property, or any part thereof, of the insurance
company against whom a proceeding has been brought under this Act and
(b) sell or compound all doubtful or uncollectible debts or claim owned
by or owing to such company provided that whenever the amount
of such debt or claim owned by or owing to such company does not exceed
one thousand pesos, the Insurance Commission may compromise or compound
the same upon such terms as it may deem for the best interest of said
company without obtaining the approval of the Court.
"SEC. 175(P). Borrowing on the Pledge of
Assets. — For the purpose of facilitating the liquidation provided
for by this Act the Insurance Commission may, subject to the approval
of the Court, borrow money and execute, acknowledge and deliver notes or
other evidence of indebtedness therefor and secure the repayments of
same by the mortgage, pledge, assignment, transfer in trust, or
hypothecation of any or all of the property, whether real, personal or
mixed, of the company against whom a proceeding has been brought under
this Act and the Insurance Commission, subject to the approval of the
Court, shall have power to take any and all other action necessary and
proper to consummate any such loans and to provide for the repayment
thereof.
"SEC. 175(Q). Time to File Claims Against
Insolvent Insurance Company. — Upon the granting of an order for
the liquidation of an insurance company, the Court shall after such
notice and hearing, as it deems proper, make an order declaring such
company to be insolvent. Thereupon, regardless of any prior notice which
may have been given to creditors, the Insurance Commission shall notify
all persons who may have claims against such company and who have not
filed proper proofs thereof, to present the same to him at a place
specified in such notice within four months or some longer time in the
discretion of the Court, if the Insurance Commission shall certify that
it is necessary, and not otherwise, from the date of the entry of such
order. The last day for the filing of proofs of claim shall be specified
in the notice. The notice shall be given in a manner determined by the
Court.
"Proofs of claim may be filed subsequent to the date specified but,
no such claim shall share in the distribution of the assets until all
allowed claims, proofs of which have been filed before said date, have
been paid in full with interest.
"SEC. 175(R). Proof and Allowance of Claims. —
A proof of claim shall consist of a statement under oath, in writing,
signed by the claimant, setting forth the claim, the consideration
thereof, and whether any, and if so, what payments have been made
thereon, and that the sum claimed is justly owing from the company to
the claimant. Whenever a claim is founded upon an instrument in writing
such instrument, unless lost shall be filed with the proof of claim. If
such instrument is lost or destroyed, a statement of such fact and of
the circumstances of loss or destruction shall be filed under oath with
the claim.
"Upon the liquidation of any insurance companies which has issued
policies insuring the lives of persons, the Insurance Commission shall,
within thirty days after the last day set for filing of claims, make a
list of the persons who have not filed proofs of claims with the
Insurance Commission, to whom it appears to its entire satisfaction from
the books of the company, there are owing amounts on such policies and
the Insurance Commission shall set opposite the name of each person the
amount so owing to such person. Each person whose name shall appear upon
the list shall be deemed to have duly filed prior to the last day set
for the filing of claims a proof of claim for the amount set opposite
his name of said list.
"No contingent claim shall share in a distribution of the assets of
the company which has been adjudicated to be insolvent except that such
claims shall be considered, if properly presented, and may be allowed
to share where (1) such claim becomes absolute against the company on or
before the last day fixed for the filing of proofs of claim against the
assets of such company, or (2) there is a surplus and the liquidation
is thereafter conducted upon the basis that such company is solvent.
"Where an insurance company has been adjudicated to be insolvent,
any person who has a cause of action against an assured of such company,
which the subject of indemnity under a liability policy issued by such
company, shall have the right to file a claim in the liquidation
proceeding, regardless of the fact that such claim may be contingent,
and such claim may be allowed; provided (1) that it may be
reasonably inferred from the proof presented upon such claim that such
person would be able to obtain a judgment upon such cause of action
against such company; (2) that such person shall furnish suitable proof
that no further valid claims against such company arising out of his
cause of action other than those already presented can be made unless
for good cause shown the Court in which the proceeding is pending shall
otherwise direct; (3) that the total liability of such company to all
claimants arising out of the same act of its assured shall be no greater
than the total liability would be were it not in liquidation; (4) that
no judgment taken by default or by collusion, against such an assured
shall be considered as evidence in the liquidation proceeding either of
the liability of such assured to such person upon such cause of action
or of the amount of damages to which such person is therein entitled.
"No claim of any secured claimant shall be allowed at a sum greater
than the difference between the value of the security and the amount
for which the claim is allowed, unless the claimant shall surrender his
security to the Insurance Commission in which event the claim shall be
allowed in the full amount for which it is valued.
"SEC. 175(S). Distribution of Assets;
Priorities; Unclaimed Dividends. — At any time after the last day
fixed for filing of proofs of claim in the liquidation of an insurance
company, the Court may, upon the application of the Insurance
Commission, authorize it to declaim out of the funds remaining in its
hands after the payment of expenses one or more dividends. Such order
shall specify what claims, if any, are entitled to priority of payment
and shall direct the manner in which dividends shall be paid. Where
there has been no adjudication of insolvency, the Insurance Commission
shall pay all allowed claims in full and shall distribute the balance of
the assets remaining in his hands in accordance with the direction of
the Court.
"Dividends remaining unclaimed or unpaid in the hands of the
Insurance Commission for six months after the final order of
distribution may be deposited in one or more banks, trust companies or
savings banks authorized by the Central Bank of the Philippines to do
business in the Philippines to the credit of the Insurance Commission,
in trust for the person entitled thereto. All these deposits shall be
entitled to priority of payment in case of the insolvency or voluntary
liquidation of the depository on an equality with any other priority
given by the General Banking Act.
"SEC. 175(T). The Insurance Commission or its
representative duly designated or appointed under this Act shall not be
subject to any action, claim or demand by, or liability to, any person
in respect of anything done or omitted to be done in good faith in the
exercise, or in connection with the exercise, of the powers conferred on
the Insurance Commission or its aforesaid representative."
