Republic of the Philippines

Congress of the Philippines

Metro Manila
Fifteenth Congress
Third Regular Session
Begun and held in Metro Manila, on Monday, the twenty-third day of
July, two thousand twelve.
[REPUBLIC ACT NO. 10607]
AN ACT STRENGTHENING THE INSURANCE INDUSTRY,
FURTHER AMENDING PRESIDENTIAL DECREE NO. 612,
OTHERWISE KNOWN AS THE INSURANCE CODE, AS
AMENDED BY PRESIDENTIAL DECREE NOS. 1141, 1280, 1455,
1460, 1814 AND 1981, AND BATAS PAMBANSA BLG. 874, AND
FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:
SECTION 1. Presidential Decree No. 612, as amended, is hereby
further amended to read as follows:
GENERAL PROVISIONS
SECTION 1. This Decree shall be known as The Insurance Code.
SEC. 2. Whenever used in this Code, the following terms shall have
the respective meanings hereinafter set forth or indicated, unless the
context otherwise requires:
(a) A contract of insurance is an agreement whereby one undertakes
for a consideration to indemnify another against loss, damage or
liability arising from an unknown or contingent event.
A contract of suretyship shall be deemed to be an insurance contract,
within the meaning of this Code, only if made by a surety who or
which, as such, is doing an insurance business as hereinafter
provided.
(b) The term doing an insurance business or transacting an
insurance business, within the meaning of this Code, shall include:
(1) Making or proposing to make, as insurer, any insurance contract;
(2) Making or proposing to make, as surety, any contract of
suretyship as a vocation and not as merely incidental to any other
legitimate business or activity of the surety;
(3) Doing any kind of business, including a reinsurance business,
specifcally recognized as constituting the doing of an insurance
business within the meaning of this Code;
(4) Doing or proposing to do any business in substance equivalent to
any of the foregoing in a manner designed to evade the provisions of
this Code.
In the application of the provisions of this Code, the fact that no proft
is derived from the making of insurance contracts, agreements or
transactions or that no separate or direct consideration is received
therefor, shall not be deemed conclusive to show that the making
thereof does not constitute the doing or transacting of an insurance
business.
(c) As used in this Code, the term Commissioner means
the Insurance Commissioner.
CHAPTER I
THE CONTRACT OF INSURANCE
TITLE 1
WHAT MAY BE INSURED
SEC. 3. Any contingent or unknown event, whether past or future,
which may damnify a person having an insurable interest, or create a
liability against him, may be insured against, subject to the provisions
of this chapter.
The consent of the spouse is not necessary for the validity of an
insurance policy taken out by a married person on his or her life or
that of his or her children.
All rights, title and interest in the policy of insurance taken out by an
original owner on the life or health of the person insured shall
automatically vest in the latter upon the death of the original owner,
unless otherwise provided for in the policy.
SEC. 4. The preceding section does not authorize an insurance for or
against the drawing of any lottery, or for or against any chance or
ticket in a lottery drawing a prize.
SEC. 5. All kinds of insurance are subject to the provisions of this
chapter so far as the provisions can apply.
TITLE 2
PARTIES TO THE CONTRACT
SEC. 6. Every corporation, partnership, or association, duly
authorized to transact insurance business as elsewhere provided in
this Code, may be an insurer.
SEC. 7. Anyone except a public enemy may be insured.
SEC. 8. Unless the policy otherwise provides, where a mortgagor of
property efects insurance in his own name providing that the loss
shall be payable to the mortgagee, or assigns a policy of insurance to
a mortgagee, the insurance is deemed to be upon the interest of the
mortgagor, who does not cease to be a party to the original contract,
and any act of his, prior to the loss, which would otherwise avoid the
insurance, will have the same efect, although the property is in the
hands of the mortgagee, but any act which, under the contract of
insurance, is to be performed by the mortgagor, may be performed by
the mortgagee therein named, with the same efect as if it had been
performed by the mortgagor.
SEC. 9. If an insurer assents to the transfer of an insurance from a
mortgagor to a mortgagee, and, at the time of his assent, imposes
further obligations on the assignee, making a new contract with him,
the acts of the mortgagor cannot afect the rights of said assignee.
TITLE 3
INSURABLE INTEREST
SEC. 10. Every person has an insurable interest in the life and
health:
(a) Of himself, of his spouse and of his children;
(b) Of any person on whom he depends wholly or in part for
education or support, or in whom he has a pecuniary interest;
(c) Of any person under a legal obligation to him for the payment of
money, or respecting property or services, of which death or illness
might delay or prevent the performance; and
(d) Of any person upon whose life any estate or interest vested in him
depends.
SEC. 11. The insured shall have the right to change the benefciary
he designated in the policy, unless he has expressly waived this right
in said policy. Notwithstanding the foregoing, in the event the insured
does not change the benefciary during his lifetime, the designation
shall be deemed irrevocable.
SEC. 12. The interest of a benefciary in a life insurance policy shall
be forfeited when the benefciary is the principal, accomplice, or
accessory in willfully bringing about the death of the insured. In such a
case, the share forfeited shall pass on to the other benefciaries,
unless otherwise disqualifed. In the absence of other benefciaries,
the proceeds shall be paid in accordance with the policy contract. If
the policy contract is silent, the proceeds shall be paid to the estate of
the insured.
SEC. 13. Every interest in property, whether real or personal, or any
relation thereto, or liability in respect thereof, of such nature that a
contemplated peril might directly damnify the insured, is an insurable
interest.
SEC. 14. An insurable interest in property may consist in:
(a) An existing interest;
(b) An inchoate interest founded on an existing interest; or
(c) An expectancy, coupled with an existing interest in that out of
which the expectancy arises.
SEC. 15. A carrier or depository of any kind has an insurable interest
in a thing held by him as such, to the extent of his liability but not to
exceed the value thereof.
SEC. 16. A mere contingent or expectant interest in any thing, not
founded on an actual right to the thing, nor upon any valid contract for
it, is not insurable.
SEC. 17. The measure of an insurable interest in property is the
extent to which the insured might be damnifed by loss or injury
thereof.
SEC. 18. No contract or policy of insurance on property shall be
enforceable except for the beneft of some person having an insurable
interest in the property insured.
SEC. 19. An interest in property insured must exist when the
insurance takes efect, and when the loss occurs, but need not exist in
the meantime; and interest in the life or health of a person insured
must exist when the insurance takes efect, but need not exist
thereafter or when the loss occurs.
SEC. 20. Except in the cases specifed in the next four sections, and
in the cases of life, accident, and health insurance, a change of
interest in any part of a thing insured unaccompanied by a
corresponding change of interest in the insurance, suspends the
insurance to an equivalent extent, until the interest in the thing and the
interest in the insurance are vested in the same person.
SEC. 21. A change of interest in a thing insured, after the occurrence
of an injury which results in a loss, does not afect the right of the
insured to indemnity for the loss.
SEC. 22. A change of interest in one or more of several distinct
things, separately insured by one policy, does not avoid the insurance
as to the others.
SEC. 23. A change of interest, by will or succession, on the death of
the insured, does not avoid an insurance; and his interest in the
insurance passes to the person taking his interest in the thing insured.
SEC. 24. A transfer of interest by one of several partners, joint
owners, or owners in common, who are jointly insured, to the others,
does not avoid an insurance even though it has been agreed that the
insurance shall cease upon an alienation of the thing insured.
SEC. 25. Every stipulation in a policy of insurance for the payment of
loss whether the person insured has or has not any interest in the
property insured, or that the policy shall be received as proof of such
interest, and every policy executed by way of gaming or wagering, is
void.
TITLE 4
CONCEALMENT
SEC. 26. A neglect to communicate that which a party knows and
ought to communicate, is called a concealment.
SEC. 27. A concealment whether intentional or unintentional entitles
the injured party to rescind a contract of insurance.
SEC. 28. Each party to a contract of insurance must communicate to
the other, in good faith, all facts within his knowledge which are
material to the contract and as to which he makes no warranty, and
which the other has not the means of ascertaining.
SEC. 29. An intentional and fraudulent omission, on the part of one
insured, to communicate information of matters proving or tending to
prove the falsity of a warranty, entitles the insurer to rescind.
SEC. 30. Neither party to a contract of insurance is bound to
communicate information of the matters following, except in answer to
the inquiries of the other:
(a) Those which the other knows;
(b) Those which, in the exercise of ordinary care, the other ought to
know, and of which the former has no reason to suppose him ignorant;
(c) Those of which the other waives communication;
(d) Those which prove or tend to prove the existence of a risk
excluded by a warranty, and which are not otherwise material; and
(e) Those which relate to a risk excepted from the policy and which
are not otherwise material.
SEC. 31. Materiality is to be determined not by the event, but solely
by the probable and reasonable infuence of the facts upon the party
to whom the communication is due, in forming his estimate of the
disadvantages of the proposed contract, or in making his inquiries.
SEC. 32. Each party to a contract of insurance is bound to know all
the general causes which are open to his inquiry, equally with that of
the other, and which may afect the political or material perils
contemplated; and all general usages of trade.
SEC. 33. The right to information of material facts may be waived,
either by the terms of insurance or by neglect to make inquiry as to
such facts, where they are distinctly implied in other facts of which
information is communicated.
SEC. 34. Information of the nature or amount of the interest of one
insured need not be communicated unless in answer to an inquiry,
except as prescribed by Section 51.
SEC. 35. Neither party to a contract of insurance is bound to
communicate, even upon inquiry, information of his own judgment
upon the matters in question.
TITLE 5
REPRESENTATION
SEC. 36. A representation may be oral or written.
SEC. 37. A representation may be made at the time of, or before,
issuance of the policy.
SEC. 38. The language of a representation is to be interpreted by the
same rules as the language of contracts in general.
SEC. 39. A representation as to the future is to be deemed a
promise, unless it appears that it was merely a statement of belief or
expectation.
SEC. 40. A representation cannot qualify an express provision in a
contract of insurance, but it may qualify an implied warranty.
SEC. 41. A representation may be altered or withdrawn before the
insurance is efected, but not afterwards.
SEC. 42. A representation must be presumed to refer to the date on
which the contract goes into efect.
SEC. 43. When a person insured has no personal knowledge of a
fact, he may nevertheless repeat information which he has upon the
subject, and which he believes to be true, with the explanation that he
does so on the information of others; or he may submit the
information, in its whole extent, to the insurer; and in neither case is
he responsible for its truth, unless it proceeds from an agent of the
insured, whose duty it is to give the information.
SEC. 44. A representation is to be deemed false when the facts fail to
correspond with its assertions or stipulations.
SEC. 45. If a representation is false in a material point, whether
afrmative or promissory, the injured party is entitled to rescind the
contract from the time when the representation becomes false.
SEC. 46. The materiality of a representation is determined by the
same rules as the materiality of a concealment.
SEC. 47. The provisions of this chapter apply as well to a
modifcation of a contract of insurance as to its original formation.
SEC. 48. Whenever a right to rescind a contract of insurance is given
to the insurer by any provision of this chapter, such right must be
exercised previous to the commencement of an action on the contract.
After a policy of life insurance made payable on the death of the
insured shall have been in force during the lifetime of the insured for a
period of two (2) years from the date of its issue or of its last
reinstatement, the insurer cannot prove that the policy is void ab
initio or is rescindable by reason of the fraudulent concealment or
misrepresentation of the insured or his agent.
TITLE 6
THE POLICY
SEC. 49. The written instrument in which a contract of insurance is
set forth, is called a policy of insurance.
SEC. 50. The policy shall be in printed form which may contain blank
spaces; and any word, phrase, clause, mark, sign, symbol, signature,
number, or word necessary to complete the contract of insurance shall
be written on the blank spaces provided therein.
Any rider, clause, warranty or endorsement purporting to be part of
the contract of insurance and which is pasted or attached to said
policy is not binding on the insured, unless the descriptive title or
name of the rider, clause, warranty or endorsement is also mentioned
and written on the blank spaces provided in the policy.
Unless applied for by the insured or owner, any rider, clause,
warranty or endorsement issued after the original policy shall be
countersigned by the insured or owner, which countersignature shall
be taken as his agreement to the contents of such rider, clause,
warranty or endorsement.
Notwithstanding the foregoing, the policy may be in electronic form
subject to the pertinent provisions of Republic Act No. 8792, otherwise
known as the Electronic Commerce Act and to such rules and
regulations as may be prescribed by the Commissioner.
SEC. 51. A policy of insurance must specify:
(a) The parties between whom the contract is made;
(b) The amount to be insured except in the cases of open or running
policies;
(c) The premium, or if the insurance is of a character where the exact
premium is only determinable upon the termination of the contract, a
statement of the basis and rates upon which the fnal premium is to be
determined;
(d) The property or life insured;
(e) The interest of the insured in property insured, if he is not the
absolute owner thereof;
(f) The risks insured against; and
(g) The period during which the insurance is to continue.
SEC. 52. Cover notes may be issued to bind insurance temporarily
pending the issuance of the policy. Within sixty (60) days after issue of
a cover note, a policy shall be issued in lieu thereof, including within
its terms the identical insurance bound under the cover note and the
premium therefor.
Cover notes may be extended or renewed beyond such sixty (60)
days with the written approval of the Commissioner if he determines
that such extension is not contrary to and is not for the purpose of
violating any provisions of this Code. The Commissioner may
promulgate rules and regulations governing such extensions for the
purpose of preventing such violations and may by such rules and
regulations dispense with the requirement of written approval by him
in the case of extension in compliance with such rules and
regulations.
SEC. 53. The insurance proceeds shall be applied exclusively to the
proper interest of the person in whose name or for whose beneft it is
made unless otherwise specifed in the policy.
SEC. 54. When an insurance contract is executed with an agent or
trustee as the insured, the fact that his principal or benefciary is the
real party in interest may be indicated by describing the insured as
agent or trustee, or by other general words in the policy.
SEC. 55. To render an insurance efected by one partner or part-
owner, applicable to the interest of his co-partners or other part-
owners, it is necessary that the terms of the policy should be such as
are applicable to the joint or common interest.
SEC. 56. When the description of the insured in a policy is so general
that it may comprehend any person or any class of persons, only he
who can show that it was intended to include him, can claim the
beneft of the policy.
SEC. 57. A policy may be so framed that it will inure to the beneft of
whomsoever, during the continuance of the risk, may become the
owner of the interest insured.
SEC. 58. The mere transfer of a thing insured does not transfer the
policy, but suspends it until the same person becomes the owner of
both the policy and the thing insured.
SEC. 59. A policy is either open, valued or running.
SEC. 60. An open policy is one in which the value of the thing insured
is not agreed upon, and the amount of the insurance merely
represents the insurers maximum liability. The value of such thing
insured shall be ascertained at the time of the loss.
SEC. 61. A valued policy is one which expresses on its face an
agreement that the thing insured shall be valued at a specifc sum.
SEC. 62. A running policy is one which contemplates successive
insurances, and which provides that the object of the policy may be
from time to time defned, especially as to the subjects of insurance,
by additional statements or indorsements.
SEC. 63. A condition, stipulation, or agreement in any policy of
insurance, limiting the time for commencing an action thereunder to a
period of less than one (1) year from the time when the cause of
action accrues, is void.
SEC. 64. No policy of insurance other than life shall be cancelled by
the insurer except upon prior notice thereof to the insured, and no
notice of cancellation shall be efective unless it is based on the
occurrence, after the efective date of the policy, of one or more of the
following:
(a) Nonpayment of premium;
(b) Conviction of a crime arising out of acts increasing the hazard
insured against;
(c) Discovery of fraud or material misrepresentation;
(d) Discovery of willful or reckless acts or omissions increasing the
hazard insured against;
(e) Physical changes in the property insured which result in the
property becoming uninsurable;
(f) Discovery of other insurance coverage that makes the total
insurance in excess of the value of the property insured; or
(g) A determination by the Commissioner that the continuation of the
policy would violate or would place the insurer in violation of this
Code.
SEC. 65. All notices of cancellation mentioned in the preceding
section shall be in writing, mailed or delivered to the named insured at
the address shown in the policy, or to his broker provided the broker is
authorized in writing by the policy owner to receive the notice of
cancellation on his behalf, and shall state:
(a) Which of the grounds set forth in Section 64 is relied upon; and
(b) That, upon written request of the named insured, the insurer will
furnish the facts on which the cancellation is based.
SEC. 66. In case of insurance other than life, unless the insurer at
least forty-fve (45) days in advance of the end of the policy period
mails or delivers to the named insured at the address shown in the
policy notice of its intention not to renew the policy or to condition its
renewal upon reduction of limits or elimination of coverages, the
named insured shall be entitled to renew the policy upon payment of
the premium due on the efective date of the renewal. Any policy
written for a term of less than one (1) year shall be considered as if
written for a term of one (1) year. Any policy written for a term longer
than one (1) year or any policy with no fxed expiration date shall be
considered as if written for successive policy periods or terms of one
(1) year.
TITLE 7
WARRANTIES
SEC. 67. A warranty is either expressed or implied.
SEC. 68. A warranty may relate to the past, the present, the future, or
to any or all of these.
SEC. 69. No particular form of words is necessary to create a
warranty.
SEC. 70. Without prejudice to Section 51, every express warranty,
made at or before the execution of a policy, must be contained in the
policy itself, or in another instrument signed by the insured and
referred to in the policy as making a part of it.
SEC. 71. A statement in a policy, of a matter relating to the person or
thing insured, or to the risk, as fact, is an express warranty thereof.
SEC. 72. A statement in a policy, which imparts that it is intended to
do or not to do a thing which materially afects the risk, is a warranty
that such act or omission shall take place.
SEC. 73. When, before the time arrives for the performance of a
warranty relating to the future, a loss insured against happens, or
performance becomes unlawful at the place of the contract, or
impossible, the omission to fulfll the warranty does not avoid the
policy.
SEC. 74. The violation of a material warranty, or other material
provision of a policy, on the part of either party thereto, entitles the
other to rescind.
SEC. 75. A policy may declare that a violation of specifed provisions
thereof shall avoid it, otherwise the breach of an immaterial provision
does not avoid the policy.
SEC. 76. A breach of warranty without fraud merely exonerates an
insurer from the time that it occurs, or where it is broken in its
inception, prevents the policy from attaching to the risk.
TITLE 8
PREMIUM
SEC. 77. An insurer is entitled to payment of the premium as soon as
the thing insured is exposed to the peril insured against.
Notwithstanding any agreement to the contrary, no policy or contract
of insurance issued by an insurance company is valid and binding
unless and until the premium thereof has been paid, except in the
case of a life or an industrial life policy whenever the grace period
provision applies, or whenever under the broker and agency
agreements with duly licensed intermediaries, a ninety (90)-day credit
extension is given. No credit extension to a duly licensed intermediary
should exceed ninety (90) days from date of issuance of the policy.
SEC. 78. Employees of the Republic of the Philippines, including its
political subdivisions and instrumentalities, and government-owned or
-controlled corporations, may pay their insurance premiums and loan
obligations through salary deduction: Provided, That the treasurer,
cashier, paymaster or ofcial of the entity employing the government
employee is authorized, notwithstanding the provisions of any existing
law, rules and regulations to the contrary, to make deductions from the
salary, wage or income of the latter pursuant to the agreement
between the insurer and the government employee and to remit such
deductions to the insurer concerned, and collect such reasonable fee
for its services.
SEC. 79. An acknowledgment in a policy or contract of insurance or
the receipt of premium is conclusive evidence of its payment, so far as
to make the policy binding, notwithstanding any stipulation therein that
it shall not be binding until the premium is actually paid.
SEC. 80. A person insured is entitled to a return of premium, as
follows:
(a) To the whole premium if no part of his interest in the thing insured
be exposed to any of the perils insured against;
(b) Where the insurance is made for a defnite period of time and the
insured surrenders his policy, to such portion of the premium as
corresponds with the unexpired time, at a pro rata rate, unless a short
period rate has been agreed upon and appears on the face of the
policy, after deducting from the whole premium any claim for loss or
damage under the policy which has previously accrued: Provided,
That no holder of a life insurance policy may avail himself of the
privileges of this paragraph without sufcient cause as otherwise
provided by law.
SEC. 81. If a peril insured against has existed, and the insurer has
been liable for any period, however short, the insured is not entitled to
return of premiums, so far as that particular risk is concerned.
SEC. 82. A person insured is entitled to a return of the premium when
the contract is voidable, and subsequently annulled under the
provisions of the Civil Code; or on account of the fraud or
misrepresentation of the insurer, or of his agent, or on account of
facts, or the existence of which the insured was ignorant of without his
fault; or when by any default of the insured other than actual fraud, the
insurer never incurred any liability under the policy.
A person insured is not entitled to a return of premium if the policy is
annulled, rescinded or if a claim is denied by reason of fraud.
SEC. 83. In case of an over insurance by several insurers other than
life, the insured is entitled to a ratable return of the premium,
proportioned to the amount by which the aggregate sum insured in all
the policies exceeds the insurable value of the thing at risk.
SEC. 84. An insurer may contract and accept payments, in addition
to regular premium, for the purpose of paying future premiums on the
policy or to increase the benefts thereof.
TITLE 9
LOSS
SEC. 85. An agreement not to transfer the claim of the insured
against the insurer after the loss has happened, is void if made before
the loss except as otherwise provided in the case of life insurance.
SEC. 86. Unless otherwise provided by the policy, an insurer is liable
for a loss of which a peril insured against was the proximate cause,
although a peril not contemplated by the contract may have been a
remote cause of the loss; but he is not liable for a loss of which the
peril insured against was only a remote cause.
SEC. 87. An insurer is liable where the thing insured is rescued from
a peril insured against that would otherwise have caused a loss, if, in
the course of such rescue, the thing is exposed to a peril not insured
against, which permanently deprives the insured of its possession, in
whole or in part; or where a loss is caused by eforts to rescue the
thing insured from a peril insured against.
SEC. 88. Where a peril is especially excepted in a contract of
insurance, a loss, which would not have occurred but for such peril, is
thereby excepted although the immediate cause of the loss was a peril
which was not excepted.
SEC. 89. An insurer is not liable for a loss caused by the willful act or
through the connivance of the insured; but he is not exonerated by the
negligence of the insured, or of the insurance agents or others.
TITLE 10
NOTICE OF LOSS
SEC. 90. In case of loss upon an insurance against fre, an insurer is
exonerated, if written notice thereof be not given to him by an insured,
or some person entitled to the beneft of the insurance, without
unnecessary delay. For other non-life insurance, the Commissioner
may specify the period for the submission of the notice of loss.
SEC. 91. When a preliminary proof of loss is required by a policy, the
insured is not bound to give such proof as would be necessary in a
court of justice; but it is sufcient for him to give the best evidence
which he has in his power at the time.
SEC. 92. All defects in a notice of loss, or in preliminary proof
thereof, which the insured might remedy, and which the insurer omits
to specify to him, without unnecessary delay, as grounds of objection,
are waived.
SEC. 93. Delay in the presentation to an insurer of notice or proof of
loss is waived if caused by any act of him, or if he omits to take
objection promptly and specifcally upon that ground.
SEC. 94. If the policy requires, by way of preliminary proof of loss,
the certifcate or testimony of a person other than the insured, it is
sufcient for the insured to use reasonable diligence to procure it, and
in case of the refusal of such person to give it, then to furnish
reasonable evidence to the insurer that such refusal was not induced
by any just grounds of disbelief in the facts necessary to be certifed
or testifed.
TITLE 11
DOUBLE INSURANCE
SEC. 95. A double insurance exists where the same person is
insured by several insurers separately in respect to the same subject
and interest.
SEC. 96. Where the insured in a policy other than life is over insured
by double insurance:
(a) The insured, unless the policy otherwise provides, may claim
payment from the insurers in such order as he may select, up to the
amount for which the insurers are severally liable under their
respective contracts;
(b) Where the policy under which the insured claims is a valued
policy, any sum received by him under any other policy shall be
deducted from the value of the policy without regard to the actual
value of the subject matter insured;
(c) Where the policy under which the insured claims is an unvalued
policy, any sum received by him under any policy shall be deducted
against the full insurable value, for any sum received by him under
any policy;
(d) Where the insured receives any sum in excess of the valuation in
the case of valued policies, or of the insurable value in the case of
unvalued policies, he must hold such sum in trust for the insurers,
according to their right of contribution among themselves;
(e) Each insurer is bound, as between himself and the other insurers,
to contribute ratably to the loss in proportion to the amount for which
he is liable under his contract.
TITLE 12
REINSURANCE
SEC. 97. A contract of reinsurance is one by which an insurer
procures a third person to insure him against loss or liability by reason
of such original insurance.
SEC. 98. Where an insurer obtains reinsurance, except under
automatic reinsurance treaties, he must communicate all the
representations of the original insured, and also all the knowledge and
information he possesses, whether previously or subsequently
acquired, which are material to the risk.
SEC. 99. A reinsurance is presumed to be a contract of indemnity
against liability, and not merely against damage.
SEC. 100. The original insured has no interest in a contract of
reinsurance.
CHAPTER II
CLASSES OF INSURANCE
TITLE I
MARINE INSURANCE
SUB-TITLE 1-A
DEFINITION
SEC. 101. Marine Insurance includes:
(a) Insurance against loss of or damage to:
(1) Vessels, craft, aircraft, vehicles, goods, freights, cargoes,
merchandise, efects, disbursements, profts, moneys, securities,
choses in action, instruments of debts, valuable papers, bottomry, and
respondentia interests and all other kinds of property and interests
therein, in respect to, appertaining to or in connection with any and all
risks or perils of navigation, transit or transportation, or while being
assembled, packed, crated, baled, compressed or similarly prepared
for shipment or while awaiting shipment, or during any delays,
storage, transhipment, or reshipment incident thereto, including war
risks, marine builders risks, and all personal property foater risks;
(2) Person or property in connection with or appertaining to a marine,
inland marine, transit or transportation insurance, including liability for
loss of or damage arising out of or in connection with the construction,
repair, operation, maintenance or use of the subject matter of such
insurance (but not including life insurance or surety bonds nor
insurance against loss by reason of bodily injury to any person arising
out of ownership, maintenance, or use of automobiles);
(3) Precious stones, jewels, jewelry, precious metals, whether in
course of transportation or otherwise; and
(4) Bridges, tunnels and other instrumentalities of transportation and
communication (excluding buildings, their furniture and furnishings,
fxed contents and supplies held in storage); piers, wharves, docks
and slips, and other aids to navigation and transportation, including
dry docks and marine railways, dams and appurtenant facilities for the
control of waterways.
(b) Marine protection and indemnity insurance, meaning insurance
against, or against legal liability of the insured for loss, damage, or
expense incident to ownership, operation, chartering, maintenance,
use, repair, or construction of any vessel, craft or instrumentality in
use of ocean or inland waterways, including liability of the insured for
personal injury, illness or death or for loss of or damage to the
property of another person.
SUB-TITLE 1-B
INSURABLE INTEREST
SEC. 102. The owner of a ship has in all cases an insurable interest
in it, even when it has been chartered by one who covenants to pay
him its value in case of loss: Provided, That in this case the insurer
shall be liable for only that part of the loss which the insured cannot
recover from the charterer.
SEC. 103. The insurable interest of the owner of the ship
hypothecated by bottomry is only the excess of its value over the
amount secured by bottomry.
SEC. 104. Freightage, in the sense of a policy of marine insurance,
signifes all the benefts derived by the owner, either from the
chartering of the ship or its employment for the carriage of his own
goods or those of others.
SEC. 105. The owner of a ship has an insurable interest in expected
freightage which according to the ordinary and probable course of
things he would have earned but for the intervention of a peril insured
against or other peril incident to the voyage.
SEC. 106. The interest mentioned in the last section exists, in case of
a charter party, when the ship has broken ground on the chartered
voyage. If a price is to be paid for the carriage of goods it exists when
they are actually on board, or there is some contract for putting them
on board, and both ship and goods are ready for the specifed voyage.
SEC. 107. One who has an interest in the thing from which profts are
expected to proceed has an insurable interest in the profts.
SEC. 108. The charterer of a ship has an insurable interest in it, to
the extent that he is liable to be damnifed by its loss.
SUB-TITLE 1-C
CONCEALMENT
SEC. 109. In marine insurance, each party is bound to communicate,
in addition to what is required by Section 28, all the information which
he possesses, material to the risk, except such as is mentioned in
Section 30, and to state the exact and whole truth in relation to all
matters that he represents, or upon inquiry discloses or assumes to
disclose.
SEC. 110. In marine insurance, information of the belief or
expectation of a third person, in reference to a material fact, is
material.
SEC. 111. A person insured by a contract of marine insurance is
presumed to have knowledge, at the time of insuring, of a prior loss, if
the information might possibly have reached him in the usual mode of
transmission and at the usual rate of communication.
SEC. 112. A concealment in a marine insurance, in respect to any of
the following matters, does not vitiate the entire contract, but merely
exonerates the insurer from a loss resulting from the risk concealed:
(a) The national character of the insured;
(b) The liability of the thing insured to capture and detention;
(c) The liability to seizure from breach of foreign laws of trade;
(d) The want of necessary documents; and
(e) The use of false and simulated papers.
SUB-TITLE 1-D
REPRESENTATION
SEC. 113. If a representation by a person insured by a contract of
marine insurance, is intentionally false in any material respect, or in
respect of any fact on which the character and nature of the risk
depends, the insurer may rescind the entire contract.
SEC. 114. The eventual falsity of a representation as to expectation
does not, in the absence of fraud, avoid a contract of marine
insurance.
SUB-TITLE 1-E
IMPLIED WARRANTIES
SEC. 115. In every marine insurance upon a ship or freight, or
freightage, or upon any thing which is the subject of marine insurance,
a warranty is implied that the ship is seaworthy.
SEC. 116. A ship is seaworthy when reasonably ft to perform the
service and to encounter the ordinary perils of the voyage
contemplated by the parties to the policy.
SEC. 117. An implied warranty of seaworthiness is complied with if
the ship be seaworthy at the time of the commencement of the risk,
except in the following cases:
(a) When the insurance is made for a specifed length of time, the
implied warranty is not complied with unless the ship be seaworthy at
the commencement of every voyage it undertakes during that time;
(b) When the insurance is upon the cargo which, by the terms of the
policy, description of the voyage, or established custom of the trade, is
to be transhipped at an intermediate port, the implied warranty is not
complied with unless each vessel upon which the cargo is shipped, or
transhipped, be seaworthy at the commencement of each particular
voyage.
SEC. 118. A warranty of seaworthiness extends not only to the
condition of the structure of the ship itself, but requires that it be
properly laden, and provided with a competent master, a sufcient
number of competent ofcers and seamen, and the requisite
appurtenances and equipment, such as ballasts, cables and anchors,
cordage and sails, food, water, fuel and lights, and other necessary or
proper stores and implements for the voyage.
SEC. 119. Where diferent portions of the voyage contemplated by a
policy difer in respect to the things requisite to make the ship
seaworthy therefor, a warranty of seaworthiness is complied with if, at
the commencement of each portion, the ship is seaworthy with
reference to that portion.
SEC. 120. When the ship becomes unseaworthy during the voyage to
which an insurance relates, an unreasonable delay in repairing the
defect exonerates the insurer on ship or shipowners interest from
liability from any loss arising therefrom.
SEC. 121. A ship which is seaworthy for the purpose of an insurance
upon the ship may, nevertheless, by reason of being unftted to
receive the cargo, be unseaworthy for the purpose of insurance upon
the cargo.
SEC. 122. Where the nationality or neutrality of a ship or cargo is
expressly warranted, it is implied that the ship will carry the requisite
documents to show such nationality or neutrality and that it will not
carry any documents which cast reasonable suspicion thereon.
SUB-TITLE 1-F
THE VOYAGE AND DEVIATION
SEC. 123. When the voyage contemplated by a marine insurance
policy is described by the places of beginning and ending, the voyage
insured is one which conforms to the course of sailing fxed by
mercantile usage between those places.
SEC. 124. If the course of sailing is not fxed by mercantile usage, the
voyage insured by a marine insurance policy is that way between the
places specifed, which to a master of ordinary skill and discretion,
would mean the most natural, direct and advantageous.
SEC. 125. Deviation is a departure from the course of the voyage
insured, mentioned in the last two (2) sections, or an unreasonable
delay in pursuing the voyage or the commencement of an entirely
diferent voyage.
SEC. 126. A deviation is proper:
(a) When caused by circumstances over which neither the master nor
the owner of the ship has any control;
(b) When necessary to comply with a warranty, or to avoid a peril,
whether or not the peril is insured against;
(c) When made in good faith, and upon reasonable grounds of belief
in its necessity to avoid a peril; or
(d) When made in good faith, for the purpose of saving human life or
relieving another vessel in distress.
SEC. 127. Every deviation not specifed in the last section is
improper.
SEC. 128. An insurer is not liable for any loss happening to the thing
insured subsequent to an improper deviation.
SUB-TITLE 1-G
LOSS
SEC. 129. A loss may be either total or partial.
SEC. 130. Every loss which is not total is partial.
SEC. 131. A total loss may be either actual or constructive.
SEC. 132. An actual total loss is caused by:
(a) A total destruction of the thing insured;
(b) The irretrievable loss of the thing by sinking, or by being broken
up;
(c) Any damage to the thing which renders it valueless to the owner
for the purpose for which he held it; or
(d) Any other event which efectively deprives the owner of the
possession, at the port of destination, of the thing insured.
SEC. 133. A constructive total loss is one which gives to a person
insured a right to abandon, under Section 141.
SEC. 134. An actual loss may be presumed from the continued
absence of a ship without being heard of. The length of time which is
sufcient to raise this presumption depends on the circumstances of
the case.
SEC. 135. When a ship is prevented, at an intermediate port, from
completing the voyage, by the perils insured against, the liability of a
marine insurer on the cargo continues after they are thus reshipped.
Nothing in this section shall prevent an insurer from requiring an
additional premium if the hazard be increased by this extension of
liability.
SEC. 136. In addition to the liability mentioned in the last section, a
marine insurer is bound for damages, expenses of discharging,
storage, reshipment, extra freightage, and all other expenses incurred
in saving cargo reshipped pursuant to the last section, up to the
amount insured.
Nothing in this or in the preceding section shall render a marine
insurer liable for any amount in excess of the insured value or, if there
be none, of the insurable value.
SEC. 137. Upon an actual total loss, a person insured is entitled to
payment without notice of abandonment.
SEC. 138. Where it has been agreed that an insurance upon a
particular thing, or class of things, shall be free from particular
average, a marine insurer is not liable for any particular average loss
not depriving the insured of the possession, at the port of destination,
of the whole of such thing, or class of things, even though it becomes
entirely worthless; but such insurer is liable for his proportion of all
general average loss assessed upon the thing insured.
SEC. 139. An insurance confned in terms to an actual loss does not
cover a constructive total loss, but covers any loss, which necessarily
results in depriving the insured of the possession, at the port of
destination, of the entire thing insured.
SUB-TITLE 1-H
ABANDONMENT
SEC. 140. Abandonment, in marine insurance, is the act of the
insured by which, after a constructive total loss, he declares the
relinquishment to the insurer of his interest in the thing insured.
SEC. 141. A person insured by a contract of marine insurance may
abandon the thing insured, or any particular portion thereof separately
valued by the policy, or otherwise separately insured, and recover for
a total loss thereof, when the cause of the loss is a peril insured
against:
(a) If more than three-fourths () thereof in value is actually lost, or
would have to be expended to recover it from the peril;
(b) If it is injured to such an extent as to reduce its value more than
three-fourths ();
(c) If the thing insured is a ship, and the contemplated voyage cannot
be lawfully performed without incurring either an expense to the
insured of more than three-fourths () the value of the thing
abandoned or a risk which a prudent man would not take under the
circumstances; or
(d) If the thing insured, being cargo or freightage, and the voyage
cannot be performed, nor another ship procured by the master, within
a reasonable time and with reasonable diligence, to forward the cargo,
without incurring the like expense or risk mentioned in the preceding
subparagraph. But freightage cannot in any case be abandoned
unless the ship is also abandoned.
SEC. 142. An abandonment must be neither partial nor conditional.
SEC. 143. An abandonment must be made within a reasonable time
after receipt of reliable information of the loss, but where the
information is of a doubtful character, the insured is entitled to a
reasonable time to make inquiry.
SEC. 144. Where the information upon which an abandonment has
been made proves incorrect, or the thing insured was so far restored
when the abandonment was made that there was then in fact no total
loss, the abandonment becomes inefectual.
SEC. 145. Abandonment is made by giving notice thereof to the
insurer, which may be done orally, or in writing:Provided, That if the
notice be done orally, a written notice of such abandonment shall be
submitted within seven (7) days from such oral notice.
SEC. 146. A notice of abandonment must be explicit, and must
specify the particular cause of the abandonment, but need state only
enough to show that there is probable cause therefor, and need not be
accompanied with proof of interest or of loss.
SEC. 147. An abandonment can be sustained only upon the cause
specifed in the notice thereof.
SEC. 148. An abandonment is equivalent to a transfer by the insured
of his interest to the insurer, with all the chances of recovery and
indemnity.
SEC. 149. If a marine insurer pays for a loss as if it were an actual
total loss, he is entitled to whatever may remain of the thing insured,
or its proceeds or salvage, as if there had been a formal
abandonment.
SEC. 150. Upon an abandonment, acts done in good faith by those
who were agents of the insured in respect to the thing insured,
subsequent to the loss, are at the risk of the insurer, and for his
beneft.
SEC. 151. Where notice of abandonment is properly given, the rights
of the insured are not prejudiced by the fact that the insurer refuses to
accept the abandonment.
SEC. 152. The acceptance of an abandonment may be either
express or implied from the conduct of the insurer. The mere silence
of the insurer for an unreasonable length of time after notice shall be
construed as an acceptance.
SEC. 153. The acceptance of an abandonment, whether express or
implied, is conclusive upon the parties, and admits the loss and the
sufciency of the abandonment.
SEC. 154. An abandonment once made and accepted is irrevocable,
unless the ground upon which it was made proves to be unfounded.
SEC. 155. On an accepted abandonment of a ship, freightage earned
previous to the loss belongs to the insurer of said freightage; but
freightage subsequently earned belongs to the insurer of the ship.
SEC. 156. If an insurer refuses to accept a valid abandonment, he is
liable as upon an actual total loss, deducting from the amount any
proceeds of the thing insured which may have come to the hands of
the insured.
SEC. 157. If a person insured omits to abandon, he may
nevertheless recover his actual loss.
SUB-TITLE 1-I
MEASURE OF INDEMNITY
SEC. 158. A valuation in a policy of marine insurance is conclusive
between the parties thereto in the adjustment of either a partial or total
loss, if the insured has some interest at risk, and there is no fraud on
his part; except that when a thing has been hypothecated by bottomry
or respondentia, before its insurance, and without the knowledge of
the person actually procuring the insurance, he may show the real
value. But a valuation fraudulent in fact, entitles the insurer to rescind
the contract.
SEC. 159. A marine insurer is liable upon a partial loss, only for such
proportion of the amount insured by him as the loss bears to the value
of the whole interest of the insured in the property insured.
SEC. 160. Where profts are separately insured in a contract of
marine insurance, the insured is entitled to recover, in case of loss, a
proportion of such profts equivalent to the proportion which the value
of the property lost bears to the value of the whole.
SEC. 161. In case of a valued policy of marine insurance on
freightage or cargo, if a part only of the subject is exposed to risk, the
valuation applies only in proportion to such part.
SEC. 162. When profts are valued and insured by a contract of
marine insurance, a loss of them is conclusively presumed from a loss
of the property out of which they are expected to arise, and the
valuation fxes their amount.
SEC. 163. In estimating a loss under an open policy of marine
insurance the following rules are to be observed:
(a) The value of a ship is its value at the beginning of the risk,
including all articles or charges which add to its permanent value or
which are necessary to prepare it for the voyage insured;
(b) The value of the cargo is its actual cost to the insured, when laden
on board, or where the cost cannot be ascertained, its market value at
the time and place of lading, adding the charges incurred in
purchasing and placing it on board, but without reference to any loss
incurred in raising money for its purchase, or to any drawback on its
exportation, or to the fuctuation of the market at the port of
destination, or to expenses incurred on the way or on arrival;
(c) The value of freightage is the gross freightage, exclusive of
primage, without reference to the cost of earning it; and
(d) The cost of insurance is in each case to be added to the value
thus estimated.
SEC. 164. If cargo insured against partial loss arrives at the port of
destination in a damaged condition, the loss of the insured is deemed
to be the same proportion of the value which the market price at that
port, of the thing so damaged, bears to the market price it would have
brought if sound.
SEC. 165. A marine insurer is liable for all the expenses attendant
upon a loss which forces the ship into port to be repaired; and where it
is stipulated in the policy that the insured shall labor for the recovery
of the property, the insurer is liable for the expense incurred thereby,
such expense, in either case, being in addition to a total loss, if that
afterwards occurs.
SEC. 166. A marine insurer is liable for a loss falling upon the
insured, through a contribution in respect to the thing insured, required
to be made by him towards a general average loss called for by a peril
insured against:Provided, That the liability of the insurer shall be
limited to the proportion of contribution attaching to his policy value
where this is less than the contributing value of the thing insured.
SEC. 167. When a person insured by a contract of marine insurance
has a demand against others for contribution, he may claim the whole
loss from the insurer, subrogating him to his own right to contribution.
But no such claim can be made upon the insurer after the separation
of the interests liable to contribution, nor when the insured, having the
right and opportunity to enforce contribution from others, has
neglected or waived the exercise of that right.
SEC. 168. In the case of a partial loss of ship or its equipment, the
old materials are to be applied towards payment for the new. Unless
otherwise stipulated in the policy, a marine insurer is liable for only
two-thirds (2/3) of the remaining cost of repairs after such deduction,
except that anchors must be paid in full.
TITLE 2
FIRE INSURANCE
SEC. 169. As used in this Code, the term fre insurance shall include
insurance against loss by fre, lightning, windstorm, tornado or
earthquake and other allied risks, when such risks are covered by
extension to fre insurance policies or under separate policies.
SEC. 170. An alteration in the use or condition of a thing insured from
that to which it is limited by the policy made without the consent of the
insurer, by means within the control of the insured, and increasing the
risks, entitles an insurer to rescind a contract of fre insurance.
SEC. 171. An alteration in the use or condition of a thing insured from
that to which it is limited by the policy, which does not increase the
risk, does not afect a contract of fre insurance.
SEC. 172. A contract of fre insurance is not afected by any act of the
insured subsequent to the execution of the policy, which does not
violate its provisions, even though it increases the risk and is the
cause of the loss.
SEC. 173. If there is no valuation in the policy, the measure of
indemnity in an insurance against fre is the expense it would be to the
insured at the time of the commencement of the fre to replace the
thing lost or injured in the condition in which it was at the time of the
injury; but if there is a valuation in a policy of fre insurance, the efect
shall be the same as in a policy of marine insurance.
SEC. 174. Whenever the insured desires to have a valuation named
in his policy, insuring any building or structure against fre, he may
require such building or structure to be examined by an independent
appraiser and the value of the insureds interest therein may then be
fxed as between the insurer and the insured. The cost of such
examination shall be paid for by the insured. A clause shall be
inserted in such policy stating substantially that the value of the
insureds interest in such building or structure has been thus fxed. In
the absence of any change increasing the risk without the consent of
the insurer or of fraud on the part of the insured, then in case of a total
loss under such policy, the whole amount so insured upon the
insureds interest in such building or structure, as stated in the policy
upon which the insurers have received a premium, shall be paid, and
in case of a partial loss the full amount of the partial loss shall be so
paid, and in case there are two (2) or more policies covering the
insureds interest therein, each policy shall contribute pro rata to the
payment of such whole or partial loss. But in no case shall the insurer
be required to pay more than the amount thus stated in such policy.
This section shall not prevent the parties from stipulating in such
policies concerning the repairing, rebuilding or replacing of buildings
or structures wholly or partially damaged or destroyed.
SEC. 175. No policy of fre insurance shall be pledged, hypothecated,
or transferred to any person, frm or company who acts as agent for or
otherwise represents the issuing company, and any such pledge,
hypothecation, or transfer hereafter made shall be void and of no
efect insofar as it may afect other creditors of the insured.
TITLE 3
CASUALTY INSURANCE
SEC. 176. Casualty insurance is insurance covering loss or liability
arising from accident or mishap, excluding certain types of loss which
by law or custom are considered as falling exclusively within the scope
of other types of insurance such as fre or marine. It includes, but is
not limited to, employers liability insurance, motor vehicle liability
insurance, plate glass insurance, burglary and theft insurance,
personal accident and health insurance as written by non-life
insurance companies, and other substantially similar kinds of
insurance.
TITLE 4
SURETYSHIP
SEC. 177. A contract of suretyship is an agreement whereby a party
called the surety guarantees the performance by another party called
the principal or obligor of an obligation or undertaking in favor of a
third party called the obligee. It includes ofcial recognizances,
stipulations, bonds or undertakings issued by any company by virtue
of and under the provisions of Act No. 536, as amended by Act No.
2206.
SEC. 178. 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 of the contract of suretyship in
relation to the principal contract between the obligor and the obligee.
SEC. 179. The surety is entitled to payment of the premium as soon
as the contract of suretyship or bond is perfected and delivered to the
obligor. No contract of suretyship or bonding shall be valid and binding
unless and until the premium therefor has been paid, except where
the obligee has accepted the bond, in which case the bond becomes
valid and enforceable irrespective of whether or not the premium has
been paid by the obligor to the surety: Provided, That if the contract of
suretyship or bond is not accepted by, or fled with the obligee, the
surety shall collect only a reasonable amount, not exceeding ffty
percent (50%) of the premium due thereon as service fee plus the
cost of stamps or other taxes imposed for the issuance of the contract
or bond: Provided, however, That if the nonacceptance of the bond be
due to the fault or negligence of the surety, no such service fee,
stamps or taxes shall be collected.
In the case of a continuing bond, the obligor shall pay the subsequent
annual premium as it falls due until the contract of suretyship is
cancelled by the obligee or by the Commissioner or by a court of
competent jurisdiction, as the case may be.
SEC. 180. Pertinent provisions of the Civil Code of the Philippines
shall be applied in a suppletory character whenever necessary in
interpreting the provisions of a contract of suretyship.
TITLE 5
LIFE INSURANCE
SEC. 181. Life insurance is insurance on human lives and insurance
appertaining thereto or connected therewith.
Every contract or undertaking for the payment of annuities including
contracts for the payment of lump sums under a retirement program
where a life insurance company manages or acts as a trustee for such
retirement program shall be considered a life insurance contract for
purposes of this Code.
SEC. 182. An insurance upon life may be made payable on the death
of the person, or on his surviving a specifed period, or otherwise
contingently on the continuance or cessation of life.
Every contract or pledge for the payment of endowments or annuities
shall be considered a life insurance contract for purposes of this
Code.
In the absence of a judicial guardian, the father, or in the latters
absence or incapacity, the mother, of any minor, who is an insured or
a benefciary under a contract of life, health, or accident insurance,
may exercise, in behalf of said minor, any right under the policy,
without necessity of court authority or the giving of a bond, where the
interest of the minor in the particular act involved does not exceed
Five hundred thousand pesos (P500,000.00) or in such reasonable
amount as may be determined by the Commissioner. Such right may
include, but shall not be limited to, obtaining a policy loan,
surrendering the policy, receiving the proceeds of the Policy, and
giving the minors consent to any transaction on the policy.
In the absence or in case of the incapacity of the father or mother, the
grandparent, the eldest brother or sister at least eighteen (18) years of
age, or any relative who has actual custody of the minor insured or
benefciary, shall act as a guardian without need of a court order or
judicial appointment as such guardian, as long as such person is not
otherwise disqualifed or incapacitated. Payment made by the insurer
pursuant to this section shall relieve such insurer of any liability under
the contract.
SEC. 183. The insurer in a life insurance contract shall be liable in
case of suicide only when it is committed after the policy has been in
force for a period of two (2) years from the date of its issue or of its
last reinstatement, unless the policy provides a shorter
period: Provided, however, That suicide committed in the state of
insanity shall be compensable regardless of the date of commission.
SEC. 184. A policy of insurance upon life or health may pass by
transfer, will or succession to any person, whether he has an insurable
interest or not, and such person may recover upon it whatever the
insured might have recovered.
SEC. 185. Notice to an insurer of a transfer or bequest thereof is not
necessary to preserve the validity of a policy of insurance upon life or
health, unless thereby expressly required.
SEC. 186. Unless the interest of a person insured is susceptible of
exact pecuniary measurement, the measure of indemnity under a
policy of insurance upon life or health is the sum fxed in the policy.
TITLE 6
MICROINSURANCE
SEC. 187. Microinsurance is a fnancial product or service that meets
the risk protection needs of the poor where:
(a) The amount of contributions, premiums, fees or charges,
computed on a daily basis, does not exceed seven and a half percent
(7.5%) of the current daily minimum wage rate for nonagricultural
workers in Metro Manila; and
(b) The maximum sum of guaranteed benefts is not more than one
thousand (1,000) times of the current daily minimum wage rate for
nonagricultural workers in Metro Manila.
SEC. 188. No insurance company or mutual beneft association shall
engage in the business of microinsurance unless it possesses all the
requirements as may be prescribed by the Commissioner. The
Commissioner shall issue such rules and regulations governing
microinsurance.
CHAPTER II-A
FINANCIAL REPORTING FRAMEWORK
SEC. 189. All companies regulated by the Commission, unless
otherwise required by law, should comply with the fnancial reporting
frameworks adopted by the Commission for purposes of creating the
statutory fnancial reports and the annual statements to be submitted
to the Commission. Financial reporting framework means a set of
accounting and reporting principles, standards, interpretations and
pronouncements that must be adopted in the preparation and
submission of the statutory fnancial statements and reports required
by the Commission. This fnancial reporting framework is not the same
as the fnancial reporting framework used to prepare the fnancial
statements that the Securities and Exchange Commission may
require. The main purpose of the statutory statements is to present
important information about the level of risk and solvency situation of
insurers. In prescribing the applicable statutory fnancial reporting
framework, the Commissioner shall take into account international
standards concerning solvency and insurance company reporting as
well as generally accepted actuarial principles concerning fnancial
reporting promulgated by the Actuarial Society of the Philippines.
The assets and investments discussed in Sections 204 to 215 shall
be accounted for in accordance with this section.
The valuation of reserves shall be accounted for in accordance with
Title 5 of this Code.