Article 49p. 49

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

required

of

stock

corporations.

A

stock

insurance

company doing business in the Philippines may, subject

to

the

pertinent

law

and regulation which now or

hereafter may be in force, alter its organization and

transform itself into a mutual insurance company.

The Secretary of Finance may, upon recommendation

of the Commissioner, increase such minimum paid-up

capital stock or cash assets 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

minimum paid-up capital and net worth requirement

must remain unimpaired for the continuance of the

license. The Commissioner may require the adoption of

the risk-based capital approach and other internationally

accepted forms of capital framework.

For the purpose of this section, net worth shall consist

of:

(a) Paid-up capital;

(b) Retained earnings;

(c) Unimpaired surplus; and

(d) Revaluation of assets as may be approved by the

Commissioner.

The

Commission

may

adopt

for

purposes

of

compliance with capital build up requirement under this

Code the recognition as part of the capital account,

capital notes or debentures which are subordinate to all

credits and senior only to common capital stocks.

The President of the Philippines may order a periodic

review every two (2) years the capital structure set out

above to determine the capital adequacy of the local

insurance industry from and after the integration and

liberalization

of

the

financial

services,

including

insurance, in the ASEAN Region. For this purpose, a

review committee consisting of representatives from the

Department of Finance (DOF), the Insurance Commission

(IC), the National Economic and Development Authority

(NEDA), the Securities and Exchange Commission (SEC)

and other agencies which the President may designate

shall conduct the review and may recommend to the

President to adopt for implementation the necessary

capital adjustment.

SECTION 195. Every company must, before engaging

in the business of insurance in the Philippines, file with

the Commissioner the following:

(a) A certified copy of the last annual statement or a

verified financial statement exhibiting the condition and

affairs of such company;

(b) If incorporated under the laws of the Philippines, a

copy of the articles of incorporation and bylaws, and any

amendments to either, certified by the Securities and

Exchange Commission to be a copy of that which is filed

in its Office;

(c) If incorporated under any laws other than those of

the Philippines, a certificate from the Securities and

Exchange Commission showing that it is duly registered

in

the

mercantile

registry

of

that

Commission

in

accordance with the Corporation Code. A copy of the

articles

of

incorporation

and

bylaws,

and

any

amendments to either, if organized or formed under any

law requiring such to be filed, duly certified by the officer

having the custody of same, or if not so organized, a copy

of the law, charter or deed of settlement under which the

deed of organization is made, duly certified by the proper

custodian thereof, or proved by affidavit to be a copy; also,

a certificate under the hand and seal of the proper officer

of such state or country having supervision of insurance

business therein, if any there be, that such corporation or

company is organized under the laws of such state or

country, with the amount of capital stock or assets and

legal reserve required by this Code;

(d) If not incorporated and of foreign domicile, aside

from the certificate mentioned in paragraph (c) of this

section,

a

certificate

setting

forth

the

nature

and

character of the business, the location of the principal

office, the name of the individual or names of the persons

composing the partnership or association, the amount of

actual capital employed or to be employed therein, and

the names of all officers and persons by whom the

business is or may be managed.

The certificate must be verified by the affidavit of the

chief

officer,

secretary,

agent,

or

manager

of

the

company;

and

if

there

are

any

written

articles

of

agreement

of

the

company,

a

copy

thereof

must

accompany such certificate.

SECTION 196. The Commissioner must require as a

condition

precedent

to the transaction of insurance

business in the Philippines by any foreign insurance

company, that such company file in his office a written

power of attorney designating some person who shall be

a resident of the Philippines as its general agent, on

whom any notice provided by law or by any insurance

policy, proof of loss, summons and other legal processes

may be served in all actions or other legal proceedings

against such company, and consenting that service upon

such general agent shall be admitted and held as valid as

if served upon the foreign company at its home office.

Any such foreign company shall, as further condition

precedent to the transaction of insurance business in the

Philippines, make and file with the Commissioner an

agreement

or

stipulation,

executed

by

the

proper

authorities of said company in form and substance as

follows:

The (name of company) does hereby stipulate and

agree in consideration of the permission granted by the

Insurance Commissioner to transact business in the

Philippines, that if at any time said company shall leave

the Philippines, or cease to transact business therein, or

shall be without any agent in the Philippines on whom

any notice, proof of loss, summons, or legal process may

be served, then in any action or proceeding arising out of

any

business

or

transaction

which

occurred

in

the

Philippines, service of any notice provided by law, or

insurance policy, proof of loss, summons, or other legal

process may be made upon the Insurance Commissioner,

and that such service upon the Insurance Commissioner

shall have the same force and effect as if made upon the

company.

Whenever

such

service

of

notice,

proof

of loss,

summons, or other legal process shall be made upon the

Commissioner, he must, within ten (10) days thereafter,

transmit by mail, postage paid, a copy of such notice,

proof of loss, summons, or other legal process to the

company at its home or principal office. The sending of

such copy by the Commissioner shall be a necessary part

of the service of the notice, proof of loss, or other legal

process.

SECTION 197. No insurance company organized or

existing under the government or laws other than those

of

the

Philippines

shall

engage

in

business in the

Philippines unless possessed of unimpaired capital or

assets and reserve of not less than One billion pesos

(P1,000,000,000.00), nor until it shall have deposited with

the Commissioner for the benefit and security of the

policyholders and creditors of such company in the

Philippines, securities satisfactory to the Commissioner

consisting of good securities of the Philippines, including

new issues of stock of registered enterprises, as this term

is defined in Executive Order No. 226 of 1987, as amended,

to the actual market value of not less than the amount

herein required: Provided, That at least fifty percent (50%)

of

such

securities

shall

consist

of

bonds

or

other

instruments

of

debt

of

the

Government

of

the

Philippines,

its

political

subdivisions

and

instrumentalities, or of government-owned or -controlled

corporations and entities, including the Bangko Sentral

ng Pilipinas: Provided, further , That the total investment

of

a

foreign

insurance

company

in

any

registered

enterprise shall not exceed twenty percent (20%) of the

net worth of said foreign insurance company nor twenty

percent (20%) of the capital of the registered enterprise,

© Compiled by RGL

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