Article 52p. 52

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

(3) Lease-agreements or similar securities received on

the sale of real estate property shall not exceed one

hundred percent (100%) of the selling price of said

property, or one hundred percent (100%) of its market

value at the time of its disposition, whichever amount is

lower. However, in no case shall such agreement have a

maturity period not exceeding thirty (30) years;

(4) Loans secured by shares of stock of solvent

corporations or institutions shall not exceed fifty percent

(50%) of:

(i) The weighted average market price for the one

hundred eighty (180) days preceding the approval of the

loan for shares listed in the stock exchange; and

(ii) For unlisted shares, the adjusted book value of

such shares.

(5) Loans secured by the chattel mortgages over

equipment shall not exceed seventy percent (70%) of the

market value of said equipment.

SECTION 205. No loan by any insurance company on

the security of real estate shall be made unless the title to

such

real

estate

shall

have first been registered in

accordance with the existing Land Registration Act , or

shall

have

been

previously

registered

under

the

provisions of the existing Mortgage Law and the lien or

interest of the insurance company as mortgagee has

been registered.

SECTION

206.

(a)

An

insurance

company

may

purchase, hold, own and convey such property, real and

personal, as may have been mortgaged, pledged, or

conveyed to it in good faith in trust for its benefit by

reason of money loaned by it in pursuance of the regular

business of the company, and such real or personal

property as may have been purchased by it at sales under

pledges, mortgages or deeds of trust for its benefit on

account of money loaned by it; and such real and

personal property as may have been conveyed to it by

borrowers in satisfaction and discharge of loans made by

the company in payment or by reason of any loan made

by the company in payment or by reason of any loan

made by it shall be sold by the company within twenty

(20) years after the title thereto has been vested in it.

(b) An insurance company may purchase, hold, and

own the following:

(1) Real properties which serve as its main place of

business

and/or

branch

offices:

Provided,

That such

investment shall not in the overall exceed twenty percent

(20%) of its net worth as shown by its latest financial

statement approved by the Commissioner.

(2) Bonds or other instruments of indebtedness of the

Government of the Philippines or its political subdivisions

authorized by law to issue bonds at the reasonable

market value thereof.

(3)

Bonds

or

other

instruments

of

debt

of

government-owned

or

-controlled

corporations

and

entities, including the Bangko Sentral ng Pilipinas.

(4)

Bonds,

debentures

or

other

instruments

of

indebtedness of any solvent corporation or institution

created

or

existing

under

the

laws

of

the

Philippines: Provided, however , That the issuing, assuming

or guaranteeing entity or its predecessors shall not have

defaulted

in the payment of interest on any of its

securities and that during each of any three (3) including

the last two (2) of the five (5) fiscal years next preceding

the date of acquisition by such insurance company of

such

bonds,

debentures,

or

other

instruments

of

indebtedness, the net earnings of the issuing, assuming

or guaranteeing institution available for its fixed charges,

as hereinafter defined, shall have been not less than one

and one-quarter (1 1/4) times the total of its fixed charges

for such year: Provided, further , That no life insurance

company shall invest in or loan upon the obligations of

any one institution in the kinds permitted under this

subsection an amount in excess of twenty-five percent

(25%) of the total admitted assets of such insurer as of

December thirty-first next preceding the date of such

investment.

As used in this subsection the term net earnings

available for fixed charges shall mean net income after

deducting operating and maintenance expenses, taxes

other than income taxes, depreciation and depletion; but

excluding extraordinary nonrecurring items of income or

expense appearing in the regular financial statement of

the issuing, assuming or guaranteeing institution. The

term fixed charges shall include interest on funded and

unfunded

debt,

amortization

of

debt

discount,

and

rentals for leased properties.

(5) Preferred or guaranteed stocks of any solvent

corporation or institution created or existing under the

laws of the Philippines: Provided, That if the stocks are

guaranteed, the amount of stocks so guaranteed is not in

excess of fifty percent (50%) of the amount of the

preferred or common stocks, as the case may be, of the

guaranteeing corporation: Provided, finally , That no life

insurance

company

shall

invest

in

or

loan

upon

obligations of any one institution in the kinds permitted

under this subsection an amount in excess of ten percent

(10%) of the total admitted assets of such insurer as of

December thirty-first next preceding the date of such

investment.

(6) Common stocks of any solvent corporation or

institution created or existing under the laws of the

Philippines: Provided, however , That no life insurance

company shall invest in or loan upon the obligations of

any one corporation or institution in the kinds permitted

under this subsection an amount in excess of ten percent

(10%) of the total admitted assets of such insurer as of

December thirty-first next preceding the date of such

investment.

(7) Securities issued by a registered enterprise, as this

term is defined in Executive Order No. 226 , otherwise

known as the Omnibus Investments Code of 1987 , as

amended:

Provided,

That

the

total investment of a

domestic non-life insurance company in any registered

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

net worth of said insurance company as shown by its

aforesaid

financial

statement

unless

previously

authorized by the Commissioner.

(8) Certificates, notes and other obligations issued by

the trustees or receivers of any institution created or

existing under the laws of the Philippines which or the

assets

of

which,

are

being

administered under the

direction

of

any

court

having

jurisdiction:

Provided,

however , That such certificates, notes or other obligations

are adequately secured as to principal and interests.

(9) Equipment trust obligations or certificates which

are adequately secured or other adequately secured

instruments evidencing an interest in equipment wholly

or in part within the Philippines: Provided, however , That

there is a right to receive determined portions of rental,

purchase or other fixed obligatory payments for the use

or purchase of such equipment.

(10) Any obligation of any corporation or institution

created or existing under the laws of the Philippines

which is, on the date of acquisition by the insurer,

adequately secured and has qualities and characteristics

wherein the speculative elements are not predominant.

(11) Such other securities as may be approved by the

Commissioner.

(c)

Any domestic insurer which has outstanding

insurance, annuity or reinsurance contracts in currencies

other than the national currency of the Philippines may

invest in, or otherwise acquire or loan upon securities and

investments in such currency which are substantially of

the same kinds, classes and investment grades as those

eligible for investment under the foregoing subdivisions

of

this

section; but the aggregate amount of such

investments and of such cash in such currency which is at

any time held by such insurer shall not exceed one and

one-half (1 1/2) times the amount of its reserves and other

obligations under such contracts or the amount which

© Compiled by RGL

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