Article 61p. 61

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

TITLE 12 Examination of Companies

SECTION 252. The Commissioner shall require every

insurance company doing business in the Philippines to

keep its books, records, accounts and vouchers in such

manner that he or his authorized representatives may

readily verify its annual statements and ascertain whether

the company is solvent and has complied with the

provisions of this Code or the circulars, instructions,

rulings or decisions of the Commissioner.

SECTION 253. The Commissioner shall at least once a

year and whenever he considers the public interest so

demands, cause an examination to be made into the

affairs, financial condition and method of business of

every insurance company authorized to transact business

in the Philippines and of any other person, firm or

corporation managing the affairs and/or property of such

insurance company. Such company, as well as such

managing person, firm or corporation, shall submit to the

examiner all such books, papers and securities as he may

require and such examiner shall also have the power to

examine

the

officers

of

such

company

under oath

touching its business and financial condition, and the

authority to transact business in the Philippines of any

such company shall be suspended by the Commissioner

if such examination is refused and such company shall

not thereafter be allowed to transact further business in

the

Philippines until it has fully complied with the

provisions of this section.

Government-owned or -controlled corporations or

entities engaged in social or private insurance shall

similarly

be

subject

to

such

examination

by

the

Commissioner unless their respective charters otherwise

provide.

TITLE 13 Suspension or Revocation of Authority

SECTION 254. If the Commissioner is of the opinion

upon examination of other evidence that any domestic or

foreign insurance company is in an unsound condition, or

that it has failed to comply with the provisions of law or

regulations obligatory upon it, or that its condition or

method of business is such as to render its proceedings

hazardous to the public or to its policyholders, or that its

net worth requirement, in the case of a domestic stock

company, or its available cash assets, in the case of a

domestic mutual company, or its security deposits, in the

case of a foreign company, is impaired or deficient, or

that the margin of solvency required of such company is

deficient, the Commissioner is authorized to suspend or

revoke

all

certificates

of

authority

granted

to

such

insurance company, its officers and agents, and no new

business shall thereafter be done by such company or for

such company by its agent in the Philippines while such

suspension, revocation or disability continues or until its

authority to do business is restored by the Commissioner.

Before restoring such authority, the Commissioner shall

require the company concerned to submit to him a

business plan showing the company's estimated receipts

and disbursements, as well as the basis therefor, for the

next succeeding three (3) years.

TITLE 14 Appointment of Conservator

SECTION 255. If at any time before, or after, the

suspension or revocation of the certificate of authority of

an insurance company as provided in the preceding title,

the Commissioner finds that such company is in a state

of continuing inability or unwillingness to maintain a

condition of solvency or liquidity deemed adequate to

protect the interest of policyholders and creditors, he may

appoint a conservator to take charge of the assets,

liabilities, and the management of such company, collect

all moneys and debts due to said company and exercise

all

powers necessary to preserve the assets of said

company,

reorganize

the

management

thereof,

and

restore its viability. The said conservator shall have the

power to overrule or revoke the actions of the previous

management and board of directors of the said company,

any provision of law, or of the articles of incorporation or

bylaws of the company, to the contrary notwithstanding,

and such other powers as the Commissioner shall deem

necessary.

The conservator may be another insurance company

doing business in the Philippines, any officer or officers of

such company, or any other competent and qualified

person, firm or corporation. The remuneration of the

conservator

and

other

expenses

attendant

to

the

conservation shall be borne by the insurance company

concerned.

The conservator 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 conservator.

The

conservator

appointed

shall

report

and

be

responsible to the Commissioner until such time as the

Commissioner is satisfied that the insurance company

can

continue

to

operate

on

its

own

and

the

conservatorship shall likewise be terminated should the

Commissioner,

on

the

basis

of

the

report

of

the

conservator or of his own findings, determine that the

continuance in business of the insurance company would

be hazardous to policyholders and creditors, in which

case the provisions of Title 15 shall apply.

No

insurance

company,

life

or

non-life,

or

any

professional reinsurer, ordered to be liquidated by the

Commissioner under the provisions hereunder may be

rehabilitated or authorized to transact anew, insurance or

reinsurance business, as the case may be.

TITLE 15 Proceedings Upon Insolvency

SECTION 256. Whenever, upon examination or other

evidence, it shall be disclosed that the condition of any

insurance company doing business in the Philippines is

one of insolvency, or that its continuance in business

would be hazardous to its policyholders and creditors, the

Commissioner shall forthwith order the company to

cease

and

desist

from

transacting

business

in

the

Philippines and shall designate a receiver to immediately

take charge of its assets and liabilities, as expeditiously as

possible collect and gather all the assets and administer

the same for the benefit of its policyholders and creditors,

and exercise all the powers necessary for these purposes

including,

but

not

limited

to,

bringing

suits

and

foreclosing mortgages in the name of the insurance

company.

The Commissioner shall thereupon determine within

ninety (90) days whether the insurance company may be

reorganized or otherwise placed in such condition so that

it may be permitted to resume business with safety to its

policyholders

and

creditors

and

shall

prescribe

the

conditions under which such resumption of business

shall take place as well as the time for fulfillment of such

conditions. In such case, the expenses and fees in the

collection and administration of the insurance company

shall be determined by the Commissioner and shall be

paid out of the assets of such company.

If the Commissioner shall determine and confirm

within the said period that the insurance company is

insolvent,

as

defined

hereunder,

or

cannot

resume

business with safety to its policyholders and creditors, he

shall, if the public interest requires, order its liquidation,

indicate the manner of its liquidation and approve a

liquidation

plan

and implement it immediately. The

Commissioner shall designate a competent and qualified

person as liquidator who shall take over the functions of

the

receiver

previously

designated

and,

with

all

convenient speed, reinsure all its outstanding policies,

convert the assets of the insurance company to cash, or

sell, assign or otherwise dispose of the same to the

policyholders, creditors and other parties for the purpose

of settling the liabilities or paying the debts of such

company and he may, in the name of the company,

© Compiled by RGL

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