Article 63p. 63

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

SECTION 266. No director, officer, or stockholder of

any such constituent companies shall receive any fee,

commission,

compensation,

or

other

valuable

consideration whatsoever, directly or indirectly, or in any

manner aiding, promoting or assisting in such merger or

consolidation.

SECTION

267.

The

merger

or

consolidation

of

companies under this Code shall be subject to the

provisions of the Corporation Code, and, in those cases

specified in Republic Act No. 5455 , as amended, be

further subject to the provisions of said law.

TITLE 17 Mutualization of Stock Life Insurance

Companies

SECTION

268.

Any domestic stock life insurance

company doing business in the Philippines may convert

itself into an incorporated mutual life insurer. To that end

it may provide and carry out a plan for the acquisition of

the outstanding shares of its capital stock for the benefit

of

its

policyholders,

or

any

class

or

classes

of

its

policyholders, by complying with the requirements of this

chapter.

SECTION 269. Such plan shall include appropriate

proceedings

for

amending

the

insurer's

articles

of

incorporation to give effect to the acquisition, by said

insurer, for the benefit of its policyholders or any class or

classes thereof, of the outstanding shares of its capital

stock and the conversion of the insurer from a stock

corporation into a nonstock corporation for the benefit of

its members. The members of such nonstock corporation

shall be the policyholders from time to time of the class

or classes for whose benefit the stock of the insurer was

acquired, and the policyholders of such other class or

classes as may be specified in such corporation's articles

of incorporation as they may be amended from time to

time. Such plan shall be:

(a) Adopted by a vote of a majority of the directors;

(b) Approved by the vote of the holders of at least a

majority of the outstanding shares at a special meeting of

shareholders called for that purpose, or by the written

consent of such shareholders;

(c) Submitted to the Commissioner and approved by

him in writing;

(d)

Approved

by

a

majority

vote

of

all

the

policyholders of the class or classes for whose benefit the

stock is to be acquired voting at an election by the

policyholders called for that purpose, subject to the

provisions

of Section 271. The terms policyholder or

policyholders as used in this chapter shall be deemed to

mean the person or persons insured under an individual

policy

of

life

insurance,

or

of

health

and

accident

insurance, or of any combination of life, health and

accident insurance. They shall also include the person or

persons to whom any annuity or pure endowment is

presently or prospectively payable by the terms of an

individual annuity or pure endowment contract, except

where the policy or contract declares some other person

to be the owner or holder thereof, in which case such

other person shall be deemed policyholder. In any case

where a policy or contract names two or more persons as

joint insured, payees, owners or holders thereof, the

persons so named shall be deemed collectively to be one

(1) policyholder for the purpose of this chapter. In any case

where a policy or contract shall have been assigned by

assignment absolute on its face to an assignee other than

the insurer, and such assignment shall have been filed at

the principal office of the insurer at least thirty (30) days

prior to the date of any election or meeting referred to in

this chapter, then such assignee shall be deemed at such

election or meeting to be the policyholder. For the

purpose of this chapter the terms policyholder and

policyholders

include

the

employer

to

whom,

or

a

president, secretary or other executive officer of any

corporation or association to which a master group policy

has been issued, but exclude the holders of certificates or

policies issued under or in connection with a master

group policy. Beneficiaries under unmatured contracts

shall not as such be deemed to be policyholders; and

(e) Filed with the Commissioner after having been

approved as provided in this section.

SECTION 270. The Commissioner shall examine the

plan

submitted

to

him

under

the

provisions

of

subparagraph (c) of Section 269. He shall not approve

such plan unless in his opinion the rights and interests of

the

insurer,

its

policyholders

and

shareholders

are

protected nor unless he is satisfied that the plan will be

fair and equitable in its operation.

SECTION

271.

The

election

prescribed

by

subparagraph (d) of Section 269 shall be called by the

board of directors or the president, and every policyholder

of the class or classes for whose benefit the stock is to be

acquired, whose insurance shall have been in force for at

least one (1) year prior to such election shall have one

vote, regardless of the number of policies or amount of

insurance he holds, and regardless of whether such

policies are policies of life insurance or policies of health

and accident insurance or annuity contracts. Notice of

such election shall be given to policyholders entitled to

vote by mail from the principal office of such insurer at

least thirty (30) days prior to the date set for such election,

in a sealed envelope, postage prepaid, addressed to each

such policyholder at his last known address.

Voting shall be by one of the following methods.

(a) At a meeting of such policyholders, held pursuant

to such notice, by ballot in person or by proxy.

(b) If not by the method described in the preceding

subparagraph, then by mail pursuant to a procedure and

on forms to be prescribed by such plan.

Such election shall be conducted under the direction

and supervision of three (3) impartial and disinterested

inspectors appointed by the insurer and approved by the

Commissioner. In case any person appointed as inspector

fails to appear at such meeting or fails or refuses to act at

such election, the vacancy, if occurring in advance of the

convening of the meeting or in advance of the opening of

the mail vote, may be filled in the manner prescribed for

the appointment of inspectors and, if occurring at the

meeting or during the canvass of the mail vote, may be

filled by the person acting as chairman of said meeting or

designated for that purpose in such plan. The decision,

act or certificate of a majority of the inspectors shall be

effective in all respects as the decision, act or certificate of

all. The inspectors of election shall determine the number

of

policyholders

the

voting

power

of

each,

the

policyholders represented at the meeting or voting by

mail, the existence of a quorum and the authenticity,

validity and effect of proxies. They shall receive votes, hear

and determine all challenges and questions in any way

arising in connection with the right to vote, count and

tabulate all votes, determine the result, and do such other

acts as are proper to conduct the vote with fairness to all

policyholders. The inspectors of election shall, before

commencing performance of their duties, subscribe to

and file with the insurer and with the Commissioner an

oath that they, and each of them, will perform their duties

impartially, in good faith, to the best of their ability and as

expeditiously as is practicable. On the request of the

insurer, the Commissioner, a policyholder or his proxy, the

inspectors shall make a report in writing of any challenge

or question or matter determined by them and execute a

certificate of any fact found by them. They shall also

certify the result of such vote to the insurer and to the

Commissioner. Any report or certificate made by them

shall be prima facie evidence of facts stated therein. All

necessary expenses incurred in connection with such

election shall be paid by the insurer. For the purpose of

this section, a quorum shall consist of five percent (5%) of

the policyholders of such insurer entitled to vote at such

election.

SECTION 272. In carrying out any such plan, the

insurer may acquire any shares of its own stock by gift,

bequest or purchase. Any shares so acquired shall, unless

© Compiled by RGL

63 of 211