Article 69p. 69

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

SECTION 305. No holding company or controlled

person shall directly or indirectly or through another

person do or cause to be done for or in behalf of the

controlled

insurer

any

act

intended

to

affect

the

insurance operations of the insurer which, if done by the

insurer, would violate any provision of this Code.

SECTION

306.

In

addition

to

any

other

penalty

provided by law, the Commissioner may, upon the willful

failure of any person within a holding company system to

comply

with

this

title

or

any

regulation

or

order

promulgated hereunder.

(a) Proceed under Title 14 or Title 15, Chapter III of this

Code with respect to insurer within the holding company

system; or

(b) Revoke or refuse to renew the authority to do

business in this country of an insurer within the holding

company system or refuse to issue such authority to any

other insurer in the system; or

(c) Direct that, in addition to any other penalty

provided by law, such person forfeit to the people of this

country

a

sum

not

less

than

Five thousand pesos

(P5,000.00) for a first violation and Twenty-five thousand

pesos

(P25,000.00)

for

any subsequent violation. An

additional sum not less than Twenty-five thousand pesos

(P25,000.00) shall be imposed for each month during

which any such violation shall continue.

CHAPTER IV Sales Agencies and Technical

Services

TITLE 1 Insurance Agents and Insurance Brokers

SECTION 307. No insurance company doing business

in the Philippines, nor any agent thereof, shall pay any

commission or other compensation to any person for

services in obtaining insurance, unless such person shall

have first procured from the Commissioner a license to

act as an insurance agent of such company or as an

insurance broker as hereinafter provided.

No person shall act as an insurance agent or as an

insurance broker in the solicitation or procurement of

applications

for

insurance, or receive for services in

obtaining

insurance,

any

commission

or

other

compensation

from

any

insurance

company

doing

business in the Philippines, or any agent thereof, without

first procuring a license so to act from the Commissioner,

which must be renewed every three (3) years thereafter.

Such license shall be issued by the Commissioner only

upon the written application of the person desiring it,

such application if for a license to act as insurance agent,

being

approved

or endorsed by the company such

person desires to represent, and shall be upon a form

prescribed by the Commissioner giving such information

as

he

may

require,

and

upon

payment

of

the

corresponding

fee

hereinafter

prescribed.

The

Commissioner shall satisfy himself as to the competence

and trustworthiness of the applicant and shall have the

right to refuse to issue or renew and to suspend or revoke

any such license in his discretion. The license shall expire

after the thirty-first day of December of the third year

following the date of issuance unless it is renewed.

Licenses may be renewed in the case of the company

represented by such agents, and in the case of insurance

brokers,

upon

the

application

of

the

said

brokers,

themselves.

SECTION 308. The provisions of Sections 307 and 309

shall apply to an employee who shall be engaged to sell

insurance products by an insurance company.

SECTION 309. Any person who for compensation

solicits or obtains insurance on behalf of any insurance

company or transmits for a person other than himself an

application for a policy or contract of insurance to or from

such

company

or

offers

or

assumes

to

act in the

negotiating of such insurance shall be an insurance

agent within the intent of this section and shall thereby

become liable to all the duties, requirements, liabilities

and penalties to which an insurance agent is subject.

An insurance agent is an independent contractor and

not an employee of the company represented. 'Insurance

agent' includes an agency leader, agency manager, or

their equivalent.

Since the insurance industry is imbued with public

interest, the insurance companies upon approval of the

Commissioner may exercise wide latitude in supervising

the activities of their insurance agents to ensure the

protection of the insuring public.

SECTION 310. Any person who for any compensation,

commission or other thing of value acts or aids in any

manner in soliciting, negotiating or procuring the making

of any insurance contract or in placing risk or taking out

insurance, on behalf of an insured other than himself,

shall be an insurance broker within the intent of this

Code, and shall thereby become liable to all the duties,

requirements,

liabilities

and

penalties

to

which

an

insurance broker is subject.

SECTION 311. Every applicant for an insurance broker's

license shall file with the application and shall thereafter

maintain in force while so licensed, a bond in favor of the

people of the Republic of the Philippines executed by a

company authorized to become surety upon official

recognizances, stipulations, bonds and undertakings. The

bond shall be in such amount as may be fixed by the

Commissioner, but in no case less than Five hundred

thousand pesos (P500,000.00), and shall be conditioned

upon full accounting and due payment to the person

entitled

thereto

of

funds

coming

into

the

broker's

possession through insurance transactions under license.

The bond shall remain in force until released by the

Commissioner, or until cancelled by the surety. Without

prejudice to any liability previously incurred thereunder,

the surety may cancel the bond on thirty (30) days

advance written notice to both the broker and the

Commissioner.

Upon approval of the application, the applicant must

also file two (2) errors and omissions (professional liability

or professional indemnity) policies issued separately by

two (2) insurance companies authorized to do business in

the

Philippines,

satisfactory to the Commissioner to

indemnify the applicant against any claim or claims for

breach of duty as insurance broker which may be made

against him by reason of any negligent act, error or

omission, whenever or wherever committed or alleged to

have been committed, on the part of the applicant or any

person who has been, is now, or may hereafter during the

subsistence of the policies be employed by the said

applicant in his capacity as insurance broker: Provided,

That the filing of any claim or claims under one of such

policies shall preclude the filing of the said claim or

claims under the other policy. The said policies shall be in

such

amounts

as

may

be

prescribed

by

the

Commissioner, depending upon the size or amount of

the broking business of the applicant, but in no case shall

the amount of each of such policies be less than Five

hundred thousand pesos (P500,000.00).

SECTION 312. The Commissioner shall, in order to

determine the competence of every applicant to have the

kind of license applied for, require such applicant to

submit to a written examination and to pass the same to

the satisfaction of the Commissioner. The Commissioner

may delegate or authorize the administration of the

examination to an independent organization, subject to

such conditions that the Commissioner may provide.

SECTION

313.

An

applicant

for

the

written

examination mentioned in the preceding section must

be of good moral character and must not have been

convicted of any crime involving moral turpitude. He

must satisfactorily show to the Commissioner that he has

been trained in the kind of insurance contemplated in

the license applied for. Such examination may be waived

if it is shown to the satisfaction of the Commissioner that

© Compiled by RGL

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