law 3 act no. 2427 insurance code

8/16/2019 Law 3 Act No. 2427 Insurance Code

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THE INSURANCE ACT OF THE PHILIPPINES - CHAN

ROBLES VIRTUAL LAW LIBRARY

This web page co!ais !he "#$$ !e%! o"

Ac! No& '(')

AN ACT REVISIN* THE INSURANCE LAWS AN+ RE*ULATIN*

INSURANCE BUSINESS IN THE PHILIPPINE ISLAN+S

Rea, "#$$ !e%! o"

Is#.ace Co,e /P.esi,e!ia$

+ec.ee No& 01'2

ACT NO. 2427

AN ACT REVISIN* THE INSURANCE LAWS

AN+ RE*ULATIN* INSURANCE BUSINESS IN THE PHILIPPINE ISLAN+S

PRELI3INARY CHAPTER

SECTION 1& The sho.! !i!$e o" !his Ac! sha$$ be "The Insurance Act." CHAPTER 1

Is#.ace i gee.a$

+e"ii!io o" Is#.ace

SECTION '& Is#.ace is a co!.ac! whe.eb4 oe #,e.!a5es "o. a

cosi,e.a!io !o i,e6i"4 ao!he. agais! $oss7 ,a6age7 o. $iabi$i!4

a.isig ".o6 a #5ow o. co!ige! e8e!&

Wha! 3a4 Be Is#.e,

SECTION 9& A4 co!ige! o. #5ow e8e!7 whe!he. pas! o. "#!#.e7

which 6a4 ,a6i"4 a pe.so ha8ig a is#.ab$e i!e.es!7 o. c.ea!e a

$iabi$i!4 agais! hi67 6a4 be is#.e, agais! s#b:ec! !o !he p.o8isioso" !his chap!e.&

SECTION (& The p.ece,ig sec!io ,oes o! a#!ho.i;e a is#.ace "o.

o. agais! !he ,.awig o" a4 $o!!e.47 o. "o. o. agais! a4 chace o.

!ic5e! i a $o!!e.4 ,.awig a p.i;e& .ob$es 8i.!#a$ $aw $ib.a.4

SECTION


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Pa.!ies !o !he Co!.ac!

SECTION 0& The pe.so who #,e.!a5es !o i,e6i"4 ao!he. b4 a

co!.ac! o" is#.ace is ca$$e, !he is#.e.7 a, !he pe.so i,e6i"ie,

is ca$$e, !he is#.e,&

SECTION )& E8e.4 pe.so7 co6pa47 co.po.a!io7 o. associa!io who

ho$,s a ce.!i"ica!e o" a#!ho.i!4 ".o6 !he is#.ace co66issioe.7 ase$se whe.e p.o8i,e, i !his Ac!7 6a4 be a is#.e.&

SECTION =& A4oe e%cep! a p#b$ic ee64 6a4 be is#.e,&

SECTION >& U$ess !he po$ic4 o!he.wise p.o8i,es7 whe.e a 6o.!gago. o"

p.ope.!4 e""ec!s is#.ace i his ow a6e p.o8i,ig !ha! !he $oss sha$$

be pa4ab$e !o !he 6o.!gagee7 o. assigs a po$ic4 o" is#.ace !o a

6o.!gagee7 !he is#.ace is ,ee6e, !o be #po !he i!e.es! o" !he

6o.!gago.7 who ,oes o! cease !o be a pa.!4 !o !he o.igia$ co!.ac!7

a, a4 ac! o" his7 p.io. !o !he $oss7 which wo#$, o!he.wise a8oi, !he

is#.ace7 wi$$ ha8e !he sa6e e""ec!7 a$!ho#gh !he p.ope.!4 is i !he

ha,s o" !he 6o.!gagee7 b#! a4 ac! which7 #,e. !he co!.ac! o" is#.ace7 is !o be pe."o.6e, b4 !he 6o.!gago.7 6a4 be pe."o.6e, b4

!he 6o.!gagee !he.ei a6e,7 wi!h !he sa6e e""ec! as i" i! ha, bee

pe."o.6e, b4 !he 6o.!gago.&

SECTION 1?& I" a is#.e. asse!s !o !he !.as"e. o" a is#.ace ".o6

a 6o.!gago. !o a 6o.!gagee7 a,7 a! !he !i6e o" his asse!7 i6poses

"#.!he. ob$iga!ios o !he assigee7 6a5ig a ew co!.ac! wi!h hi67

!he ac!s o" !he 6o.!gago. cao! a""ec! !he .igh!s o" sai, assigee&

Is#.ab$e I!e.es!

SECTION 11& E8e.4 pe.so has a is#.ab$e i!e.es! i !he $i"e a,

hea$!h&/a2 O" hi6se$"@

/b2 O" a4 pe.so o who6 he ,epe,s who$$4 o. i pa.! "o. e,#ca!io

o. s#ppo.!@

/c2 O" a4 pe.so #,e. a $ega$ ob$iga!io !o hi6 "o. !he pa46e! o"

6oe47 o. .espec!ig p.ope.!4 o. se.8ices7 o" which ,ea!h o. i$$ess

6igh! ,e$a4 o. p.e8e! !he pe."o.6ace@ a,

/,2 O" a4 pe.so #po whose $i"e a4 es!a!e o. i!e.es! 8es!e, i hi6

,epe,s&

SECTION 1'& E8e.4 i!e.es! i p.ope.!47 whe!he. .ea$ o. pe.soa$7 o.

a4 .e$a!io !he.e!o7 o. $iabi$i!4 i .espec! !he.eo"7 o" s#ch a a!#.e !ha!a co!e6p$a!e, pe.i$ 6igh! ,i.ec!$4 ,a6i"4 !he is#.e,7 is a is#.ab$e

i!e.es!&

SECTION 19& A is#.ab$e i!e.es! i p.ope.!4 6a4 cosis! i cha.ob$es8i.!#a$$aw$ib.a.4

/a2 A e%is!ig i!e.es!@

/b2 A ichoa!e i!e.es! "o#,e, o a e%is!ig i!e.es!@ o.

/c2 A e%pec!ac47 co#p$e, wi!h a e%is!ig i!e.es! i !ha! o#! o"

which !he e%pec!ac4 a.ises&


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SECTION 1(& A ca..ie. o. ,eposi!o.4 o" a4 5i, has a is#.ab$e

i!e.es! i a !hig he$, b4 hi6 as s#ch7 !o !he e%!e! o" his $iabi$i!4 b#!

o! !o e%cee, !he 8a$#e !he.eo"&

SECTION 1& E%cep! i !he cases speci"ie, i !he e%! "o#. sec!ios7 a,

i !he cases o" $i"e7 acci,e!7 a, hea$!h is#.ace7 a chage o" i!e.es!

i a4 pa.! o" a !hig is#.e, #acco6paie, b4 a co..espo,igchage o" i!e.es! i !he is#.ace7 s#spe,s !he is#.ace !o a

e#i8a$e! e%!e!7 #!i$ !he i!e.es! i !he !hig a, !he i!e.es! i !he

is#.ace a.e 8es!e, i !he sa6e pe.so& .ob$es 8i.!#a$ $aw $ib.a.4

SECTION '?& A chage o" i!e.es! i a !hig is#.e,7 a"!e. !he

occ#..ece o" a i:#.4 which .es#$!s i a $oss7 ,oes o! a""ec! !he .igh!

o" !he is#.e, !o i,e6i"4 "o. !he $oss&

SECTION '1& A chage o" i!e.es! i oe o. 6o.e o" se8e.a$ ,is!ic!

!higs7 sepa.a!e$4 is#.e, b4 oe po$ic47 ,oes o! a8oi, !he is#.ace

as !o !he o!he.s&

SECTION ''& A chage o" i!e.es!7 b4 wi$$ o. s#ccessio7 o !he ,ea!h o" !he is#.e,7 ,oes o! a8oi, a is#.ace@ a, his i!e.es! i !he

is#.ace passes !o !he pe.so !a5ig his i!e.es! i !he !hig is#.e,&

SECTION '9& A !.as"e. o" i!e.es! b4 oe o" se8e.a$ pa.!e.s7 :oi!

owe.s7 o. owe.s i co66o7 who a.e :oi!$4 is#.e,7 !o !he o!he.s7

,oes o! a8oi, a is#.ace7 e8e !ho#gh i! has bee ag.ee, !ha! !he

is#.ace sha$$ cease #po a a$iea!io o" !he !hig is#.e,&

SECTION '(& E8e.4 s!ip#$a!io i a po$ic4 o" is#.ace "o. !he pa46e!

o" $oss whe!he. !he pe.so is#.e, has o. has o! a4 i!e.es! i !he

s#b:ec! 6a!!e. o" !he is#.ace e%cep! i !he cases p.o8i,e, "o. i

sec!io oe h#,.e, a, si%!4-si% o. !ha! !he po$ic4 sha$$ be .ecei8e, asp.oo" o" s#ch i!e.es!7 a, e8e.4 po$ic4 e%ec#!e, b4 wa4 o" ga6ig o.

wage.ig7 is 8oi,&

Cocea$6e! a, Rep.ese!a!ios

SECTION '


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SECTION ')& Each pa.!4 !o a co!.ac! o" is#.ace 6#s! co66#ica!e

!o !he o!he.7 i goo, "ai!h7 a$$ "ac!s wi!hi his 5ow$e,ge which a.e

6a!e.ia$ !o !he co!.ac!7 a, which !he o!he. has o! !he 6eas o"

asce.!aiig7 a, as !o which he 6a5es o wa..a!4&

SECTION '=& A i!e!ioa$ a, ".a#,#$e! o6issio7 o !he pa.! o" oe

is#.e,7 !o co66#ica!e i"o.6a!io o" 6a!!e.s p.o8ig o. !e,ig !op.o8e !he "a$si!4 o" a wa..a!47 e!i!$es !he is#.e. !o .esci,&

SECTION '>& Nei!he. pa.!4 !o a co!.ac! o" is#.ace is bo#, !o

co66#ica!e i"o.6a!io o" !he 6a!!e.s "o$$owig7 e%cep! i aswe. !o

!he i#i.ies o" !he o!he. cha.ob$es8i.! #a$$aw$ib.a.4

/a2 Those which !he o!he. 5ows@

/b2 Those which7 i !he e%e.cise o" o.,ia.4 ca.e7 !he o!he. o#gh! !o

5ow7 a, o" which !he "o.6e. has o .easo !o s#ppose hi6 igo.a!@

/c2 Those o" which !he o!he. wai8es co66#ica!io@

/,2 Those which p.o8e o. !e, !o p.o8e !he e%is!ece o" a .is5 e%c$#,e,

b4 a wa..a!47 a, which a.e o! o!he.wise 6a!e.ia$@ a,/e2 Those which .e$a!e !o a .is5 e%cep!e, ".o6 !he po$ic47 a, which

a.e o! o!he.wise 6a!e.ia$&

SECTION 9?& 3a!e.ia$i!4 is !o be ,e!e.6ie, o! b4 !he e8e!7 b#!

so$e$4 b4 !he p.obab$e a, .easoab$e i"$#ece o" !he "ac!s #po !he

pa.!4 !o who6 !he co66#ica!io is ,#e7 i "o.6ig his es!i6a!e o" !he

,isa,8a!ages o" !he p.opose, co!.ac!7 o. i 6a5ig his i#i.ies&

SECTION 91& Each pa.!4 !o a co!.ac! o" is#.ace is bo#, !o 5ow a$$

!he gee.a$ ca#ses which a.e ope !o his i#i.47 e#a$$4 wi!h !ha! o"

!he o!he.7 a, which 6a4 a""ec! ei!he. !he po$i!ica$ o. 6a!e.ia$ pe.i$s

co!e6p$a!e,@ a, a$$ gee.a$ #sages o" !.a,e&SECTION 9'& The .igh! !o i"o.6a!io o" 6a!e.ia$ "ac!s 6a4 be wai8e,7

ei!he. b4 !he !e.6s o" is#.ace o. b4 eg$ec! !o 6a5e i#i.ies as !o

s#ch "ac!s7 whe.e !he4 a.e ,is!ic!$4 i6p$ie, i o!he. "ac!s o" which

i"o.6a!io is co66#ica!e,&

SECTION 99& I"o.6a!io o" !he a!#.e o. a6o#! o" !he i!e.es! o" oe

is#.e, ee, o! be co66#ica!e, #$ess i aswe. !o a i#i.47

e%cep! as p.esc.ibe, b4 sec!io "o.!4-ie&

SECTION 9(& Nei!he. pa.!4 !o a co!.ac! o" is#.ace is bo#, !o

co66#ica!e7 e8e #po i#i.47 i"o.6a!io o" his ow :#,g6e!

#po !he 6a!!e.s i #es!io&SECTION 9


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e%pec!a!io&

SECTION 9>& A .ep.ese!a!io cao! be a$$owe, !o #a$i"4 a e%p.ess

p.o8isio i a co!.ac! o" is#.ace@ b#! i! 6a4 #a$i"4 a i6p$ie,

wa..a!4&

SECTION (?& A .ep.ese!a!io 6a4 be a$!e.e, o. wi!h,.aw be"o.e !he

is#.ace is e""ec!e,7 b#! o! a"!e.wa.,s&SECTION (1& A .ep.ese!a!io 6#s! be p.es#6e, !o .e"e. !o !he ,a!e

o which !he co!.ac! goes i!o e""ec!&

SECTION ('& Whe a pe.so is#.e, has o pe.soa$ 5ow$e,ge o" a

"ac!7 he 6a4 e8e.!he$ess .epea! i"o.6a!io which he has #po !he

s#b:ec!7 a, which he be$ie8es !o be !.#e7 wi!h !he e%p$aa!io !ha! he

,oes so o !he i"o.6a!io o" o!he.s7 o. he 6a4 s#b6i! !he i"o.6a!io7

i i!s who$e e%!e!7 !o !he is#.e.@ a, i ei!he. case is he .esposib$e

"o. i!s !.#!h7 #$ess i! p.ocee,s ".o6 a age! o" !he is#.e,7 whose

,#!4 i! is !o gi8e !he i!e$$igece&

SECTION (9& A .ep.ese!a!io is !o be ,ee6e, "a$se whe !he "ac!s "ai$!o co..espo, wi!h i!s asse.!ios o. s!ip#$a!ios&

SECTION ((& I" a .ep.ese!a!io is "a$se i a 6a!e.ia$ poi!7 whe!he.

a""i.6a!i8e o. p.o6isso.47 !he i:#.e, pa.!4 is e!i!$e, !o .esci, !he

co!.ac! ".o6 !he !i6e whe !he .ep.ese!a!io beco6es "a$se&

SECTION (& A po$ic4 o" is#.ace 6#s! speci"4 cha.ob$es8i.!#a$$aw$ib.a.4

/a2 The pa.!ies be!wee who6 !he co!.ac! is 6a,e@

/b2 The a6o#! !o be is#.e, e%cep! i !he cases o" ope o. .#ig

po$icies@

/c2 The .a!e o" p.e6i#6@/,2 The p.ope.!4 o. $i"e is#.e,@

/e2 The i!e.es! o" !he is#.e, i p.ope.!4 is#.e,7 i" he is o! !he

abso$#!e owe. !he.eo"@

/"2 The .is5s is#.e, agais!@ a,

/g2 The pe.io, ,#.ig which !he is#.ace is !o co!i#e&

SECTION


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speci"ie, i !he po$ic4&

SECTION


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is!.#6e! sige, b4 !he is#.e, a, .e"e..e, !o i !he po$ic47 as

6a5ig a pa.! o" i!&

SECTION 00& A s!a!e6e! i a po$ic47 o" a 6a!!e. .e$a!ig !o !he pe.so

o. !hig is#.e,7 o. !o !he .is57 as a "ac!7 is a e%p.ess wa..a!4

!he.eo"&

SECTION 0)& A s!a!e6e! i a po$ic47 which i6po.!s !ha! i! is i!e,e,!o ,o o. o! !o ,o a !hig which 6a!e.ia$$4 a""ec!s !he .is57 is a

wa..a!4 !ha! s#ch ac! o. o6issio sha$$ !a5e p$ace&

SECTION 0=& Whe7 be"o.e !he !i6e a..i8es "o. !he pe."o.6ace o" a

wa..a!4 .e$a!ig !o !he "#!#.e7 a $oss is#.e, agais! happes7 o.

pe."o.6ace beco6es #$aw"#$ a! !he p$ace o" !he co!.ac!7 o.

i6possib$e7 !he o6issio !o "#$"i$$ !he wa..a!4 ,oes o! a8oi, !he

po$ic4&

SECTION 0>& The 8io$a!io o" a 6a!e.ia$ wa..a!47 o. o!he. 6a!e.ia$

p.o8isio o" a po$ic47 o !he pa.! o" ei!he. pa.!4 !he.e!o7 e!i!$es !he

o!he. !o .esci,&SECTION )?& A po$ic4 6a4 ,ec$a.e !ha! a 8io$a!io o" speci"ie,

p.o8isios !he.eo" sha$$ a8oi, i!7 o!he.wise !he b.each o" a i66a!e.ia$

p.o8isio ,oes o! a8oi, !he po$ic4&

SECTION )1& A b.each o" wa..a!47 wi!ho#! ".a#,7 6e.e$4 e%oe.a!es

a is#.e. ".o6 !he !i6e !ha! i! occ#.s7 o. whe.e i! is b.o5e i i!s

icep!io p.e8e!s !he po$ic4 ".o6 a!!achig !o !he .is5&

P.e6i#6

SECTION )'& A is#.e. is e!i!$e, !o pa46e! o" !he p.e6i#6 soo7 as

!he !hig is#.e, is e%pose, !o !he pe.i$ is#.e, agais!&

SECTION )9& A pe.so is#.e, is e!i!$e, !o a .e!#. o" p.e6i#67/a2 To !he who$e p.e6i#67 i" o pa.! o" his i!e.es! i !he !hig is#.e,

be e%pose, !o a4 o" !he pe.i$s is#.e, agais!@

/b2 Whe.e !he is#.ace is 6a,e "o. a ,e"ii!e pe.io, o" !i6e a, !he

is#.e, s#..e,e.s his po$ic47 !o s#ch po.!io o" !he p.e6i#6 as

co..espo,s wi!h !he #e%pi.e, !i6e7 a! a p.o-.a!a .a!e7 #$ess a sho.!

pe.io, .a!e has bee ag.ee, #po a, appea.s o !he "ace o" !he po$ic47

a"!e. ,e,#c!ig ".o6 !he who$e p.e6i#6 a4 c$ai6 "o. $oss o. ,a6age

#,e. !he po$ic4 which has p.e8io#s$4 acc.#e, P.o8i,e,7 Tha! o

ho$,e. o" a $i"e is#.ace po$ic4 6a4 a8ai$ hi6se$" o" !he p.i8i$eges o"

!his pa.ag.aph wi!ho#! s#""icie! ca#se as o!he.wise p.o8i,e, b4 $aw&SECTION )(& I" a pe.i$ is#.e, agais! has e%is!e,7 a, !he is#.e. has

bee $iab$e "o. a4 pe.io,7 howe8e. sho.!7 !he is#.e, is o! e!i!$e, !o

.e!#. o" p.e6i#6s7 so "a. as !ha! pa.!ic#$a. .is5 is coce.e,&

SECTION )


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whe7 b4 a4 ,e"a#$! o" !he is#.e, o!he. !ha ac!#a$ ".a#,7 !he is#.e.

e8e. ic#..e, a4 $iabi$i!4 #,e. !he po$ic4&

SECTION )0& I case o" a o8e.-is#.ace b4 se8e.a$ is#.e.s7 !he

is#.e, is e!i!$e, !o a .a!ab$e .e!#. o" !he p.e6i#67 p.opo.!ioe, !o

!he a6o#! b4 which !he agg.ega!e s#6 is#.e, i a$$ !he po$icies

e%cee,s !he is#.ab$e 8a$#e o" !he !hig a! .is57Loss

SECTION ))& A is#.e. is $iab$e "o. a $oss o" which a pe.i$ is#.e,

agais! was !he p.o%i6a!e ca#se@ a$!ho#gh a pe.i$ o! co!e6p$a!e, b4

!he co!.ac! 6a4 ha8e bee a .e6o!e ca#se o" !he $oss@ b#! he is o!

$iab$e "o. a $oss o" which !he pe.i$ is#.e, agais! was o$4 a .e6o!e

ca#se&

SECTION )=& A is#.e. is $iab$e whe.e !he !hig is#.e, is .esc#e,

".o6 a pe.i$ is#.e, agais!7 !ha! wo#$, o!he.wise ha8e ca#se, a $oss7

i" i !he co#.se o" s#ch .esc#e !he !hig is e%pose, !o a pe.i$ o!

is#.e, agais!7 which pe.6ae!$4 ,ep.i8es !he is#.e, o" i!spossessio7 i who$e o. i pa.!@ o. whe.e a $oss is ca#se, b4 e""o.!s !o

.esc#e !he !hig is#.e, ".o6 a pe.i$ is#.e, agais!& .ob$es 8i.!#a$ $aw

$ib.a.4

SECTION )>& Whe.e a pe.i$ is specia$$4 e%cep!e, i a co!.ac! o"

is#.ace7 a $oss7 which wo#$, o! ha8e occ#..e, b#! "o. s#ch pe.i$7 is

!he.eb4 e%cep!e,@ a$!ho#gh !he i66e,ia!e ca#se o" !he $oss was a pe.i$

which was o! e%cep!e,&

SECTION =?& A is#.e. is o! $iab$e "o. a $oss ca#se, b4 !he wi$$"#$ ac!

o. !h.o#gh !he coi8ace o" !he is#.e,@ b#! he is o! e%oe.a!e, b4

!he eg$igece o" !he is#.e,7 o. o" his age!s o. o!he.s&No!ice o" Loss

SECTION =1& I case o" $oss #po a is#.ace agais! "i.e7 a is#.e.

is e%oe.a!e,7 i" o!ice !he.eo" be o! gi8e !o hi6 b4 so6e pe.so

is#.e,7 o. e!i!$e, !o !he bee"i! o" !he is#.ace7 wi!ho#!

#ecessa.4 ,e$a4&

SECTION ='& Whe p.e$i6ia.4 p.oo" o" $oss is .e#i.e, b4 a po$ic4@ !he

is#.e, is o! bo#, !o gi8e s#ch p.oo" as wo#$, be ecessa.4 i a

co#.! o" :#s!ice@ b#! i! is s#""icie! "o. hi6 !o gi8e !he bes! e8i,ece

which he has i his powe. a! !he !i6e&

SECTION =9& A$$ ,e"ec!s i a o!ice o" $oss7 o. i p.e$i6ia.4 p.oo" !he.eo"7 which !he is#.e, 6igh! .e6e,47 a, which !he is#.e. o6i!s

!o speci"4 !o hi67 wi!ho#! #ecessa.4 ,e$a47 as g.o#,s o" ob:ec!io7

a.e wai8e,&

SECTION =(& +e$a4 i !he p.ese!a!io !o a is#.e. o" o!ice o. p.oo"

o" $oss is wai8e,7 i" ca#se, b4 a4 ac! o" his7 o. i" he o6i!s !o !a5e

ob:ec!io p.o6p!$4 a, speci"ica$$4 #po !ha! g.o#,&

SECTION =


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!he ce.!i"ica!e o. !es!i6o4 o" a pe.so o!he. !ha !he is#.e,7 i! is

s#""icie! "o. !he is#.e, !o #se a .easoab$e ,i$igece !o p.oc#.e i!7

a, i case o" !he .e"#sa$ o" s#ch pe.so !o gi8e i!7 !he "#.ish

.easoab$e e8i,ece !o !he is#.e. !ha! s#ch .e"#sa$ was o! i,#ce,

b4 a4 :#s! g.o#,s o" ,isbe$ie" i !he "ac!s ecessa.4 !o be ce.!i"ie,&

+o#b$e Is#.aceSECTION =0& A ,o#b$e is#.ace e%is!s whe.e !he sa6e pe.so is

is#.e, b4 se8e.a$ is#.e.s sepa.a!e$4 i .espec! !o !he sa6e s#b:ec!

a, i!e.es!&

SECTION =)& Whe.e !he is#.e, is o8e.is#.e, b4 ,o#b$e is#.ace

/a2 The is#.e,7 #$ess !he po$ic4 o!he.wise p.o8i,es7 6a4 c$ai6

pa46e! ".o6 !he is#.e.s i s#ch o.,e. as he 6a4 se$ec!7 #p !o !he

a6o#! "o. which !he is#.e.s a.e se8e.a$$4 $iab$e #,e. !hei.

.espec!i8e co!.ac!s@

/b2 Whe.e !he po$ic4 #,e. which !he is#.e, c$ai6 is a 8a$#e, po$ic47

!he is#.e, 6#s! gi8e c.e,i! as agais! !he 8a$#a!io "o. a4 s#6.ecei8e, b4 hi6 #,e. a4 o!he. po$ic4 wi!ho#! .ega., !o !he ac!#a$

8a$#e o" !he s#b:ec! 6a!!e. is#.e,@

/c2 Whe.e !he po$ic4 #,e. which !he is#.e, c$ai6s is a #8a$#e,

po$ic4 he 6#s! gi8e c.e,i!7 as agais! !he "#$$ is#.ab$e 8a$#e7 "o. a4

s#6 .ecei8e, b4 hi6 #,e. a4 o!he. po$ic4@

/,2 Whe.e !he is#.e, .ecei8es a4 s#6 i e%cess o" !he 8a$#a!io i

!he case o" 8a$#e, po$icies a, !he is#.ab$e 8a$#e i !he case o"

#8a$#e, po$icies7 he 6#s! ho$, s#ch s#6 i !.#s! "o. !he is#.e.s7

acco.,ig !o !hei. .igh! o" co!.ib#!io a6og !he6se$8es@

/e2 Each is#.e. is bo#,7 as be!wee hi6se$" a, !he o!he. is#.e.s7!o co!.ib#!e .a!ab$4 !o !he $oss i p.opo.!io !o !he a6o#! "o. which

he is $iab$e #,e. his co!.ac!&

Reis#.ace

SECTION ==& A co!.ac! o" .eis#.ace is oe b4 which a is#.e.

p.oc#.es a !hi., pe.so !o is#.e hi6 agais! $oss o. $iabi$i!4 b4 .easo

o" s#ch o.igia$ is#.ace&

SECTION =>& Whe.e a is#.e. ob!ais .eis#.ace7 he 6#s!

co66#ica!e a$$ !he .ep.ese!a!ios o" !he o.igia$ is#.e,7 a, a$so

a$$ !he 5ow$e,ge a, i"o.6a!io he possesses7 whe!he. p.e8io#s$4 o.

s#bse#e!$4 ac#i.e,7 which a.e 6a!e.ia$ !o !he .is5&SECTION >?& A .eis#.ace is p.es#6e, !o be a co!.ac! o" i,e6i!4

agais! $iabi$i!47 a, o! 6e.e$4 agais! ,a6age&

SECTION >1& The o.igia$ is#.e, has o i!e.es! i a co!.ac! o"

.eis#.ace&

CHAPTER II

3a.ie is#.ace

+e"ii!io o" 3a.ie Is#.ace


10/33

SECTION >'& 3a.ie is#.ace is a is#.ace agais! .is5s coec!e,

wi!h a8iga!io7 !o which a ship7 ca.go7 ".eigh!age7 p.o"i!s7 o. o!he.

is#.ab$e i!e.es! i 6o8ab$e p.ope.!47 6a4 be e%pose, ,#.ig a

ce.!ai 8o4age o. a "i%e, pe.io, o" !i6e&

Is#.ab$e I!e.es!

SECTION >9& The owe. o" a ship has i a$$ cases a is#.ab$e i!e.es!i i!7 e8e whe i! has bee cha.!e.e, b4 oe who co8ea!s !o pa4

hi6 i!s 8a$#e i case o" $oss P.o8i,e,7 Tha! i !his case !he is#.e.

sha$$ be $iab$e "o. o$4 !ha! pa.! o" !he o" !he $oss which !he is#.e,

cao! .eco8e. ".o6 !he cha.!e.e.&

SECTION >(& The is#.ab$e i!e.es! o" !he owe. o" a ship

h4po!heca!e, b4 bo!!o6.4 is o$4 !he e%cess o" i!s 8a$#e o8e. !he

a6o#! sec#.e, b4 bo!!o6.4&

SECTION >)& The i!e.es! 6e!ioe, i !he $as! sec!io e%is!s7 i !he

case o" a cha.!e. pa.!47 whe !he ship has b.o5e g.o#, o !he

cha.!e.e, 8o4age7 a, i" a p.ice is !o be pai, "o. !he ca..iage o" goo,s

whe !he4 a.e ac!#a$$4 o boa.,7 o. !he.e is so6e co!.ac! "o. p#!!ig

!he6 o boa.,7 a, bo!h ship a, goo,s a.e .ea,4 "o. !he speci"ie,8o4age&

SECTION >=& Oe who has a i!e.es! i !he !hig ".o6 which p.o"i!s

a.e e%pec!e, !o p.ocee,7 has a is#.ab$e i!e.es! i !he p.o"i!s&

SECTION >>& The cha.!e.e. o" a ship has a is#.ab$e i!e.es! i i!7 !o

!he e%!e! !ha! he is $iab$e !o be ,a6i"ie, b4 i!s $oss&

Cocea$6e!

SECTION 1??& I 6a.ie is#.ace each pa.!4 is bo#, !o

co66#ica!e7 a a,,i!io !o wha! is .e#i.e, b4 sec!io !we!4-se8e7

a$$ !he i"o.6a!io which he possesses7 6a!e.ia$ !o !he .is57 e%cep!

s#ch as is 6e!ioe, i sec!io !we!4-ie7 a, !o s!a!e !he e%ac! a,who$e !.#!h i .e$a!io !o a$$ 6a!!e.s !ha! he .ep.ese!s7 o. #po

i#i.4 ,isc$oses o. ass#6es !o ,isc$ose&

SECTION 1?1& I 6a.ie is#.ace7 i"o.6a!io o" !he be$ie" o.

e%pec!a!io o" a !hi., pe.so7 i .e"e.ece !o a 6a!e.ia$ "ac!7 is

6a!e.ia$&

SECTION 1?'& A pe.so is#.e, b4 a co!.ac! o" 6a.ie is#.ace is

p.es#6e, !o ha8e ha, 5ow$e,ge7 a! !he !i6e o" is#.ig7 o" a p.io.


11/33

$oss7 o" !he i"o.6a!io 6igh! possib$4 ha8e .eache, hi6 i !he #s#a$

6o,e o" !.as6issio7 a, a! !he #s#a$ .a!e o" co66#ica!io&

SECTION 1?9& A cocea$6e! i a 6a.ie is#.ace7 i .espec! !o a4

o" !he "o$$owig 6a!!e.s7 ,oes o! 8i!ia!e !he e!i.e co!.ac!7 b#!

6e.e$4 e%oe.a!es !he is#.e. ".o6 a $oss .es#$!ig ".o6 !he .is5

cocea$e,&/a2 The a!ioa$ cha.ac!e. o" !he is#.e,@

/b2 The $iabi$i!4 o" !he !hig is#.e, !o cap!#.e a, ,e!e!io@

/c2 The $iabi$i!4 !o sei;#.e ".o6 b.each o" "o.eig $aws o" !.a,e@

/,2 The wa! o" ecessa.4 ,oc#6e!s@ a,

/e2 The #se o" "a$se a, si6#$a!e, pape.s&

Rep.ese!a!ios

SECTION 1?(& I" a .ep.ese!a!io7 b4 a pe.so is#.e, b4 a co!.ac! o"

6a.ie is#.ace7 is i!e!ioa$$4 "a$se i a4 6a!e.ia$ .espec!7 o. i

.espec! o" a4 "ac! o which !he cha.ac!e. a, a!#.e o" !he .is5

,epe,s !he is#.e. 6a4 .esci, !he e!i.e co!.ac!&SECTION 1?& A wa..a!4 o" seawo.!hiess e%!e,s o! o$4 !o !he

co,i!io o" !he s!.#c!#.e o" !he ship i!se$"7 b#! .e#i.es !ha! i! be

p.ope.$4 $a,e7 a, p.o8i,e, wi!h a co6pe!e! 6as!e.7 a s#""icie!

#6be. o" co6pe!e! o""ice.s a, sea6e7 a, !he .e#isi!e

app#.!eaces a, e#ip6e!7 s#ch as ba$$as!7 cab$es7 a, acho.s7


12/33

co.,age a, sai$s7 "oo,7 wa!e.7 "#e$7 a, $igh!s7 a, o!he. ecessa.4 o.

p.ope. s!o.es a, i6p$e6e!s "o. !he 8o4age&

SECTION 11?& Whe.e ,i""e.e! po.!ios o" !he 8o4age co!e6p$a!e, b4

a po$ic4 ,i""e. i .espec! !o !he !higs .e#isi!e !o 6a5e !he ship

seawo.!h4 !he.e"o.7 a wa..a!4 o" seawo.!hiess is co6p$ie, wi!h i"7 a!

!he co66ece6e! o" each po.!io7 !he ship is seawo.!h4 wi!h.e"e.ece !o !ha! po.!io&

SECTION 111& Whe a ship beco6es #seawo.!h4 ,#.ig !he 8o4age !o

which a is#.ace .e$a!es7 a #.easoab$e ,e$a4 i .epai.ig !he

,e"ec! e%oe.a!es !he is#.e. ".o6 $iabi$i!4 ".o6 a4 $oss a.isig

!he.e".o6&

SECTION 11'& A ship which is seawo.!h4 "o. !he p#.pose o" a

is#.ace #po !he ship 6a47 e8e.!he$ess7 b4 .easo o" beig #"i!!e,

!o .ecei8e !he ca.go7 be #seawo.!h4 "o. !he p#.pose o" is#.ace #po

!he ca.go&

SECTION 119& Whe.e !he a!ioa$i!4 o. e#!.a$i!4 o" a ship o. ca.go ise%p.ess$4 wa..a!e,7 i! is i6p$ie, !ha! !he ship wi$$ ca..4 !he .e#isi!e

,oc#6e!s !o show s#ch a!ioa$i!47 o. e#!.a$i!47 a, !ha! i! wi$$ o!

ca..4 a4 ,oc#6e!s which cas! .easoab$e s#spicio !he.eo&

The Vo4age a, +e8ia!io

SECTION 11(& Whe !he 8o4age co!e6p$a!e, b4 a po$ic4 is ,esc.ibe,

b4 !he p$aces o" begiig a, e,ig7 !he 8o4age is#.e, is oe which

co"o.6s !o !he co#.se o" sai$ig "i%e, b4 6e.ca!i$e #sage be!wee

!hose p$aces&

SECTION 11


13/33

SECTION 11>& A is#.e. is o! $iab$e "o. a4 $oss happeig !o a !hig

is#.e, s#bse#e!$4 !o a i6p.ope. ,e8ia!io&

Loss

SECTION 1'?& A $oss 6a4 be ei!he. !o!a$ o. pa.!ia$&

SECTION 1'1& E8e.4 $oss which is o! !o!a$ is pa.!ia$&

SECTION 1''& A !o!a$ $oss 6a4 be ei!he. ac!#a$ o. cos!.#c!i8e&SECTION 1'9& A ac!#a$ !o!a$ $oss is ca#se, b4 cha.ob$es8i.! #a$$aw$ib.a.4

/a2 A !o!a$ ,es!.#c!io o" !he !hig is#.e,@

/b2 The $oss o" !he !hig b4 si5ig7 o. b4 beig b.o5e #p@

/c2 A4 ,a6age !o !he !hig which .e,e.s i! 8a$#e$ess !o !he owe. "o.

!he p#.poses "o. which he he$, i!@ o.

/,2 A4 o!he. e8e! which e!i.e$4 ,ep.i8es !he owe. o" !he

possessio7 a! !he po.! o" ,es!ia!io7 o" !he !hig is#.e,&

SECTION 1'(& A cos!.#c!i8e !o!a$ $oss is oe which gi8es !o a pe.so

is#.e, a .igh! !o aba,o7 #,e. sec!io oe h#,.e, a, !hi.!4-!wo&

SECTION 1'0& A ac!#a$ $oss 6a4 be p.es#6e, ".o6 !he co!i#e,absece o" a ship wi!ho#! beig hea., o"@ a, !he $eg!h o" !i6e which

is s#""icie! !o .aise !his p.es#6p!io ,epe,s o !he ci.c#6s!aces o"

!he case&

SECTION 1'0& Whe a ship is p.e8e!e,7 a! a i!e.6e,ia!e po.!7 ".o6

co6p$e!ig !he 8o4age7 b4 !he pe.i$s is#.e, agais!7 !he 6as!e. 6#s!

6a5e e8e.4 e%e.!io !o p.oc#.e7 i !he sa6e o. a co!ig#o#s po.!7

ao!he. ship7 "o. !he p#.pose o" co8e4ig !he ca.go !o i!s ,es!ia!io@

a, !he $iabi$i!4 o" a 6a.ie is#.e. !he.eo co!i#es a"!e. !he4 a.e

!h#s .eshippe,&

SECTION 1')& I a,,i!io !o !he $iabi$i!4 6e!ioe, i !he $as! sec!io a6a.ie is#.e. is bo#, "o. ,a6ages7 e%peses o" ,ischa.gig7 s!o.age7

.eship6e!7 e%!.a ".eigh!age7 a, a$$ o!he. e%peses ic#..e, i sa8ig

ca.go .eshippe, p#.s#a! !o !he $as! sec!io7 #p !o !he a6o#! is#.e,&

SECTION 1'=& Upo a ac!#a$ !o!a$ $oss7 a pe.so is#.e, is e!i!$e, !o

pa46e! wi!ho#! o!ice o" aba,o6e!&

SECTION 1'>& Whe.e i! has bee ag.ee, !ha! a is#.ace #po a

pa.!ic#$a. !hig7 o. a c$ass o" !higs7 sha$$ be ".ee ".o6 pa.!ic#$a.

a8e.age7 $oss o! ,ep.i8ig !he is#.e, o" !he possessio7 a! !he po.!

,es!ia!io7 o" !he who$e o" s#ch !hig7 o. c$ass o" !higs7 e8e !ho#gh

i! beco6es e!i.e$4 wo.!h$ess@ b#! he is $iab$e "o. his p.opo.!io o" a$$gee.a$ a8e.age $oss assesse, #po !he !hig is#.e,&

SECTION 19?& A is#.ace co"ie, i !e.6s !o a ac!#a$ !o!a$ $oss7

,oes o! co8e. a cos!.#c!i8e !o!a$ $oss7 b#! co8e.s a4 $oss which

ecessa.i$4 .es#$!s i ,ep.i8ig !he is#.e, o" !he possessio7 a! !he

po.! o" ,es!ia!io7 o" !he e!i.e !hig is#.e,&

Aba,o6e!

SECTION 191& Aba,o6e! is !he ac! b4 which7 a"!e. a cos!.#c!i8e


14/33

!o!a$ $oss7 a pe.so is#.e, b4 co!.ac! o" 6a.ie is#.ace ,ec$a.es !o

!he is#.e. !ha! he .e$i#ishes !o hi6 his i!e.es! i !he !hig is#.e,&

SECTION 19'& A pe.so is#.e, b4 a co!.ac! o" 6a.ie is#.ace 6a4

aba,o !he !hig is#.e,7 o. a4 pa.!ic#$a. po.!io !he.eo" sepa.a!e$4

8a$#e, b4 !he po$ic47 o. o!he.wise sepa.a!e$4 is#.e, a, .eco8e. "o. a

!o!a$ $oss !he.eo"7 whe !he ca#se o" !he $oss is a pe.i$ is#.e,agais!cha.ob$es8i.! #a$$aw$ib.a.4

/a2 I" 6o.e !ha !h.ee-"o#.!hs !he.eo" i 8a$#e is ac!#a$$4 $os!7 o. wo#$,

ha8e !o be e%pe,e, !o .eco8e. i! ".o6 !he pe.i$@

/b2 I" i! is i:#.e, !o s#ch a e%!e! as !o .e,#ce i!s 8a$#e 6o.e !ha

!h.ee-"o#.!hs@

/c2 I" !he !hig is#.e,7 beig a ship7 !he co!e6p$a!e, 8o4age cao!

be $aw"#$$4 pe."o.6e, wi!ho#! ic#..ig a e%pese !o !he is#.e, o"

6o.e !ha !h.ee-"o#.!hs !he 8a$#e o" !he !hig aba,oe,7 o. wi!ho#!

ic#..ig a .is5 which a p.#,e! 6a wo#$, o! !a5e #,e. !he

ci.c#6s!aces@ o./,2 I" !he !hig is#.e,7 beig ca.go o. ".eigh!age7 !he 8o4age cao!

be pe."o.6e, o. ao!he. ship p.oc#.e, b4 !he 6as!e.7 wi!hi a

.easoab$e !i6e a, wi!h .easoab$e ,i$igece7 !o "o.wa., !he ca.go7

wi!ho#! ic#..ig !he $i5e e%pese o. .is5& B#! ".eigh!age cao! i a4

case be aba,oe,7 #$ess !he ship is a$so aba,oe,&

SECTION 199& A aba,o6e! 6#s! be ei!he. pa.!ia$ o. co,i!ioa$&

SECTION 19(& A, aba,o6e! 6#s! be 6a,e wi!hi a .easoab$e

!i6e a"!e. .eceip! o" .e$iab$e i"o.6a!io o" !he $oss7 b#! whe.e !he

i"o.6a!io is o" a ,o#b!"#$ cha.ac!e. !he is#.e, is e!i!$e, !o a

.easoab$e !i6e !o 6a5e i#i.4&SECTION 19


15/33

o. i!s p.ocee,s o. sa$8age7 as i" !he.e ha, bee a "o.6a$ aba,o6e!&

SECTION 1(1& Upo a aba,o6e!7 ac!s ,oe i goo, "ai!h b4 !hose

who we.e age!s o" !he is#.e, i .espec! !o !he !hig is#.e,7

s#bse#e! !o !he $oss7 a.e a! !he .is5 o" !he is#.e.7 a, "o. his

bee"i!&

SECTION 1('& Whe.e o!ice o" aba,o6e! is p.ope.$4 gi8e7 !he.igh!s o" !he is#.e, a.e o! p.e:#,ice, b4 !he "ac! !ha! !he is#.e.

.e"#ses !o accep! !he aba,o6e!&

SECTION 1(9& The accep!ace o" a aba,o6e! 6a4 be ei!he.

e%p.ess o. i6p$ie, ".o6 !he co,#c! o" !he is#.e.& The 6e.e si$ece o"

!he is#.e. a"!e. o!ice is o! !o be cos!.#e, as a accep!ace&

SECTION 1((& The accep!ace o" a aba,o6e!7 whe!he. e%p.ess o.

i6p$ie,7 is coc$#si8e #po !he pa.!ies7 a, a,6i!s !he $oss a, !he

s#""iciec4 o" !he aba,o6e!&

SECTION 1(& A 8a$#a!io i a po$ic4 o" 6a.ie is#.ace is coc$#si8e

be!wee !he pa.!ies !he.e!o i !he a,:#s!6e! o" ei!he. a pa.!ia$ o.

!o!a$ $oss7 i" !he is#.e, has so6e i!e.es! a! .is57 a, !he.e is o ".a#,

o his pa.!@ e%cep! !ha! whe a !hig has bee h4po!heca!e, b4

bo!!o6.4 o. .espo,e!ia7 be"o.e i!s is#.ace7 a, wi!ho#! !he

5ow$e,ge o" !he pe.so ac!#a$$4 p.oc#.ig !he is#.ace7 he 6a4

show !he .ea$ 8a$#e& B#! a 8a$#a!io ".a#,#$e! i "ac! e!i!$es !he

is#.e. !o .esci, !he co!.ac!&

SECTION 1


16/33

8a$#a!io app$ies o$4 i p.opo.!io !o s#ch pa.!&

SECTION 1


17/33

SECTION 1& I !he case o" a pa.!ia$ $oss o" a ship o. i!s e#ip6e!7

!he o$, 6a!e.ia$s a.e !o be app$ie, !owa.,s pa46e! "o. !he ew7 a,

#$ess o!he. co,i!ios a.e s!ip#$a!e, i !he po$ic47 a 6a.ie is#.e. is

$iab$e "o. !he .e6aiig cos! o" .epai.s7 $ess ,e,#c!ios ".o6 s#ch cos!

!o be 6a,e i acco.,ace wi!h !he "o$$owig .#$es cha.ob$es8i.! #a$$aw$ib.a.4

1& I !he case o" i.o o. s!ee$ ships7 ".o6 ,a!e o" o.igia$ .egis!e. !o !he,a!e o" acci,e!cha.ob$es8i.! #a$$aw$ib.a.4

/a2 Up !o oe 4ea. o$,& A$$ .epai.s !o be a$$owe, i "#$$7 e%cep!

pai!ig o. coa!ig o" bo!!o67 ".o6 which oe-!hi., is !o be ,e,#c!e,&

/b2 Be!wee oe a, !h.ee 4ea.s& Oe-!hi., !o be ,e,#c!e, o""

.epai.s !o a, .eewa$ o" woo,wo.5 o" h#$$7 6as!s7 a, spa.s7

"#.i!#.e7 #pho$s!e.47 c.oc5e.47 6e!a$ a, g$asswa.e7 a$so sai$s7

.iggig7 .opes7 shee!s7 a, hawse.s /o!he. !ha wi.e a, chai27

awigs7 co8e.s a, pai!ig& Oe-si%!h !o be ,e,#c!e, o"" wi.e

.iggig7 wi.e .opes7 a, wi.e hawse.s7 chai cab$es a, chais7 ,o5e4

egies7 s!ea6 wiches a, coec!ios7 s!ea6 c.aes a,coec!ios@ o!he. .epai.s i "#$$&

/c2 Be!wee !h.ee a, si% 4ea.s& +e,#c!ios as abo8e #,e. c$a#se

/b27 e%cep! !ha! oe-si%!h be ,e,#c!e, o"" i.owo.5 o" 6as!s a, spa.s

a, 6achie.4 /ic$#si8e o" boi$e.s a, !hei. 6o#!igs2&

/,2 Be!wee si% a, !e 4ea.s& +e,#c!ios as abo8e #,e. c$a#se

/c27 e%cep! !ha! oe-!hi., be ,e,#c!e, o"" i.owo.5 o" 6as!s a, spa.s7

.epai.s !o a, .eewa$ o" a$$ 6achie.4 /ic$#si8e o" boi$e.s a, !hei.

6o#!igs27 a, a$$ hawse.s7 .opes7 shee!s7 a, .iggig&

/e2 Be!wee !e a, "i"!ee 4ea.s& Oe-!hi., !o be ,e,#c!e, o"" a$$

.epai.s a, .eewa$s7 e%cep! i.owo.5 o" h#$$ a, ce6e!ig a, chaicab$es7 ".o6 which oe-si%!h !o be ,e,#c!e,& Acho.s !o be a$$owe, i

"#$$&

/"2 O8e. "i"!ee 4ea.s& Oe-!hi., !o be ,e,#c!e, o"" a$$ .epai.s a,

.eewa$s& Acho.s !o be a$$owe, i "#$$& Oe-si%!h !o be ,e,#c!e, o""

chai cab$es&

/g2 *ee.a$$4& The ,e,#c!ios /e%cep! as !o p.o8isios a, s!o.es7

6achie.47 a, boi$e.s2 !o be .eg#$a!e, b4 !he age o" !he ship7 a, o!

!he age o" !he pa.!ic#$a. pa.! o" he. !o which !he4 app$4& No pai!ig

bo!!o6 !o be a$$owe, i" !he bo!!o6 has o! bee pai!e, wi!hi si%

6o!hs p.e8io#s !o !he ,a!e o" acci,e!& No ,e,#c!io !o be 6a,e i.espec! o" o$, 6a!e.ia$ which is .epai.e, wi!ho#! beig .ep$ace, b4

ew7 a, p.o8isios a, s!o.es which ha8e o! bee i #se&

'& I !he case o" woo,e o. co6posi!e ships cha.ob$es8i.!#a $$aw$ib.a.4

Whe a ship is #,e. oe 4ea. o$, ".o6 ,a!e o" o.igia$ .egis!e. a! !he

!i6e o" acci,e! o ,e,#c!io ew "o. o$, sha$$ be 6a,e& A"!e. !ha!

pe.io, a ,e,#c!io o" oe !hi., sha$$ be 6a,e7 wi!h !he "o$$owig

e%cep!ioscha.ob$es8i.! #a$$aw$ib.a.4


18/33

Acho.s sha$$ be a$$owe, i "#$$& Chai cab$es sha$$ be s#b:ec! !o a

,e,#c!io o" oe-si%!h o$4& No ,e,#c!io sha$$ be 6a,e i .espec! o"

p.o8isios a, s!o.es which ha, o! bee i #se& 3e!a$ shea!hig sha$$

be ,ea$! wi!h b4 a$$owig i "#$$ !he cos! o" a weigh! e#a$ !o !he g.oss

weigh! o" 6e!a$ shea!hig s!.ippe, o""7 6i#s !he p.ocee,s o" !he o$,

6e!a$& Nai$s7 "e$!7 a, $abo. 6e!a$$ig a.e s#b:ec! !o a ,e,#c!io o" oe-!hi.,&

CHAPTER III

Fi.e Is#.ace

SECTION 10?& A a$!e.a!io i !he #se o. co,i!io o" a !hig is#.e,

".o6 !ha! !o which i! is $i6i!e, b4 !he po$ic4 6a,e wi!ho#! !he cose!

o" !he is#.e.7 b4 6eas wi!hi !he co!.o$ o" !he is#.e,7 a,

ic.easig !he .is57 e!i!$es a is#.e. !o .esci, a co!.ac! o" "i.e

is#.ace&

SECTION 101& A a$!e.a!io i !he #se o. co,i!io o" a !hig is#.e,

".o6 !ha! !o which i! is $i6i!e, b4 !he po$ic47 which ,oes o! ic.ease!he .is57 ,oes o! a""ec! a co!.ac! o" "i.e is#.ace&

SECTION 10'& A co!.ac! o" "i.e is#.ace is o! a""ec!e, b4 a4 ac! o"

!he is#.e, s#bse#e! !o !he e%ec#!io o" !he po$ic47 which ,oes o!

8io$a!e i!s p.o8isios7 e8e !ho#gh i! ic.eases !he .is5 a, is !he ca#se

o" a $oss&

SECTION 109& I" !he.e is o 8a$#a!io i !he po$ic47 !he 6eas#.e o"

i,e6i!4 i a is#.ace agais! "i.e is !he e%pese i! wo#$, be !o !he

is#.e, a! !he !i6e o" !he co66ece6e! o" !he "i.e !o .ep$ace !he

!hig $os! o. i:#.e, i !he co,i!io i which i! was a! !he !i6e o" !he

i:#.4@ b#! !he e""ec! o" a 8a$#a!io i a po$ic4 o" "i.e is#.ace is !hesa6e as i a po$ic4 o" 6a.ie is#.ace&

SECTION 10(& Whee8e. !he is#.e, ,esi.es !o ha8e a 8a$#a!io a6e,

i his po$ic47 is#.ig a4 b#i$,ig o. s!.#c!#.e agais! "i.e7 he 6a4

.e#i.e s#ch b#i$,ig o. s!.#c!#.e !o be e%a6ie, b4 !he is#.e. a,

!he 8a$#e o" !he is#.e,s i!e.es! !he.ei sha$$ be !he.e#po "i%e, b4

!he pa.!ies& The cos! o" s#ch e%a6ia!io sha$$ be pai, "o. b4 !he

is#.e,& A c$a#se sha$$ be ise.!e, i s#ch po$ic4 s!a!ig s#bs!a!ia$$4

!ha! !he 8a$#e o" !he is#.e,s i!e.es! i s#ch b#i$,ig o. s!.#c!#.e has

bee !h#s "i%e,& I !he absece o" a4 chage ic.easig !he .is5

wi!ho#! !he cose! o" !he is#.e. o. o" ".a#, o !he pa.! o" !heis#.e,7 !he i case o" a !o!a$ $oss #,e. s#ch po$ic47 !he who$e

a6o#! so is#.e, #po !he is#.e,s i!e.es! i s#ch b#i$,ig o.

s!.#c!#.e7 as s!a!e, i !he po$ic4 #po which !he is#.e.s ha8e .ecei8e,

a p.e6i#67 sha$$ be pai,7 a, i case o" a pa.!ia$ $oss !he "#$$ a6o#! o"

!he pa.!ia$ $oss sha$$ be so pai,7 a, i case !he.e a.e !wo o. 6o.e

po$icies co8e.ig !he is#.e,s i!e.es! !he.ei7 each po$ic4 sha$$

co!.ib#!e p.o .a!a !o !he pa46e! o" s#ch who$e o. pa.!ia$ $oss& B#! i


19/33

o case sha$$ !he is#.e. be .e#i.e, !o pa4 6o.e !ha !he a6o#! !h#s

s!a!e, i s#ch po$ic4& This sec!io sha$$ o! p.e8e! !he pa.!ies ".o6

s!ip#$a!ig i s#ch po$icies coce.ig !he .epai.ig7 .eb#i$,ig7 o.

.ep$acig b#i$,igs o. s!.#c!#.es who$$4 o. pa.!ia$$4 ,a6age, o.

,es!.o4e,&

CHAPTER IVLi"e a, Hea$!h Is#.ace

SECTION 10


20/33

ecessa.4 !o sec#.e !he e"o.ce6e! o" !he p.o8isios o" !his Ac!7

s#b:ec! !o !he app.o8a$ o" !he Sec.e!a.4 o" Fiace a, D#s!ice&

SECTION 1)'& A"!e. !he beco6ig e""ec!i8e o" !his Ac!7 o "o.eig o.

,o6es!ic is#.ace co6pa4 sha$$ !.asac! a4 ew b#siess i !he

Phi$ippie Is$a,s #!i$ a"!e. i! sha$$ ha8e ob!aie, a ce.!i"ica!e o"

a#!ho.i!4 "o. !ha! p#.pose ".o6 !he Is#.ace Co66issioe.& No s#chce.!i"ica!e o" a#!ho.i!4 sha$$ be g.a!e, !o a4 s#ch co6pa4 #!i$ !he

Is#.ace Co66issioe. sha$$ ha8e sa!is"ie, hi6se$" b4 s#ch

e%a6ia!io as he 6a4 6a5e a, s#ch e8i,ece as he 6a4 .e#i.e !ha!

s#ch co6pa4 is #a$i"ie, b4 !he $aws o" !he Phi$ippie Is$a,s !o

!.asac! b#siess he.ei& Sai, ce.!i"ica!e o" a#!ho.i!4 sha$$ e%pi.e o

!he $as! ,a4 o" D#e o" each 4ea. a, sha$$ be .eewe, a#a$$4 i" !he

co6pa4 is co!i#ig !o co6p$4 wi!h a$$ o" !he p.o8isios o" !his

chap!e.& Be"o.e iss#ig s#ch ce.!i"ica!e o" a#!ho.i!47 !he Is#.ace

Co66issioe. 6#s! be sa!is"ie, !ha! !he a6e o" !he co6pa4 is o!

!ha! o" a4 o!he. 5ow co6pa4 !.asac!ig a si6i$a. b#siess7 o. aa6e so si6i$a. as !o be ca$c#$a!e, !o 6is$ea, !he p#b$ic& E8e.4

co6pa4 .ecei8ig a4 s#ch ce.!i"ica!e o" a#!ho.i!4 sha$$ be s#b:ec! !o

!he is#.ace $aws o" !he Phi$ippie Is$a,s a, !o !he :#.is,ic!io a,

s#pe.8isio o" !he Is#.ace Co66issioe.& A appea$ 6a4 be !a5e

".o6 a4 ,ecisio o" !he Is#.ace Co66issioe.7 .e"#sig !o g.a!

s#ch ce.!i"ica!e o" a#!ho.i!4 !o !he Sec.e!a.4 o" Fiace a, D#s!ice

whose ,ecisio sha$$ be "ia$&

SECTION 1)9& The Is#.ace Co66issioe. sha$$ .e#i.e each

is#.ace co6pa4 !o 5eep i!s boo5s7 .eco.,s7 acco#!s7 a, 8o#che.s

i s#ch 6ae. !ha! he o. his a#!ho.i;e, .ep.ese!a!i8es 6a4 .ea,i$48e.i"4 i!s a#a$ s!a!e6e! a, asce.!ai whe!he. !he co6pa4 is

so$8e! a, has co6p$ie, wi!h !he p.o8isios o" !his chap!e.&

SECTION 1)(& The Is#.ace Co66issioe. sha$$ a! $eas! oce a 4ea.

a, whee8e. he cosi,e.s !he p#b$ic i!e.es! so ,e6a,s7 ca#se a

e%a6ia!io !o be 6a,e i!o !he "iacia$ co,i!io o" e8e.4 ,o6es!ic

is#.ace co6pa4& S#ch co6pa4 sha$$ s#b6i! !o !he e%a6ie. a$$

s#ch boo5s7 pape.s7 a, sec#.i!ies as he 6a4 .e#i.e a, s#ch

e%a6ie. sha$$ a$so ha8e !he powe. !o e%a6ie !he o""ice.s o" s#ch

co.po.a!io #,e. oa!h !o#chig i!s b#siess a, "iacia$ co,i!io7

a, !he a#!ho.i!4 o" a4 s#ch co6pa4 !o !.asac! b#siess i !hePhi$ippie Is$a,s !ha! .e"#ses !o a$$ow s#ch e%a6ia!io7 sha$$ be

.e8o5e, b4 !he Is#.ace Co66issioe.7 a, s#ch co6pa4 sha$$ o!

!he.ea"!e. be a$$owe, !o !.asac! "#.!he. b#siess i !he Phi$ippie

Is$a,s #!i$ i! has "#$$4 co6p$ie, wi!h !he p.o8isios o" !his sec!io&

SECTION 1)


21/33

a4 p.o8isio o" $aw ob$iga!o.4 #po i!7 o. !ha! i!s co,i!io is s#ch as

!o .e,e. i!s p.ocee,igs ha;a.,o#s !o !he p#b$ic o. !o i!s po$ic4

ho$,e.s o. !ha! i!s ac!#a$ asse!s e%c$#si8e o" i!s capi!a$ a.e $ess !ha i!s

$iabi$i!ies7 ic$#,ig #ea.e, p.e6i#6s a, .eis#.ace .ese.8e7 !he

Is#.ace Co66issioe. is a#!ho.i;e,7 s#b:ec! !o appea$ !o !he

Sec.e!a.4 o" Fiace a, D#s!ice7 !o .e8o5e o. s#spe, a$$ ce.!i"ica!eso" a#!ho.i!4 g.a!e, !o s#ch is#.ace co6pa47 i!s o""ice.s o. age!s7

a, o ew b#siess sha$$ !he.ea"!e. be ,oe b4 s#ch co6pa4 o. "o.

s#ch co6pa4 b4 i!s age!s i !he Phi$ippie Is$a,s whi$e s#ch

.e8oca!io7 s#spesio o. ,isabi$i!4 co!i#es o. #!i$ i!s a#!ho.i!4 !o

,o b#siess is .es!o.e, b4 !he Is#.ace Co66issioe.&

The ,ecisio o" !he Sec.e!a.4 o" Fiace a, D#s!ice i a$$ s#ch cases

sha$$ be "ia$&

SECTION 1)0& The Is#.ace Co66issioe. 6#s! ca#se e8e.4

co6pa47 be"o.e egagig i !he b#siess o" is#.ace7 !o "i$e i his

o""ice as "o$$owscha.ob$es8i.! #a$$aw$ib.a.4

/a2 A ce.!i"ie, cop4 o" !he $as! a#a$ s!a!e6e! o. a 8e.i"ie, "iacia$

s!a!e6e! e%hibi!ig !he co,i!io a, a""ai.s o" s#ch co6pa4&

/b2 I" ico.po.a!e, #,e. !he $aws o" !he Phi$ippie Is$a,s7 a cop4 o"

!he a.!ic$es o" ico.po.a!io a, b4-$aws a, a4 a6e,6e!s !o

ei!he.7 ce.!i"ie, b4 !he chie" o" !he ,i8isio o" a.chi8es7 pa!e!s7

cop4.igh!s7 a, !.a,e6a.5s !o be a cop4 o" !ha! which is "i$e, i his

o""ice&

/c2 I" ico.po.a!e, #,e. a4 $aws o!he. !ha !hose o" !he Phi$ippie

Is$a,s7 a cop4 o" !he a.!ic$es o" ico.po.a!io a, b4-$aws a, a4

a6e,6e!s !o ei!he. i" o.gai;e, o. "o.6e, #,e. a4 $aw .e#i.igs#ch !o be "i$e,7 ,#$4 ce.!i"ie, b4 !he o""ice. ha8ig !he c#s!o,4 o"

sa6e7 o. i" o! so o.gai;e,7 a cop4 o" !he $aw7 cha.!e.7 o. ,ee, o"

se!!$e6e! #,e. which !he ,ee, o" o.gai;a!io is 6a,e7 ,#$4 ce.!i"ie,

b4 !he p.ope. c#s!o,ia !he.eo"7 o. p.o8e, b4 a""i,a8i! !o be a cop4@

a$so7 a ce.!i"ica!e #,e. !he ha, a, sea$ o" !he p.ope. o""ice. o" s#ch

s!a!e o. co#!.4 ha8ig s#pe.8isio o" is#.ace b#siess !he.ei7 i"

a4 !he.e be7 !ha! s#ch co.po.a!io o. co6pa4 is o.gai;e, #,e. !he

$aws o" s#ch s!a!e o. co#!.47 wi!h !he a6o#! o" capi!a$ s!oc5 o.

asse!s a, $ega$ .ese.8e .e#i.e, b4 !his Ac!&

/,2 I" o! ico.po.a!e,7 a ce.!i"ica!e se!!ig "o.!h !he a!#.e a,cha.ac!e. o" !he b#siess7 !he $oca!io o" !he p.icipa$ o""ice7 !he a6es

o" !he pe.sos a, o" !hose co6posig !he co6pa47 "i.67 o.

associa!io7 !he a6o#! o" ac!#a$ capi!a$ e6p$o4e, o. !o be e6p$o4e,

!he.ei7 a, !he a6es o" a$$ o""ice.s a, pe.sos b4 who6 !he

b#siess is o. 6a4 be 6aage,& .ob$es 8i.!#a$ $aw $ib.a.4

The ce.!i"ica!e 6#s! be 8e.i"ie, b4 !he a""i,a8i! o" !he chie" o""ice.7

sec.e!a.47 age!7 o. 6aage. o" !he co6pa4@ a, i" !he.e a.e a4


22/33

w.i!!e a.!ic$es o" ag.ee6e! o. co6pa47 a cop4 !he.eo" 6#s!

acco6pa4 s#ch ce.!i"ica!e&

SECTION 1))& The Is#.ace Co66issioe. 6#s! .e#i.e as a co,i!io

p.ece,e! !o !he !.asac!io o" is#.ace b#siess i !he Phi$ippie

Is$a,s b4 a4 "o.eig is#.ace co6pa47 !ha! s#ch co6pa4 "i$e i

his o""ice a w.i!!e powe. o" a!!o.e4 ,esiga!ig so6e pe.so whosha$$ be a .esi,e! o" !he Phi$ippie Is$a,s7 o who6 a4 o!ice

p.o8i,e, b4 $aw o. b4 a4 is#.ace po$ic47 p.oo" o" $oss7 s#66os7

a, o!he. p.ocess 6a4 be se.8e, i a$$ ac!ios o. o!he. $ega$

p.ocee,igs agais! s#ch co6pa47 a, cose!ig !ha! se.8ice #po

s#ch age! sha$$ be a,6i!!e, a, he$, as 8a$i, as i" se.8e, #po !he

"o.eig co6pa4 a! i!s ho6e o""ice& A4 s#ch "o.eig co6pa4 sha$$7 as

a "#.!he. co,i!io p.ece,e! !o !he !.asac!io o" is#.ace b#siess

i !he Phi$ippie Is$a,s7 6a5e a, "i$e wi!h !he Is#.ace

Co66issioe. a ag.ee6e! o. s!ip#$a!io7 e%ec#!e, b4 !he p.ope.

a#!ho.i!ies o" sai, co6pa4 i "o.6 a, s#bs!ace as "o$$ow cha.ob$es8i.!#a$ $aw$ib.a.4

"The (name of company) does hereby stipulate and agree in

consideration of the permission granted by the Insurance

Commissioner to it to transact business in the hilippine Islands! that if

at any time said company shall leae the hilippine Islands! or cease to

transact business therein! or shall be #ithout an agent in the hilippine

Islands on #hom any notice! proof of loss! summons! or other legal

process may be sered! then in any action or proceeding arising out of

any business or transactions #hich occurred in the hilippine Islands!

serice of any notice proided by la#! or insurance policy! proof of loss!

summons! or other legal process may be made upon the InsuranceCommissioner! and that such serice upon the Commissioner shall hae

the same force and effect as if made upon the company."

Whee8e. s#ch se.8ice o" o!ice7 p.oo" o" $oss7 s#66os7 o. o!he. $ega$

p.ocess sha$$ be 6a,e #po !he Is#.ace Co66issioe.7 he 6#s!7

wi!hi !e ,a4s !he.ea"!e.7 !.as6i! b4 6ai$7 pos!age pai,7 a cop4 o"

s#ch o!ice7 p.oo"s o" $oss7 s#66os7 o. ei!he. $ega$ p.ocess !o !he

co6pa4 a! i!s ho6e o. p.icipa$ o""ice& The se,ig o" s#ch cop4 b4

!he co66issioe. sha$$ be a ecessa.4 pa.! o" !he se.8ice o" !he o!ice7

p.oo" o" $oss7 o. o!he. $ega$ p.ocess&

SECTION 1)=& No "o.eig is#.ace co6pa4 sha$$ egage i b#siessi !he Phi$ippie Is$a,s #$ess possesse, o" pai, #p #i6pai.e,

capi!a$ /o. asse!s2 a, .ese.8e o! $ess !ha !ha! he.ei .e#i.e, o"

,o6es!ic is#.ace co6paies@ a, o is#.ace co6pa4 o.gai;e,

o. e%is!ig #,e. !he go8e.6e! o. $aws o!he. !ha !hose o" !he

Phi$ippie Is$a,s o. a4 s!a!e o" !he Ui!e, S!a!es sha$$ egage i

b#siess i !he Phi$ippie Is$a,s #!i$ i! sha$$ ha8e ,eposi!e, wi!h !he

Is#.ace Co66issioe. "o. !he bee"i! a, sec#.i!4 o" i!s po$ic4


23/33

ho$,e.s a, c.e,i!o.s i !he Phi$ippie Is$a,s sec#.i!ies7 sa!is"ac!o.4

!o !he Is#.ace Co66issioe. cosis!ig o" bo,s o" !he Ui!e, S!a!es

o. o" !he Phi$ippie Is$a,s o. o" !he ci!4 o" 3ai$a o. o" 6#icipa$i!ies

i !he Phi$ippie Is$a,s a#!ho.i;e, b4 $aw !o iss#e bo,s7 o. o" !he

go8e.6e! i which s#ch co6pa4 is o.gai;e,7 o. o!he. goo,

sec#.i!ies !o !he ac!#a$ 6a.5e! 8a$#e o" oe h#,.e, !ho#sa,pesos roided! Tha! i" a co6pa4 o.gai;e, o. e%is!ig #,e. !he

$aws o" a4 go8e.6e! o#!si,e o" !he Ui!e, S!a!es a, !he Phi$ippie

Is$a,s sha$$ ha8e 6a,e a ,eposi! wi!h !he is#.ace ,epa.!6e! o"

so6e oe o" !he S!a!es o" !he Ui!e, S!a!es o" sec#.i!ies o" !he

cha.ac!e. abo8e ,esc.ibe, !o !he ac!#a$ 6a.5e! 8a$#e o" a! $eas! "o#.

h#,.e, !ho#sa, pesos7 i e%c$#si8e !.#s! "o. !he bee"i! a, sec#.i!4

o" a$$ !he co6pa4s po$ic4 ho$,e.s a, c.e,i!o.s i !he Ui!e, S!a!es

a, i!s possessios7 each ,eposi! sha$$ be he$, !o be i $ie# o" !he

,eposi! .e#i.e, b4 !his7 A, roided! Further 7 Tha! i! sha$$ be a

s#""icie! co6p$iace wi!h !he p.o8isios o" !his sec!io i" !he ,eposi!he.ei .e#i.e, be 6a,e wi!h !he Chie" o" !he B#.ea# o" Is#$a. A""ai.s

o" !he Wa. +epa.!6e! a! Washig!o o. wi!h a sa"e ,eposi! co6pa4

,esiga!e, b4 !ha! o""ice.7 which co6pa4 sha$$ ag.ee !o ho$, !he

sec#.i!ies so ,eposi!e, s#b:ec! !o !he co!.o$ o" !he Chie" o" !he B#.ea#

o" Is#$a. A""ai.s as !he .ep.ese!a!i8e o" !he is#.ace co66issioe.

o" !he Phi$ippie Is$a,s&

SECTION 1)>& The Is#.ace Co66issioe. sha$$ ho$, !he sec#.i!ies

,eposi!e, as a"o.esai,7 "o. !he bee"i! a, sec#.i!4 o" a$$ !he po$ic4

ho$,e.s o" !he co6pa4 ,eposi!ig !he sa6e7 b#! sha$$7 so $og as !he

co6pa4 sha$$ co!i#e so$8e!7 pe.6i! !he co6pa4 !o co$$ec! !hei!e.es! o. ,i8i,e,s o !he sec#.i!ies so ,eposi!e,7 a,7 ".o6 !i6e !o

!i6e7 wi!h his asse!7 !o wi!h,.aw a4 o" s#ch sec#.i!ies7 #po

,eposi!ig wi!h sai, co66issioe. o!he. $i5e sec#.i!ies7 !he 6a.5e!

8a$#e o" which sha$$ be e#a$ !o !he 6a.5e! 8a$#e o" s#ch as 6a4 be

wi!h,.aw& I !he e8e! o" a4 co6pa4 ceasig !o ,o b#siess i !he

Phi$ippie Is$a,s !he sec#.i!ies ,eposi!e, as a"o.esai, sha$$ be

.e!#.e, #po !he co6pa4s 6a5ig app$ica!io !he.e"o. a, p.o8ig

!o !he sa!is"ac!io o" !he Is#.ace Co66issioe. !ha! i! has o "#.!he.

$iabi$i!4 #,e. a4 o" i!s po$icies i !he Phi$ippie Is$a,s&

SECTION 1=?& E8e.4 is#.ace co6pa47 ,oig b#siess i !hePhi$ippie Is$a,s7 sha$$ a#a$$4 o o. be"o.e !he !hi.!ie!h ,a4 o" Ap.i$7

o" each 4ea.7 .e,e. !o !he Is#.ace Co66issioe. a s!a!e6e! sige,

a, swo. !o b4 !he chie" o""ice. o" s#ch co6pa4 showig7 i s#ch

"o.6 a, ,e!ai$ as 6a4 be p.esc.ibe, b4 !he Is#.ace Co66issioe.7

!he e%ac! co,i!io o" i!s a""ai.s o !he p.ece,ig !hi.!4-"i.s! ,a4 o"

+ece6be. roided! Tha! i case !he "isca$ 4ea. o" a is#.ace

co6pa4 ,oes o! !e.6ia!e wi!h !he !hi.!4-"i.s! ,a4 o" +ece6be.7 i!


24/33

sha$$ be ,ee6e, a s#""icie! co6p$iace wi!h !his sec!io i" !he .epo.!

is 6a,e !o coici,e wi!h !he .eg#$a. "isca$ 4ea. o" !he co6pa4& I s#ch

case !he .epo.! o" !he co6pa4 sha$$ be "i$e, wi!h !he Is#.ace

Co66issioe. wi!hi "o#. 6o!hs a"!e. !he c$ose o" i!s "isca$ 4ea.

A,7roided! Further! Tha! !he Is#.ace Co66issioe. 6a4 i his

,isc.e!io7 a, #po app.o8a$ o" !he Sec.e!a.4 o" Fiace a, D#s!ice7g.a! a e%!esio o" o! e%cee,ig !h.ee 6o!hs7 !o a4 co6pa47

#po his beig sa!is"ie, !ha! !he pe.io, o" "o#. 6o!hs g.a!e, b4 !his

sec!io is ia,e#a!e wi!h .ega., !o sai, co6pa4&

SECTION 1=1& I66e,ia!e$4 #po app.o8a$ o" !he a#a$ s!a!e6e!s b4

!he Is#.ace Co66issioe.7 e8e.4 is#.ace co6pa4 ,oig b#siess

i !he Phi$ippie Is$a,s sha$$ p#b$ish i !wo pape.s o" gee.a$

ci.c#$a!io i !he ci!4 o" 3ai$a7 oe p#b$ishe, i Eg$ish a, oe i !he

Spaish $ag#age7 a "#$$ s4opsis o" i!s a#a$ "iacia$ s!a!e6e!

showig "#$$4 !he co,i!io o" i!s b#siess7 a, se!!ig "o.!h i!s

.eso#.ces a, $iabi$i!ies&SECTION 1='& E8e.4 $i"e is#.ace co6pa47 ,oig b#siess i !he

Phi$ippie Is$a,s7 sha$$ a#a$$4 6a5e a 8a$#a!io o" a$$ po$icies7

a,,i!ios !he.e!o7 #pai, ,i8i,e,s7 a, a$$ o!he. ob$iga!ios

o#!s!a,ig o !he !hi.!4-"i.s! ,a4 o" +ece6be. o" !he p.ece,ig 4ea.&

A$$ s#ch 8a$#a!ios sha$$ be 6a,e #po !he e! p.e6i#6 basis7

acco.,ig !o !he s!a,a., a,op!e, b4 !he co6pa47 which s!a,a.,

sha$$ be s!a!e, i i!s a#a$ .epo.!&

S#ch s!a,a., o" 8a$#a!io7 whe!he. o !he e! $e8e$ p.e6i#67

p.e$i6ia.4 !e.67 a4 6o,i"ie, p.e$i6ia.4 !e.67 o. se$ec! a, #$!i6a!e

.ese.8e basis7 sha$$ be acco.,ig !o a s!a,a., !ab$e o" 6o.!a$i!47 wi!hi!e.es! a! o! $ess !ha !h.ee o. 6o.e !ha si% pe. ce! co6po#,

i!e.es!& Whe !he p.e$i6ia.4 !e.6 basis is #se, !he !e.6 is#.ace

sha$$ be $i6i!e, !o !he "i.s! po$ic4 4ea.&

The .es#$!s o" s#ch 8a$#a!io sha$$ be .epo.!e, !o !he Is#.ace

Co66issioe. o o. be"o.e !he !hi.!ie!h ,a4 o" Ap.i$ o" each 4ea.

acco6paie, b4 a swo. s!a!e6e! o" !he co6pa4s ac!#a.4 ce.!i"4ig

!o !he "ig#.es a, s!a!ig #po wha! 6o.!a$i!4 !ab$e i! is base,7 #po

wha! .a!e o" i!e.es! !he 8a$#a!io is 6a,e7 a, !he 6e!ho,s #se, i

a..i8ig a! !he .es#$!s ob!aie, roided 7 Tha! i case !he "isca$ 4ea. o"

a $i"e is#.ace co6pa4 ,oes o! !e.6ia!e wi!h !he !hi.!4-"i.s! ,a4 o" +ece6be.7 i! sha$$ be ,ee6e, a s#""icie! co6p$iace wi!h !his sec!io

i" !he 8a$#a!io he.ei .e#i.e, is 6a,e !o coici,e wi!h !he .eg#$a.

"isca$ 4ea. o" !he co6pa4& I s#ch case !he .es#$! o" s#ch 8a$#a!io

sha$$ be .epo.!e, !o !he Is#.ace Co66issioe. wi!hi "o#. 6o!hs

a"!e. !he c$ose o" i!s "isca$ 4ea. A, roided! Further 7 Tha! !he

Is#.ace Co66issioe. 6a4 i his ,isc.e!io7 a, #po app.o8a$ o"

!he Sec.e!a.4 o" Fiace a, D#s!ice7 g.a! a e%!esio o" o!


25/33

e%cee,ig !h.ee 6o!hs7 !o a4 co6pa47 #po his beig sa!is"ie, !ha!

!he pe.io, o" "o#. 6o!hs g.a!e, b4 !his sec!io is ia,e#a!e wi!h

.ega., !o sai, co6pa4&

SECTION 1=9& The agg.ega!e e! 8a$#e o" !he po$icies o" s#ch co6pa4

so asce.!aie, sha$$ be ,ee6e, i!s .ese.8e $iabi$i!47 !o p.o8i,e "o.

which i! sha$$ ho$, "#,s i sec#.e i8es!6e!s e#a$ !o s#ch e! 8a$#e7abo8e a$$ i!s o!he. $iabi$i!ies@ a, i! sha$$ be !he ,#!4 o" !he Is#.ace

Co66issioe.7 a"!e. ha8ig 8e.i"ie,7 !o s#ch a e%!e! as he 6a4 ,ee6

ecessa.47 !he 8a$#a!io o" a$$ po$icies i "o.ce7 !o sa!is"4 hi6se$" !ha!

!he co6pa4 has s#ch a6o#! i sa"e $ega$ sec#.i!ies a"!e. a$$ o!he.

,eb!s a, c$ai6s agais! i! ha8e bee p.o8i,e, "o.&

SECTION 1=(& He.ea"!e. o po$ic4 o" $i"e o. e,ow6e! is#.ace sha$$

be iss#e, o. ,e$i8e.e, wi!hi !he Phi$ippie Is$a,s #$ess i! sha$$

co!ai i s#bs!ace !he "o$$owig p.o8isios cha.ob$es8i.! #a$$aw$ib.a.4

/a2 A p.o8isio !ha! !he is#.e, is e!i!$e, !o a g.ace ei!he. o" !hi.!4

,a4s o. o" oe 6o!h wi!hi which !he pa46e! o" a4 p.e6i#6 a"!e.!he "i.s! 4ea. 6a4 be 6a,e7 s#b:ec! a! !he op!io o" !he co6pa4 !o a4

i!e.es! cha.ge o! i e%cess o" si% pe. ce!#6 pe. a#6 "o. !he

#6be. o" ,a4s o" g.ace e$apsig be"o.e !he pa46e! o" !he p.e6i#67

,#.ig which pe.io, o" g.ace !he po$ic4 sha$$ co!i#e i "#$$ "o.ce7 b#!

i case !he po$ic4 beco6es a c$ai6 ,#.ig !he sai, pe.io, o" g.ace

be"o.e !he o8e.,#e p.e6i#6 o. !he ,e"e..e, p.e6i#6s o" !he c#..e!

po$ic4 4ea. i" a4 a.e pai,7 !he a6o#! o" s#ch p.e6i#6s7 wi!h i!e.es!

o a4 o8e.,#e p.e6i#67 6a4 be ,e,#c!e, ".o6 a4 a6o#! pa4ab$e

#,e. !he po$ic4 i se!!$e6e!&

/b2 A p.o8isio !ha! !he po$ic4 sha$$7 i !he absece o" ".a#,7 beico!es!ab$e a"!e. "i8e 4ea.s ".o6 i!s ,a!e o" iss#e e%cep! "o.

opa46e! o" p.e6i#6s a, e%cep! "o. 8io$a!io o" !he co,i!ios o"

!he po$ic4 .e$a!ig !o 6i$i!a.4 o. a8a$ se.8ice i !i6e o" wa.&

/c2 A p.o8isio !ha! !he po$ic4 sha$$ cos!i!#!e !he e!i.e co!.ac!

be!wee !he pa.!ies7 b#! i" !he co6pa4 ,esi.es !o 6a5e !he

app$ica!io a pa.! o" !he co!.ac! i! 6a4 ,o so p.o8i,e, a cop4 o" s#ch

app$ica!io sha$$ be i,o.se, #po o. a!!ache, !o !he po$ic4 whe

iss#e,7 a, i s#ch case !he po$ic4 sha$$ co!ai a p.o8isio !ha! !he

po$ic4 a, !he app$ica!io !he.e"o. sha$$ cos!i!#!e !he e!i.e co!.ac!

be!wee !he pa.!ies&/,2 A p.o8isio !ha! i" !he age o" !he is#.e, has bee 6iss!a!e, !he

a6o#! pa4ab$e #,e. !he po$ic4 sha$$ be s#ch as !he p.e6i#6 wo#$,

ha8e p#.chase, a! !he co..ec! age&

/e2 A p.o8isio !ha! !he po$ic4 sha$$ pa.!icipa!e i !he s#.p$#s o" !he

co6pa4&

/"2 A p.o8isio speci"4ig !he op!ios !o which !he po$ic4-ho$,e. is

e!i!$e, i !he e8e! o" ,e"a#$! i a p.e6i#6 pa46e! a"!e. !h.ee "#$$


26/33

a#a$ p.e6i#6s sha$$ ha8e bee pai,&

/g2 A p.o8isio !ha! a"!e. !h.ee "#$$ 4ea.s p.e6i#6s ha8e bee pai,7

!he co6pa4 a! a4 !i6e7 whi$e !he po$ic4 is i "o.ce7 wi$$ a,8ace7 o

p.ope. assig6e! o. p$e,ge o" !he po$ic4 a, o !he so$e sec#.i!4

!he.eo"7 a! a speci"ie, .a!e o" i!e.es!7 a s#6 e#a$ !o7 o. a! !he op!io

o" !he owe. o" !he po$ic4 $ess !ha7 !he .ese.8e a! !he e, o" !hec#..e! po$ic4 4ea. o !he po$ic4 a, o a4 ,i8i,e, a,,i!ios !he.e!o7

$ess a s#6 o! 6o.e !ha !wo a, oe-ha$" pe. ce!#6 o" !he a6o#!

is#.e, b4 !he po$ic4 a, o" a4 ,i8i,e, a,,i!ios !he.e!o@ a, !ha!

!he co6pa4 wi$$ ,e,#c! ".o6 s#ch $oa 8a$#e a4 e%is!ig

i,eb!e,ess o !he po$ic4 a, a4 #pai, ba$ace o" !he p.e6i#6 "o.

!he c#..e! po$ic4 4ea.7 a, 6a4 co$$ec! i!e.es! i a,8ace o !he $oa

!o !he e, o" !he c#..e! po$ic4 4ea.@ which p.o8isio 6a4 "#.!he.

p.o8i,e !ha! s#ch $oa 6a4 be ,e"e..e, "o. o! e%cee,ig si% 6o!hs

a"!e. !he app$ica!io !he.e"o. is 6a,e& A co6pa4 6a47 i $ie# o" !he

p.o8isio he.eiabo8e pe.6i!!e, "o. !he ,e,#c!io ".o6 a $oa o !hepo$ic4 o" a s#6 o! 6o.e !ha !wo a, oe-ha$" pe. ce!#6 o" !he

a6o#! is#.e, b4 !he po$ic4 a, o" a4 ,i8i,e, a,,i!ios !he.e!o7

ise.! i !he po$ic4 a p.o8isio !ha! oe-"i"!h o" !he e!i.e .ese.8e 6a4

be ,e,#c!e, i case o" a $oa #,e. !he po$ic47 o. 6a4 p.o8i,e !he.ei

!ha! !he ,e,#c!io 6a4 be !he sai, !wo a, oe-ha$" pe. ce!#6 o. !he

oe-"i"!h o" !he sai, e!i.e .ese.8e a! !he op!io o" !he co6pa4&

/h2 A !ab$e showig i "ig#.es !he $oa 8a$#es7 i" a47 a, !he op!ios

a8ai$ab$e #,e. !he po$ic4 each 4ea. #po ,e"a#$! i p.e6i#6

pa46e!s7 ,#.ig a! $eas! !he "i.s! !we!4 4ea.s o" !he po$ic4&

/i2 I case !he p.ocee,s o" a po$ic4 a.e pa4ab$e i is!a$$6e!s o. as aa#i!47 a !ab$e showig !he a6o#!s o" !he is!a$$6e!s o. a#i!4

pa46e!s&

/:2 A p.o8isio !ha! !he ho$,e. o" a po$ic4 sha$$ be e!i!$e, !o ha8e !he

po$ic4 .eis!a!e, a! a4 !i6e wi!hi !h.ee 4ea.s ".o6 !he ,a!e o" ,e"a#$!

#$ess !he cash 8a$#e has bee ,#$4 pai,7 o. !he e%!esio pe.io,

e%pi.e,7 #po !he p.o,#c!io o" e8i,ece o" is#.abi$i!4 sa!is"ac!o.4 !o

!he co6pa4 a, !he pa46e! o" a$$ o8e.,#e p.e6i#6s a, a4 o!he.

i,eb!e,ess !o !he co6pa4 #po sai, po$ic4 wi!h i!e.es! a! a .a!e

which sha$$ be s!ip#$a!e, i !he po$ic4 a, o! e%cee,ig !e pe.

ce!#6 pe. a#67 pa4ab$e a#a$$4&A4 o" !he "o.egoig p.o8isios o. po.!ios !he.eo" o! app$icab$e !o

sig$e p.e6i#6 o. o pa.!icipa!ig o. !e.6 po$icies sha$$ !o !ha! e%!e!

o! be ico.po.a!e, !he.ei@ a, a4 s#ch po$ic4 6a4 be iss#e, o.

,e$i8e.e, i !he Phi$ippie Is$a,s which i !he opiio o" !he is#.ace

co66issioe. co!ais p.o8isios o a4 oe o. 6o.e o" !he se8e.a$

"o.egoig .e#i.e6e!s 6o.e "a8o.ab$e !o !he po$ic4 ho$,e. !ha

he.eibe"o.e .e#i.e,& The p.o8isios o" !his sec!io sha$$ o! app$4 !o


27/33

po$icies o" .eis#.ace& .ob$es 8i.!#a$ $aw $ib.a.4

SECTION 1=& No is#.ace co6pa4 ,oig b#siess wi!hi !he

Phi$ippie Is$a,s7 o. a4 age! !he.eo"7 sha$$ pa4 a4 co66issio o.

o!he. co6pesa!io !o a4 pe.so "o. se.8ices i ob!aiig ew


28/33

is#.ace #$ess s#ch pe.so sha$$ ha8e "i.s! p.oc#.e, ".o6 !he

Is#.ace Co66issioe. a ce.!i"ica!e o" a#!ho.i!4 !o ac! as a age! o"

s#ch co6pa4 he.eia"!e. p.o8i,e,& No pe.so sha$$ ac! as age!7

s#bage!7 o. b.o5e.7 i !he so$ici!a!io o. p.oc#.e6e! o" app$ica!ios

"o. is#.ace7 o. .ecei8e "o. se.8ices i ob!aiig ew is#.ace a4

co66issio o. o!he. co6pesa!io ".o6 a4 is#.ace co6pa4 ,oigb#siess i !he Phi$ippie Is$a,s7 o. age! !he.eo"7 wi!ho#! "i.s!

p.oc#.ig a ce.!i"ica!e o" a#!ho.i!4 so !o ac! ".o6 !he Is#.ace

Co66issioe.7 which 6#s! be .eewe, a#a$$4 o !he "i.s! ,a4 o"

Da#a.47 o. wi!hi si% 6o!hs !he.ea"!e.& S#ch ce.!i"ica!e sha$$ be

iss#e, b4 !he Is#.ace Co66issioe. o$4 #po !he w.i!!e

app$ica!io o" pe.sos ,esi.ig s#ch a#!ho.i!4 s#ch app$ica!io beig

app.o8e, a, co#!e.sige, b4 !he co6pa4 s#ch pe.so ,esi.es !o

.ep.ese!7 a, sha$$ be #po a "o.6 app.o8e, b4 !he Is#.ace

Co66issioe.7 gi8ig s#ch i"o.6a!io as he 6a4 .e#i.e& The

Is#.ace Co66issioe. sha$$ ha8e !he .igh! !o .e"#se !o iss#e o..eew a, !o .e8o5e a4 s#ch ce.!i"ica!e i his ,isc.e!io& No s#ch

ce.!i"ica!e sha$$ be 8a$i,7 howe8e.7 i a4 e8e! a"!e. !he "i.s! ,a4 o"

D#$4 o" !he 4ea. "o$$owig !he iss#ig o" s#ch ce.!i"ica!e& Reewa$

ce.!i"ica!es 6a4 be iss#e, #po !he app$ica!io o" !he co6pa4&

A4 pe.so o. co6pa4 8io$a!ig !he p.o8isios o" !his sec!io sha$$ be

"ie, i !he s#6 o" "i8e h#,.e, pesos& O !he co8ic!io o" a4 pe.so

ac!ig as age!7 s#bage!7 o. b.o5e.7 o" !he co66issio o" a4 o""ese

coec!e, wi!h !he b#siess o" is#.ace7 !he Is#.ace Co66issioe.

sha$$ i66e,ia!e$4 .e8o5e !he ce.!i"ica!e o" a#!ho.i!4 iss#e, !o hi6 a,

o s#ch ce.!i"ica!e sha$$ !he.ea"!e. be iss#e, !o s#ch co8ic!e, pe.so&SECTION 1>?& No is#.ace co6pa47 egage, i b#siess i !he

Phi$ippie Is$a,s7 o. a4 age! !he.eo"7 sha$$ 6a5e a4 co!.ac! o"

is#.ace7 o. ag.ee6e! as !o po$ic4 co!.ac!7 o!he. !ha is p$ai$4

e%p.esse, i !he po$ic4 iss#e, !he.eo@ o. sha$$ a4 s#ch co6pa4 o.

age!7 pa4 o. a$$ow7 o. o""e. !o pa4 o. a$$ow7 as i,#ce6e! !o

is#.ace7 a4 .eba!e o" p.e6i#6s pa4ab$e o !he po$ic47 o. sha$$ a4

pa.!ic#$a. po$ic4 ho$,e. o" !he sa6e c$ass be a$$owe, a4 a,8a!age i

!he ,i8i,e,s o. o!he. bee"i!s !o acc.#e !he.eo7 o. a4 8a$#ab$e

cosi,e.a!io o. i,#ce6e! wha!e8e. o! speci"ie, i !he po$ic4

co!.ac! o" is#.ace&SECTION 1>1& No age!7 s#bage!7 b.o5e.7 o. o!he. pe.so7

.ep.ese!ig a4 is#.ace co6pa4 ,oig b#siess i !he Phi$ippie

Is$a,s sha$$ i a4 wa47 ,i.ec!$4 o. i,i.ec!-,i8i,e o. o""e. !o ,i8i,e his

co66issio o. o!he. .e6#e.a!io7 o. gi8e o. o""e. !o gi8e a4 pa.! o"

his co66issio o. o!he. .e6#e.a!io7 o. a4 o!he. cosi,e.a!io as a

i,#ce6e! !o is#.ace@ o. sha$$ a4 s#ch co6pa4 o. a4 age!

!he.eo"7 as !o a4 ew po$icies o" is#.ace he.ea"!e. iss#e,7 6a5e a4


29/33

,isc.i6ia!io agais! a4 ci!i;e o" !he Phi$ippie Is$a,s whe.eb4

s#ch ci!i;e o" !he Phi$ippie Is$a,s is gi8e $ess a,8a!ageo#s .a!es7

,i8i,e,s o. o!he. po$ic4 co,i!ios o. p.i8i$eges !ha a.e acco.,e, !o

Ca#casias beca#se o" his .ace& Whoe8e. 8io$a!es !his o. !he p.ece,ig

sec!io sha$$ be "ie, i !he s#6 o" !wo h#,.e, pesos "o. each s#ch

o""ese a, #po co8ic!io !he ce.!i"ica!e o" a#!ho.i!4 o" !he co6pa47age!7 s#bage!7 o. b.o5e. as !he case 6a4 be sha$$ be .e8o5e, b4 !he

Is#.ace Co66issioe.&

SECTION 1>'& I! sha$$ be #$aw"#$ "o. a4 pe.so7 co6pa4 o.

co.po.a!io i !he Phi$ippie Is$a,s ei!he. !o p.oc#.e7 .ecei8e7 o.

"o.wa., app$ica!ios "o. is#.ace i o. !o iss#e o. !o ,e$i8e. o. accep!

po$icies o" o. "o. a4 co6pa4 o. co6paies o! ha8ig bee $ega$$4

a#!ho.i;e, !o !.asac! b#siess i !he Phi$ippie Is$a,s7 as p.o8i,e, i

!his chap!e.@ a, a4 s#ch pe.so7 co6pa4 o. co.po.a!io 8io$a!ig

!he p.o8isios o" !his sec!io sha$$ be ,ee6e, g#i$!4 o" a pea$ o""ese7

a,7 #po co8ic!io !he.eo"7 sha$$ "o. each s#ch o""ese7 be p#ishe,b4 a "ie o" !wo h#,.e, pesos7 o. i6p.iso6e! "o. !wo 6o!hs7 o.

bo!h i !he ,isc.e!io o" !he co#.! roided! Tha! is#.ace co6paies

o! a#!ho.i;e, !o !.asac! b#siess i !he Phi$ippie Is$a,s 6a4 be

p$ace, #po !e.6s a, co,i!ios as "o$$ows cha.ob$es8i.!#a $$aw$ib.a.4

The Is#.ace Co66issioe. 6a4 iss#e a ce.!i"ica!e o" a#!ho.i!4 !o a4

.eg#$a.$4 a#!ho.i;e, "i.e o. 6a.ie is#.ace age! o" !he Phi$ippie

Is$a,s7 s#b:ec! !o .e8oca!io a! a4 !i6e7 pe.6i!!ig !he pe.so

a6e, !he.ei !o p.oc#.e po$icies o" is#.ace o .is5s $oca!e, i !he

Phi$ippie Is$a,s "o. co6paies o! a#!ho.i;e, !o !.asac! b#siess i

!he Phi$ippie Is$a,s&Be"o.e !he age! a6e, i s#ch ce.!i"ica!e o" a#!ho.i!4 sha$$ p.oc#.e

a4 is#.ace i s#ch co6pa4 !he.e sha$$ be e%ec#!e, a, "i$e, i

each case wi!h !he Is#.ace Co66issioe. b4 !he age! a, b4 !he

pa.!4 ,esi.ig !he is#.ace a""i,a8i!s se!!ig "o.!h !ha! !he pa.!4

,esi.ig is#.ace is a"!e. ,i$ige! e""o.! #ab$e !o p.oc#.e7 i a4 o"

!he co6paies a#!ho.i;e, !o ,o b#siess i !he Phi$ippie Is$a,s7 !he

a6o#! o" is#.ace ecessa.4&

E8e.4 s#ch age! sha$$ 5eep a sepa.a!e acco#! o" !he b#siess ,oe

#,e. !he a#!ho.i!4 o" !his sec!io7 ope a! a$$ !i6es !o !he ispec!io

o" a4 a#!ho.i;e, *o8e.6e! o""ice.@ showig !he e%ac! a6o#! a,cha.ac!e. o" s#ch is#.ace p$ace, "o. a4 pe.so7 "i.6 o. co.po.a!io7

!he g.oss p.e6i#6 cha.ge, !he.eo7 !he co6paies wi!h which !he

sa6e is p$ace,7 !he ,a!es o" !he po$icies7 !he !e.6s !he.eo"7 a, !he

$oca!io o" !he is#.e, p.ope.!4&

S#ch age! sha$$ $i5ewise 6a5e a 4ea.$4 .epo.! !o !he Co$$ec!o. o"

I!e.a$ Re8e#e a! !he !i6e a, i !he 6ae. p.esc.ibe, i sec!io

eigh!4-oe o" Ac! N#6be.e, Twe!4-!h.ee h#,.e, a, !hi.!4-ie7


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showig !he e!i.e a6o#! o" a$$ p.e6i#6s .ecei8e, b4 !he co6pa4 he

.ep.ese!s #,e. !he a#!ho.i!4 o" !his sec!io& A, s#ch age! sha$$ pa4

!o !he Co$$ec!o. o" I!e.a$ Re8e#e a !a% e#a$ !o !wice !he !a%

i6pose, b4 sec!io se8e!4-ie o" Ac! N#6be.e, Twe!4-!h.ee

h#,.e, a, !hi.!4-ie7 which !a% sha$$ be pai, a! !he sa6e !i6e a,

be s#b:ec! !o !he sa6e pea$!4 "o. ,e$i#ec4 as !he !a% i6pose, b4sai, Ac! N#6be.e, Twe!4-!h.ee h#,.e, a, !hi.!4-ie P.o8i,e,7

Howe8e.7 Tha! !he p.o8isios o" !his sec!io sha$$ o! app$4 !o

.eis#.ace&

Is#.ace Co.po.a!ios

SECTION 1>9& The p.o8isios o" Ac! N#6be.e, Fo#.!ee h#,.e, a,

"i"!4-ie7 5ow as The Co.po.a!io Law a, i!s a6e,6e!s7 sha$$

app$4 !o a$$ ico.po.a!e, is#.ace co6paies ow o. he.ea"!e.

egage, i b#siess i !he Phi$ippie Is$a,s i so "a. as !he4 ,o o!

co"$ic! wi!h !he p.o8isios o" !his chap!e.&

SECTION 1>(& Co.po.a!ios "o.6e, o. o.gai;e, !o sa8e a4 pe.so o.pe.sos o. o!he. co.po.a!io ha.6$ess ".o6 $oss7 ,a6age7 o. $iabi$i!4

a.isig ".o6 a4 #5ow o. "#!#.e o. co!ige! e8e!7 o. !o

i,e6i"4 o. !o co6pesa!e a4 pe.so o. pe.sos o. o!he. co.po.a!io

"o. a4 s#ch $oss7 ,a6age7 o. $iabi$i!47 o. !o g#a.a!ee !he co!.ac!#a$

ob$iga!ios o. ,eb!s o" o!he.s7 sha$$ be 5ow as is#.ace

co.po.a!ios "o. !he p#.poses o" !his chap!e.&

+o6es!ic Is#.ace Co.po.a!ios

SECTION 1>0& E8e.4 is#.ace co.po.a!io he.ea"!e. "o.6e, o.

o.gai;e, #,e. !he $aws o" !he Phi$ippie Is$a,s sha$$7 i" a s!oc5

co.po.a!io7 ha8e a s#bsc.ibe, capi!a$ s!oc5 e#a$ !o a! $eas! !woh#,.e, a, "i"!4 !ho#sa, pesos7 "i"!4 pe. ce!#6 o" which 6#s! be

pai, #p i cash p.e8io#s !o !he iss#ace o" a4 po$ic47 a, !he .esi,#e

wi!hi !we$8e 6o!hs ".o6 !he ,a!e o" "i$ig i!s a.!ic$es o"

ico.po.a!io& Fo. "ai$#.e !o ha8e i!s capi!a$ s!oc5 pai, #p wi!hi !he

!i6e p.esc.ibe, !he co.po.a!io sha$$ o! be pe.6i!!e, !o !a5e a4 ew

.is5s o" a4 5i, o. cha.ac!e.& I" o.gai;e, as a 6#!#a$ co6pa47 i

$ie# o" s#ch capi!a$ s!oc57 i! 6#s! ha8e a8ai$ab$e cash asse!s o" a! $eas!

!wo h#,.e, a, "i"!4 !ho#sa, pesos abo8e a$$ $iabi$i!ies "o. $osses

.epo.!e,7 e%peses7 !a%es7 $ega$ .ese.8e7 a, .eis#.ace o" a$$

o#!s!a,ig .is5s&A4 o""ice.7 o""icia$7 o. ,i.ec!o. o" !he co.po.a!io !a5ig o. a#!ho.i;ig

!he !a5ig o" a4 .is5 "o. !he co.po.a!io i 8io$a!io o" !he !e.6s o"

!his sec!io sha$$ be p#ishe, b4 i6p.iso6e! "o. o! $ess !ha oe

4ea. o. 6o.e !ha "i8e 4ea.s a, b4 a "ie o" o! $ess !ha oe

!ho#sa, o. 6o.e !ha "i8e !ho#sa, pesos&

SECTION 1>0& No ,o6es!ic is#.ace co.po.a!io sha$$ a,op! !he a6e

o" a4 e%is!ig co6pa4 !.asac!ig a si6i$a. b#siess o. a4 a6e so

http://www.chanrobles.com/legal5cc.htmhttp://www.chanrobles.com/legal5cc.htm


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si6i$a. as !o be ca$c#$a!e, !o 6is$ea, !he p#b$ic&

SECTION 1>)& No is#.ace co.po.a!io sha$$ $oa a4 o" i!s 6oe4 o.

,eposi!s e%cep! #po "i.s! 6o.!gages o. ,ee,s o" !.#s! o"

#ec#6be.e, i6p.o8e, .ea$ es!a!e7 i ci!ies a, ce!e.s o" pop#$a!io

o" 6#icipa$i!ies i !he Phi$ippie Is$a,s whe !he a6o#! o" s#ch

$oa is o! i e%cess o" si%!4 pe. ce!#6 o" !he 8a$#e o" s#ch .ea$es!a!e7 o. #po !he sec#.i!4 o" "i.s! 6o.!gages o. ,ee,s o" !.#s! o"

ac!#a$$4 c#$!i8a!e,7 i6p.o8e, a, #ec#6be.e, ag.ic#$!#.a$ $a,s i

!he Phi$ippie Is$a,s whe !he a6o#! o" s#ch $oas is o! i e%cess

o" "o.!4 pe. ce!#6 o" !he 8a$#e o" s#ch $a,7 o. #po bo,s o. o!he.

e8i,ece o" ,eb! o" !he *o8e.6e! o" !he Ui!e, S!a!es7 o. o" !he

Phi$ippie Is$a,s7 o. o" !he Ci!4 o" 3ai$a7 o. o" 6#icipa$i!ies i !he

Phi$ippie Is$a,s a#!ho.i;e, b4 $aw !o iss#e bo,s7 o. s#ch o!he.

sec#.i!ies7 ,eposi!e, as co$$a!e.a$7 as 6a4 be app.o8e, b4 !he

Is#.ace Co66issioe. roided! $o#eer! Tha! a $i"e is#.ace

co.po.a!io 6a4 $oa i!s 6oe4 #po !he sec#.i!4 o" a po$ic4 !o aa6o#! o! e%cee,ig !he e! .ese.8e 8a$#e o" !he po$ic4 a! !he !i6e

sai, $oa is 6a,e&

SECTION 1>=& No $oa b4 a4 is#.ace co.po.a!io o !he sec#.i!4 o"

.ea$ es!a!e sha$$ be 6a,e #$ess !he !i!$e !o s#ch .ea$ es!a!e sha$$ ha8e

"i.s! bee .egis!e.e, i acco.,ace wi!h !he La, Regis!.a!io Ac!7 o.

sha$$ be a !i!#$o .ea$ ,#$4 .egis!e.e,7 o. ha8e bee p.e8io#s$4 .egis!e.e,

#,e. !he p.o8isios o" !he 3o.!gage Law@ !ha! is7 #,e. !he s4s!e6 o"

.egis!.a!io es!ab$ishe, b4 !he $aws i "o.ce o !he ,a!e o" !he passage

o" Ac! N#6be.e, Fo#. h#,.e, a, ie!4-si%7 e!i!$e, "The %and

&egistration Act." .ob$es 8i.!#a$ $aw $ib.a.4SECTION 1>>& I! sha$$ be !he ,#!4 o" !he o""ice.s o" !he co.po.a!io !o

.epo.! #a.!e.$4 o !he "i.s! ,a4s o" Da#a.47 Ap.i$7 D#$4 a, Oc!obe. o"

each 4ea. !o !he Is#.ace Co66issioe. a $is! o" s#ch i8es!6e!s as

6a4 be 6a,e b4 !he67 a, !he Is#.ace Co66issioe. 6a47 i" s#ch

i8es!6e!s7 o. a4 o" !he67 see6 i:#,icio#s !o hi67 .e#i.e !he sa$e

o" !he sa6e&

SECTION '??& Is#.ace co.po.a!ios 6a4 p#.chase7 ho$,7 ow a,

co8e4 .ea$ a, pe.soa$ p.ope.!4 as "o$$ows&

/a2 The $o! wi!h !he b#i$,ig !he.eo i which !he co.po.a!io co,#c!s

a, ca..ies o i!s b#siess&/b2 S#ch p.ope.!47 .ea$ a, pe.soa$7 as 6a4 ha8e bee 6o.!gage,7

p$e,ge,7 o. co8e4e, !o i! i goo, "ai!h i !.#s! "o. i!s bee"i! b4 .easo

o" 6oe4 $oae, b4 i! i p#.s#ace o" !he .eg#$a. b#siess o" !he

co.po.a!io7 a, s#ch .ea$ o. pe.soa$ p.ope.!4 as 6a4 ha8e bee

p#.chase, b4 i! a! sa$es #,e. p$e,ges7 6o.!gages7 o. ,ee,s o" !.#s! "o.

i!s bee"i! o acco#! o" 6oe4 $oae, b4 i!7 a, s#ch .ea$ a,

pe.soa$ p.ope.!4 as 6a4 ha8e bee co8e4e, !o i! b4 bo..owe.s i


32/33

sa!is"ac!io a, ,ischa.ge o" $oas 6a,e b4 !he co.po.a!io !o

!he6roided! $o#eer! Tha! a4 .ea$ es!a!e p#.chase, b4 sai,

co.po.a!io i pa46e! o. b4 .easo o" a4 $oa 6a,e b4 sai,

co.po.a!io sha$$ be so$, b4 !he co.po.a!io wi!hi "i8e 4ea.s a"!e. !he

!i!$e !he.e!o has bee 8es!e, i i!&

/c2 Bo,s a, o!he. e8i,eces o" ,eb! o" !he *o8e.6e! o" !he Ui!e,S!a!es o. o" !he Phi$ippie Is$a,s o. o" !he ci!4 o" 3ai$a o. o" a4

6#icipa$i!4 i !he Phi$ippie Is$a,s a#!ho.i;e, b4 $aw !o iss#e bo,s

a! !he .easoab$e 6a.5e! 8a$#e !he.eo"7 a, s#ch o!he. sec#.i!ies as

6a4 be app.o8e, b4 !he Is#.ace Co66issioe.&

SECTION '?1& No is#.ace co.po.a!io sha$$ ,ec$a.e a4 ,i8i,e,

e%cep! ".o6 p.o"i!s .e6aiig o ha, a"!e. .e!aiig #i6pai.e, cha.ob$es8i.!# a$$aw$ib.a.4

/a2 The e!i.e pai, #p capi!a$ s!oc5&

/b2 I !he case o" $i"e is#.ace co.po.a!ios !he $ega$ .ese.8e "#,

.e#i.e, b4 sec!io oe h#,.e, a, eigh!4-!h.ee o" !his Ac!&

/c2 I !he case o" co.po.a!ios o!he. !ha $i"e !he $ega$ .ese.8e "#,.e#i.e, b4 sec!io oe h#,.e, a, eigh!4-si% o" !his Ac!&

/,2 A s#6 s#""icie! !o pa4 a$$ $osses .epo.!e,7 o. i !he co#.se o"

se!!$e6e!7 a, a$$ $iabi$i!ies "o. e%peses a, !a%es&

Co,#c! o" Is#.ace B#siess b4 Pe.sos No! Ico.po.a!e,

SECTION '?'& No pe.so7 pa.!e.ship7 o. associa!io o" pe.sos sha$$

egage i !he b#siess o" is#.ace i !he Phi$ippie Is$a,s e%cep! as

age! o" a pe.so o. co.po.a!io a#!ho.i;e, !o ,o !he b#siess o"

is#.ace i !he Phi$ippie Is$a,s7 #$ess possesse, o" !he capi!a$ a,

asse!s .e#i.e, o" a is#.ace co.po.a!io ,oig !he sa6e 5i, o"

b#siess i !he Phi$ippie Is$a,s a, i8es!e, i !he sa6e 6ae.@o. #$ess !he Is#.ace Co66issioe. sha$$ ha8e g.a!e, !o hi6 o.

!he6 a ce.!i"ica!e !o !he e""ec! !ha! he o. !he4 ha8e co6p$ie, wi!h a$$

!he p.o8isios o" $aw which a is#.ace co.po.a!io ,oig b#siess i

!he Phi$ippie Is$a,s is .e#i.e, !o obse.8e&

E8e.4 pe.so7 pa.!e.ship7 o. associa!io .ecei8ig a4 s#ch ce.!i"ica!e

o" a#!ho.i!4 sha$$ be s#b:ec! !o !he is#.ace $aws o" !he Phi$ippie

Is$a,s a, !o !he :#.is,ic!io a, s#pe.8isio o" !he Is#.ace

Co66issioe. i !he sa6e 6ae. as i" a is#.ace co.po.a!io

a#!ho.i;e, b4 !he $aws o" !he Phi$ippie Is$a,s !o egage i !he

b#siess o" is#.ace speci"ie, i !he ce.!i"ica!e&*ee.a$ Pea$!4

SECTION '?9& A4 pe.so who 5owig$4 8io$a!es a4 p.o8isio o" !his

chap!e. "o. which o pea$!4 is p.o8i,e,7 sha$$ #po co8ic!io

p#ishe, b4 a "ie o! e%cee,ig "i8e h#,.e, pesos o. b4

i6p.iso6e! o! e%cee,ig "i8e 6o!hs o. b4 bo!h s#ch "ie a,

i6p.iso6e! i !he ,isc.e!io o" !he co#.!&

CHAPTER VI


33/33

Fia$ P.o8isio

SECTION '?(& The p.o8isios o" sec!ios oe h#,.e, a, "o.!4-se8e

!o oe h#,.e, a, "i"!4-!h.ee7 ic$#si8e7 o" Ac! N#6be.e, Fo#.!ee

h#,.e, a, "i"!4-ie@ Ti!$e Eigh! o" Boo5 Two@ Sec!io Thi., o" Ti!$e

Th.ee7 Boo5 Th.ee o" !he Co,e o" Co66e.ce@ a, a$$ $aws o. pa.!s o"

$aws i co"$ic! o. icosis!e! wi!h !his Ac!7 a.e he.eb4 .epea$e,&SECTION '?

law 3 act no. 2427 insurance code

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