Amending Section 249, Title 15, Presidential Decree No. 612, Otherwise Known As The Insurance Code

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PRESIDENTIAL DECREE No. 1141

AMENDING SECTION 249, TITLE 15, PRESIDENTIAL DECREE NO. 612, OTHERWISE KNOWN AS THE INSURANCE CODE

WHEREAS, the Insurance Commissioner is entrusted with the duty to see that all laws relating to insurance, insurance companies and other insurance matters are faithfully executed and to perform the duties imposed upon him by the Insurance Code;

WHEREAS, considering the nature of insurance transactions which depend entirely on utmost good faith especially on the part of the insurer, and where an insurance company has become insolvent or cannot continue to resume business with safety to its policyholders and other creditors, its assets must be preserved to settle satisfactorily and expeditiously as possible its debts and accounts; and,

WHEREAS, the action of the Insurance Commissioner in connection therewith should not be hampered unnecessarily by tedious and protracted court litigations;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution, do hereby decree and order the amendment...

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Summary of Presidential Decree No. 1141 Amending Section 249 of the Insurance Code

Provisions on Insolvency of Insurance Companies
- The Insurance Commissioner has the authority to order an insolvent insurance company to cease operations and designate a receiver to take charge of its assets and liabilities. (Section 1)
- The Commissioner determines within 30 days whether the company can be reorganized or liquidated. (Section 1)
- If reorganization is possible, the Commissioner prescribes conditions for resuming business and expenses are paid from the company's assets. (Section 1)
- If the company is insolvent or cannot resume safely, the Commissioner orders liquidation and approves a liquidation plan. (Section 1)
- The Commissioner files a petition in court for assistance in liquidation, and the court adjudicates disputed claims. (Section 1)
- The Commissioner designates a liquidator to reinsure policies, convert assets to cash, and settle liabilities. (Section 1)
- The Commissioner's actions are final and executory, can only be set aside by the court if proven arbitrary and made in bad faith. (Section 1)
- No restraining order or injunction can be issued against the Commissioner unless proven arbitrary and made in bad faith, and a bond is filed. (Section 1)
- Proceedings under this law are given preference in courts, and the Commissioner is not required to pay fees. (Section 1)
- "Insolvency" is defined as the inability to pay lawful obligations as they fall due and failure to maintain the required margin of solvency. (Section 1)