No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@[Link]

Intellectual Property Code and Insurance Code

Intellectual Property Office

Declaration of State Policy

1. The intellectual property system is viewed by the state as an essential element that contributed
to the development of economic, technology, and foreign relations.
2. The said law shall govern in protecting the exclusive rights of the following:
a. scientists
b. inventors
c. artists and
d. other gifted citizen

Intellectual Property
1. Intangible assets resulting from the creative work of an individual or organization
2. CREATION OF MINDS such as:
a. Inventions
b. Literary or artistic works
c. Symbols, names, images, and designs used in commerce

Intellectual Property Rights

1. Consists of the Following:
a. copyright and related rights;
b. trademarks and service marks
c. geographical indications
d. industrial designs
e. patents
f. layout designs (topographies) of integrated circuits; and
g. protection of undisclosed information.

Technology Transfer Arrangements

- Refers to the contract or agreement involving the transfer of systematic knowledge for the
manufacture of a product, application of a process, or rendering of a service to another party,
which may involve the transfer, assignment or licensing of intellectual property rights.

Intellectual Property Office

- The one who has the right to administer and implement the state policies regarding the Intellectual
Property Act.

PART II
The Law on Patents

Basic Patent Principles

1. Territoriality - Patents are valid only in the country or region in which they have been granted.
2. First to File - Applicant who files first will get the patent.
a. If two (2) or more persons have made the invention separately and independently
of each other, the right to patent shall belong to the person who filed an application
for such invention or
b. Where two (2) of more applicants are filed for the same invention, to the applicant
which has the earliest filling date
3. Disclosure - applicant shall disclose the invention in a manner sufficiently clear and complete.
FOLLOWS the Quid pro quo principle which means that “you give, for me to give as well”
4. Conditional - patents are granted only upon compliance with the criteria of patentability
5. Limited Rights

Patentable Inventions
- Any technical solution of a problem in any field of human activity which is new involves an
inventive step and is industrially applicable.
- It may be, or may relate to, a product, or process, or an improvement of any of the foregoing.

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Criteria for Patentability

1. Novelty - An invention shall not be considered new if it forms part of a prior art.
a. Prior art
i. Everything which has been available to the public anywhere in the world, before
the filing date or the priority date of the application claiming the invention

RULE: When a work has already been made available to the public, it shall be non-patentable
for absence of novelty

EXCEPT: Doctrine of Non-Prejudicial Disclosure

- The disclosure of information contained in the application during the 12 month period
before the filing date or the priority date of the application if such disclosure was made
by:
I. The inventor
II. A patent office and the information was contained:
A. In an application filed by the inventor and should have not been disclosed
by the office or
B. In an application filed without the knowledge or consent of the inventor
by a third party which obtained the information directly or indirectly from
the inventor;
III. A third party who obtained the information directly or indirectly from the
inventor;
2. Inventive Step - if, having regard to prior art, it is not obvious to a person skilled in the art
at the time of the filling date or priority date of the application claiming the invention.

Test of Non-Obviousness:
- If any person possessing ordinary skill in the art was able to draw the
inferences and he constructs that the supposed inventor drew from prior
art, then the latter did not really invent it.
- Person Skilled in the art-Ordinary practitioner (fictional person)
- Has access and understanding of all the prior art
- Aware of common general knowledge in the specific art
- Observes developments in the related technical field (could be a team;
need not have inventive ability)

3. Industrially Applicable - an invention that can be produced and used in any industry. This means
that an invention is not merely theoretical, but also has a practical purpose.

Non-Patentable Inventions
1. Plant varieties or animal breeds or essentially biological process for the production of plants or
animals.
a. Exception: Microbiological process and microorganisms are patentable.
2. Aesthetic creations
3. Discoveries, scientific theories and mathematical methods;
4. Schemes, rules, and methods of performing mental acts, playing games or doing business,
and programs for computers;
5. Anything contrary to public order or morality
6. Methods for treatment of the human or animal body
a. Exception: Machines and equipment are patentable.
7. In the case of drugs and medicines, mere discovery of a new form or new property of a
known substance which does not result in the enhancement of the efficacy of that substance.

Ownership of Patents
- The right to a patent belongs to the inventor, his heirs, or assigns.
- When two (2) of more persons have jointly made an invention, the right to a patent shall belong
to them jointly.
- Patent rights may be assigned or transferred but it must be:
- In writing
- Duly notarized
Inventions Created Pursuant to a Commission
1. Pursuant to a Commission
- The person who commissions the work shall own the patent, unless otherwise
provided in the contract.
2. Pursuant to employment

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- In case the employee made the invention in the course of his employment contract, the
patent shall belong to:
a. The EMPLOYEE, if the inventive activity is not a part of his regular duties even
if the employee uses the time, facilities, and materials of the employer;
b. The EMPLOYER, if the inventive activity is the result of the performance of his
regularly-assigned duties, unless there is an agreement, express or implied, to
the contrary
Patent Registration
1. Filing of the application
2. Accordance of the filing date
3. Formality examination
4. Classification and Search
5. Publication of application
6. Substantive examination
7. Grant of Patent
8. Publication upon grant
9. Issuance of Certificate

Patent Application
- The patent application shall be in Filipino or English and shall contain the following:
1. A request for the grant of patent;
2. A description of the invention;
3. Drawings necessary for the understanding of the invention;
4. One or more claims; and
5. An abstract

Grounds for cancellation of Patent

- Any interested party may petition to cancel any patent or any claim or parts of a claim any of the
following grounds:
a. The invention is not new or patentable;
b. The patent does not disclose the invention in a manner sufficiently clear and
complete for it to be carried out by any person skilled in the art; or
c. Contrary to public order or morality
d. Patent is found invalid in an action for infringement
e. The patent includes matters outside the scope of the contained in the application.
Patent Application by Persons Not Having the Right to a Patent
Remedies of persons with a right to a patent

If a person other than the applicant is declared by the final court order or decision as having the right
to a patent, he may within 3 months after such decision has become final:
a. Prosecute the application as his own
b. File a new patent application
c. Request the application to be referred; or
d. Seek cancellation of the patent

Time to file action: within one (1) year from the date of publication

Rights conferred by patent

1. In case of Product
- Right to restrain, prohibit and prevent any unauthorized person or entity from MAKING,
USING, OFFERING for sale, SELLING, or IMPORTING the product.
2. In case of Process
- Right to RESTRAIN, PROHIBIT, and PREVENT any unauthorized person or entity from
manufacturing, dealing in, using, offering from sale, selling, or importing any product
obtained directly or indirectly from such process.
3. Right to assign the patent, to transfer by succession and to conclude licensing contracts.

Limitations of Patent Rights

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The owner of a patent has NO RIGHT to prevent third parties from making, using, offering for sale, selling
or importing a patented product in the following circumstances:

a. Using a patented product after it has been put on the market in the Philippines by the
owner of the product, or with his express consent.
● In case of drugs or medicine, the said limitation applies after a drug or
medicine has been introduced in the Philippines or anywhere else in the
world by the patent owner, or by any party authorized to use the invention. This
allows parallel importation for drugs and medicines.
● The right to import the drugs and medicine shall be available to any
government agency or any private third party.
b. Where the act is done PRIVATELY and on NON-COMMERCIAL purpose.
c. Exclusively for experimental use of the invention for scientific or educational
purposes.
d. In the case of drugs and medicines, where the act includes testing, using making or
selling the invention including any data related thereto, solely for purposes reasonably
related to the development and submission of information and issuance of approvals by
government regulatory agencies required under any law of the Philippines or of another
country that regulates the manufacture, construction, use or sale of any product.

Other Limitations
Prior User
- Person other than the applicant, who in good faith, started using the invention in the
Philippines, or undertaken serious preparations to use the same, before the filing date
or priority date of the application shall have the right to continue the use thereof, but
this right shall only be transferred or assigned further with his enterprise or business.

Use by government
- A government agency or third person authorized by the government may exploit the
invention even without agreement of the patent owner where:
a. The public interest, in particular, national security, nutrition, health or the
development of other sectors, as determined by the appropriate agency of the
government, so requires; or
b. A judicial or administrative body has determined that the manner of exploitation,
by the owner of the patent or his license is anti-competitive; or
c. In the case of drugs and medicines, there is a national emergency or other
circumstances of extreme urgency requiring the use of the invention; or
d. In the case of drugs and medicines, there is public non-commercial use of the
patentee, without satisfactory reason or;
e. In the case of drugs and medicines, the demand for the patented article in the
Philippines is not being met to an adequate extent and on reasonable
terms, as determined by the Secretary of the Department of Health.

Doctrine of Exhaustion
- Also known as the DOCTRINE OF FIRST SALE, it provides that the patent holder has control of
the first sale of his invention.
- He has the opportunity to receive the FULL CONSIDERATION for his invention from his sale.
- He EXHAUST HIS RIGHTS in the FUTURE control of his invention

Patent Infringement
- The MAKING, USING, OFFERING for sale, SELLING, or IMPORTING a patented product or a
product obtained directly or indirectly from a patented process, or the USE of a patented process
without the authorization of the patentee.
- LITERAL Infringement
● Exist if an accused device falls directly within the scope of properly interpreted claims.
- Doctrine of Equivalent Infringement
● When a device appropriated a prior invention by incorporating its innovative concept and,
despite some modification and change, performs substantially the same function
in substantially the same way to achieve substantially the same result.

Remedies of the Owners of the Patent Against Infringers

- Civil Action for infringement
- Criminal action for infringement

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● If the infringement is REPEATED, the criminal action prescribes THREE (3) years from
the commission of the crime.
- Administrative remedy
● Where the amount of damages claimed is not less than P200,000.00.
Defenses in Action for Infringement
- The invention is not new or patentable;
- The patent does not disclose the invention in a manner sufficiently clear and complete for
it to be carried out by any person skilled in the art; or
- Contrary to public order or morality
- Invalidity of the patent
- Right of prior user
- Prescription (20 years)

Legal Life of Patent

- 20 years

Mode of Creation
- By Registration in the Intellectual Property Office

PART III
The Law on Trademarks, Service Marks, and Trade Names

Legal Definitions
1. Mark - means any visible sign capable of distinguishing the goods (trademark) or services (service
mark) of an enterprise and shall include a stamped or marked container of goods; (Sec. 38, R.A.
No. 166a)
2. Collective mark - means any visible sign designated as such in the application for registration and
capable of distinguishing the origin or any other common characteristic, including the quality of
goods or services of different enterprises which use the sign under the control of the registered
owner of the collective mark; (Sec. 40, R.A. No. 166a)
3. Trade name - means the name or designation identifying or distinguishing an enterprise; (Sec.
38, R.A. No. 166a)

Distinctions between a Trademark vs Trade name

1. As to concept or definition, a trademark identifies or distinguishes the goods or services, while a
trade name identifies or distinguishes the business or enterprise.
2. As to registration, a trademark requires registration while a trade name does not require
registration.

Acquisition of ownership of a Trademark, service name, or trade name

1. The rights in a mark shall be acquired through registration made validly in accordance with the
provisions of this law, but the right to register a trademark should be based on ownership.
2. Certificate of Registration - shall be prima facie evidence of the validity of the registration, the
registrant's ownership of the mark, and of the registrant's exclusive right to use the same in
connection with the goods or services and those that are related thereto specified in the certificate.

Registration of Trademarks, Service marks, and Trade names

1. In order for a mark to be registered, it must exhibit the following:
a. A visible sign (words, letters, numerals, figures, pictures, logos)
b. Capable of distinguishing one’s goods or services from another
2. The owner of a trademark, trade name, or service mark used to distinguish his goods, business, or
services from the goods, business, or services of others shall have the right to register the same
unless:
a. Those contrary to law, morals, or public policy
b. Consist of immoral, deceptive, or scandalous matter
c. Consist of matters which may disparage or falsely suggest a connection with persons
d. Consists of flags or coats of arms of nations
e. Consist of names, portraits, or signatures of living persons
f. Identical registered mark belonging to a different proprietor or a mark with an earlier filing;
g. Same goods or services or closely related goods or services;
h. Those resemble such a mark as to be likely to deceive or cause confusion.
3. An application for registration of a collective mark shall designate the mark as a collective mark
and shall be accompanied by a copy of the agreement, if any, governing the use of the collective
mark.

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 No. 125 Brgy. San Sebastian
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Telephone : (043) 723 8412
Gmail : icarecpareview@[Link]

Requirements for the application of Trademarks, Service marks, and Trade names
1. The application for the registration of the mark shall be in Filipino or in English and shall contain
the following:
a. Request for registration;
b. Name and address of the applicant
c. Sworn statement of the applicant's domicile and citizenship
d. The applicant is a juridical entity
e. Appointment of an agent or representative
2. Declaration of Actual Use - within three (3) years from the filing date of the application. Otherwise,
the application shall be refused, or the mark shall be removed from the Register by the Director.

Duration of effectivity of Trademark Registration

1. 10 years, subject to indefinite renewals of 10 years each.
2. The registrant is required to file a declaration of actual use and evidence to that effect or show
valid reasons based on the existence of obstacles to such use within one (1) year from the fifth
year anniversary of the date of the registration of the mark.

The distinctiveness of a mark

1. Fanciful trademark - made-up words that have been invented for the sole purpose of functioning
as a trademark and are considered to be the strongest type of mark. (KODAK, EXXON, XEROX)
2. Arbitrary Trademarks - utilizes words having a common meaning that has no relation to the goods
or services being sold. (APPLE, DOVE, SHELL)
3. Suggestive Trademarks - marks that suggest a quality or characteristic of the goods or services.
This is far more common due to tying a mark to the product in a customer’s mind. (MICROSOFT,
NETFLIX)
4. Descriptive Trademarks - words that merely describe the goods or services on which the mark is
used. (SHARP, WINDOWS, BEST BUY)
5. Generic Trademarks - cannot be protected as they are devices that actually name a product and
are incapable of functioning as a trademark. (BANDAID, THERMOS)

Rights of a Trademark owner

1. Rights to exclusive use of the mark in connection with one’s own goods or services resulting in the
likelihood of confusion.
2. Rights to prevent others from use of an identical mark for the same, similar or related goods or
services.

Trademark rights through assignment and transfers of registration

1. An application for registration of a mark, or its registration, may be assigned or transferred with or
without the transfer of the business using the mark.
2. The assignment of the application for registration of a mark, or of its registration, shall be in writing
and require the signatures of the contracting parties. Transfers by mergers or other forms of
succession may be made by any document supporting such transfer.

Cancellation of Registration
1. A petition to cancel a registration of a mark under this act may be filed with the Bureau of Legal
Affairs by any person who believes that he is or will be damaged by the registration of a mark
under this act as follows:
a. Within five (5) years from the date of the registration of the mark.
b. At any time, if the registered mark becomes the generic name for the goods or services or
its registration was obtained fraudulently.
c. At any time, if the registered owner of the mark without legitimate reasons fails to use the
mark within the Philippines

Trademark infringement
1. Use without the consent of the trademark owners of any reproduction, counterfeit, copy or
colorable limitation of any registered mark, or trade name.
2. Elements when there is a trademark infringement:
a. Registration
b. Trademark is reproduced, counterfeit, or copied by another

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c. Lack of consent by the owner

d. Use in connection with sale
e. Likelihood of confusion
i. Confusion of goods - as to the goods themselves
ii. Confusion of business - as to the source or origin of such goods

Tests of Confusion
1. Dominancy test - focuses on the prevalent features of the competing marks
2. Totality test - determined on the basis of visual, aural, connotative comparisons and overall
impressions engendered by the marks in controversy as they are encountered in the marketplace.

Remedies and Jurisdiction for Trademark Infringement

1. Recover damages from any person who infringes his rights, and the measure of the damages
suffered shall be either the reasonable profit or profit made out of infringement.
2. In cases where actual intent to mislead the public or to defraud the complainant is shown, in the
discretion of the court, the damages may be doubled.
3. Seek injunction
4. Seek the destruction of infringing materials without compensation of any sort or disposed of outside
of commerce in such a manner as to avoid any harm caused

Distinction between Trademark infringement vs Unfair competition

1. As to definition, trademark infringement is the unauthorized use of a trademark, while unfair
competition is the passing off of one’s goods as those of another.
2. As to intent, in trademark infringement, fraudulent intent is unnecessary. In unfair competition,
fraudulent intent is essential.
3. As to registration, trademark infringement requires prior registration, while unfair competition does
not necessarily need registration.

Remedies and Jurisdiction for Unfair Competition

1. Liable in a civil action by any person injured, thereby any damages sustained in consequences
thereof
2. May file for criminal action
a. 2 - 5 years imprisonment
b. P50,000 - P200,000 in fine

PART IV
The Law on Copyright

Legal Definition
1. Copyright - a right over literary and artistic works which are original intellectual creations in the
literary and artistic domain protected from the moment of creation

Legal Life of Copyright – As a general rule, the legal life of copyright is the life of author plus 50 years
after his death.

Copyrightable works
1. Literary and Artistic works include, in particular:
a. Books, pamphlets, articles, and other writings;
b. Periodicals and newspapers;
c. Lectures, sermons, dissertations for oral delivery;
d. Letters;
e. Dramatic composition or choreographic works;
f. Musical compositions;
g. Works of drawings, painting, architecture, sculpture or other works of art;
h. Original ornamental designs or industrial designs
i. Illustrations, maps, plans, sketches or other works relative to topography, geography
j. Drawings of a scientific or technical character
k. Photographic works
l. Audiovisual works and cinematographic works
m. Pictorial illustrations
n. Computer programs; and
o. Other literary, scholarly, scientific, and artistic works
2. Derivative works - works based on or derived from one or more existing works and shall also be
protected by copyright are the following:

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a. Dramatizations, translations, adaptations, and other alterations

b. Collections of literary, scholarly, or artistic works
3. Right of the Publisher - In addition to the right to publish granted by the author, his heirs, or
assigns, the publisher shall have a copyright consisting merely of the right of reproduction of the
typographical arrangement of the published edition of the work.

Non-copyrightable works
1. Idea, procedure, system, method, concept, principle, discovery or mere data
2. News of the day and other items of press information
3. Any official text of a legislative, administrative or legal nature
4. Pleadings
5. Decisions of courts and tribunals
6. Any work of the government of the Philippines
7. TV programs
8. Systems of bookkeeping
9. Statutes
Rights of Copyright owners
1. Economic rights - the right to carry out, authorize or prevent the following acts:
a. Reproduction of the work
b. Carry-out derivative work
c. First distribution of the original copy
d. Rental right
e. Public display
f. Public performance
g. Other communications to the public
2. Moral right - for reasons of professionalism and propriety, the author has the right:
a. To require that authorship of the works be attributed to him
b. To make any alterations of his work
c. To preserve integrity of work, object to any distortion, mutilation or modification
d. To restrain the use of his name with respect to any work, not of his own creation

Ownership of Copyright
1. Copyright ownership shall be governed by the following rules:
a. Original literary and artistic works - belongs to the author of the work
b. Works of Joint Authorship - the co-authors shall be the original owners of the copyright
and in the absence of agreement, their rights shall be governed by the rules on co-
ownership.
c. Works during Employment:
i. Employee - if the creation of the object of copyright is not a part of his regular
duties even if the employee uses the time, facilities and materials of the employer.
ii. Employer - if the work is the result of the performance of his regularly-assigned
duties, unless there is an agreement, express or implied, to the contrary.
d. Commissioned work - the person who so commissioned the work shall have the ownership
of the work but the copyright thereto shall remain with the creator
e. Audiovisual work - the copyright shall belong to the producer, the author of the scenario,
the composer of the music, the film director, and the author of the work so adapted.
f. Letters - belongs to the writer subject to the provisions of the Civil Code
g. Anonymous and Pseudonymous works - the publishers shall be deemed to represent the
authors of articles and other writings published without the names of the authors or under
pseudonyms.

Transfer, Assignment and Licensing of Copyright

1. The copyright may be assigned in whole or in a part only if there is a written indication of such
intention.
2. If two (2) or more authors jointly own a copyright or any part thereof, neither of the owners shall
be entitled to grant licenses without the prior written consent of the other owners.
3. The extent of authority granted to the publisher of newspapers, periodicals, or magazine
constitutes only a license to make a single publication unless expressly stated otherwise.

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Copyright infringement
1. Occurs when there is a violation of any of the exclusive economic or moral rights granted to the
copyright owner. It may also consist in aiding or abetting such infringement.
2. The IP Code also provides for the liability of a person who at the time when copyright subsists in
a work has in his possession an article which he knows, or ought to know, to be an infringing copy
of the work for the following purposes:
a. Selling or letting for hire
b. Distributing the article for the purpose of trade
c. Trade exhibit of the article in public

Remedies available to an owner of a copyright against an infringer

1. Any person infringing a right protected under this law is liable for civil or administrative action such
as:
a. Injunction restraining such infringement
b. Claim damages to the copyright proprietor including legal costs and other expenses
c. Deliver under oath all articles, sales invoices and other documents evidencing sales alleged
to infringe a copyright
d. Deliver under oath for destruction without any compensation all infringing copies or devices

2. Any person infringing any right secured by aiding or abetting such infringement shall be guilty of
a crime punishable by:
a. 1-3 years imprisonment plus a fine of P50,000 to P150,000 for the first offense
b. 3 years and 1 day to 6 years imprisonment plus a fine of P50,000 - P150,000 for the second
offense
c. 6 years and 1 day to 9 years imprisonment plus a fine of P500,000 - P1,000,000 for the
third and subsequent offenses.

Limitations of Copyright
1. The following acts shall not constitute an infringement of copyright:
a. The inclusion of a work in a publication, broadcast or other communication to the public
as a way of illustration for teaching purposes and is compatible with fair use
b. Reproduction or distribution of published articles or materials in a specialized format
exclusively for the use of the blind, visually and reading-impaired persons
c. The recitation or performance of a work, once it has been lawfully published, if done
privately and free of charge or it made strictly for charitable or religious institutions

Fair Use of Copyright

1. The fair use of a copyrighted work for criticism, comment, news, reporting, teaching including
multiple copies for classroom use, scholarship, research and similar purposes is not an infringement
of copyright
2. To determine whether the use made of a work in particular case is fair use, the following factors
must be considered:
a. Purpose and character of the use
b. Nature of the copyrighted work
c. Amount and substantiability of the portion used in relation to the work as a whole
d. Effect of the use upon the potential market for or value of the work

Insurance Code of the Philippines (RA 10607)

An act strengthening the insurance industry, further amending presidential decree no. 612, otherwise
known as "the insurance code", as amended by presidential decree nos. 1141, 1280, 1455, 1460,
1814 and 1981, and batas pambansa blg. 874, and for other purposes
Laws Governing the Insurance Industry
● The Insurance Code (RA 10607) - an act strengthening the insurance industry by providing
specific stipulations related to insurance contracts and insurance companies
○ Intends to reinforce the provisions of the previous codes
○ Ensure economic viability and financial stability of companies operating in the country

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○
Give every citizen an opportunity to be amply protected and to be secured by securing an
insurance for themselves
● The Civil Code (RA 386) - in the absence of applicable provisions in the Insurance Code, the
stipulations under the Civil Code is adhered
● US Insurance Code (California) - in the absence of applicable provisions in the Insurance
Code and the Civil Code, the stipulations under the US Insurance Code is adhered
● Revised Corporation Code of the Philippines (RA 11232) - Contains provisions for
incorporating/incorporated insurance companies
○ The shares or series of shares of insurance companies authorized to obtain or access
funds from the public, whether publicly listed or not, shall not be permitted to issue
no-par value shares of stock.
○ The following activities of insurance companies shall not be approved by the Commission
unless accompanied by a favorable recommendation of the appropriate
government agency (insurance Commission) to the effect that such articles or
amendment is in accordance with law.
■ Application for revival of certificate of incorporation
■ Articles of incorporation or amendment to articles of incorporation
■ Bylaws or any amendment thereto
■ Articles of merger or of consolidation
■ Application for dissolution
○ The board of the insurance companies vested with public interest shall have
independent directors constituting at least twenty percent (20%) of such
board:
○ Insurance companies may not be incorporated as a close corporation
○ Insurance companies may not be incorporated as a OPC
Governing Body: The Insurance Commission (Sec. 437)
● Headed by the insurance commissioner appointed by the president for a term of 6 years
without reappointment but with hold-over capacity
○ Has the power to regulate, seeing to it that laws related to insurance, insurance
companies, and other insurance matters are faithfully executed.
○ The commissioner may issue such rulings, instructions, circulars, orders and
decisions as may be deemed necessary to secure the enforcement of the provisions of
this Code, to ensure the efficient regulation of the insurance industry in accordance
with global best practices and to protect the insuring public.

○ Powers and Functions of the Commissioner:

● Formulate policies and recommendations on issues concerning the insurance
industry, advise Congress and other government agencies on all aspects of the
insurance industry and propose legislation and amendments thereto;
● Approve, reject, suspend or revoke licenses or certificates of registration
provided for by this Code;
● Impose sanctions for the violation of laws and the rules, regulations and orders
issued pursuant thereto;
● Prepare, approve, amend or repeal rules, regulations and orders, and issue
opinions and provide guidance on and supervise compliance with such rules,
regulations and orders;
● Enlist the aid and support of, and/or deputize any and all enforcement agencies
of the government in the implementation of its powers and functions under this
Code;
● Issue cease and desist orders to prevent fraud or injury to the insuring public;
● Punish for contempt of the Commissioner, both direct and indirect, in accordance
with the pertinent provisions of and penalties prescribed by the Rules of Court;
● Compel the officers of any registered insurance corporation or association to call
meetings of stockholders or members thereof under its supervision;
● Issue subpoena duces tecum and summon witnesses to appear in any
proceeding of the Commission and, in appropriate cases, order the examination,
search and seizure of all documents, papers, files and records, tax returns, and
books of accounts of any entity or person under investigation as may be
necessary for the proper disposition of the cases before it, subject to the
provisions of existing laws;
● Suspend or revoke, after proper notice and hearing, the license or certificate of
authority of any entity or person under its regulation, upon any of the grounds
provided by law;

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● Conduct an examination to determine compliance with laws and regulations if the

circumstances so warrant as determined by appropriate rules and regulations;
● Investigate not oftener than once a year from the last date of examination to
determine whether an institution is conducting its business on a safe and sound
basis: Provided, That, the deficiencies/irregularities found by or discovered by an
audit shall be immediately addressed;
● Inquire into the solvency and liquidity of the institutions under its supervision
and enforce prompt corrective action;
● To retain and utilize, in addition to its annual budget, all fees, charges and other
income derived from the regulation of insurance companies and other supervised
persons or entities;
● To fix and assess fees, charges and penalties as the Commissioner may find
reasonable in the exercise of regulation; and
● Exercise such other powers as may be provided by law as well as those which
may be implied from, which are necessary or incidental to the express powers
granted the Commission to achieve the objectives and purposes of this Code.
7.1 Concept of Insurance
● A contract of insurance is an agreement whereby one undertakes for a consideration to
indemnify another against loss, damage or liability arising from an unknown or
contingent event (Sec. 2[a]).
● A contract of suretyship shall be deemed to be an insurance contract, within the meaning of
this Code, only if made by a surety who or which, as such, is doing an insurance business as
hereinafter provided (Sec. 2[a]).
○ Doing an insurance business or transacting an insurance business (Sec. 2[b]).
■ Making or proposing to make, as insurer, any insurance contract;
■ Making or proposing to make, as surety, any contract of suretyship as a vocation
and not as merely incidental to any other legitimate business or activity of the
surety;
■ Doing any kind of business, including a reinsurance business, specifically
recognized as constituting the doing of an insurance business within the meaning
of this Code;
■ Doing or proposing to do any business in substance equivalent to any of the
foregoing in a manner designed to evade the provisions of this Code (catch all
provision).
7.2 Elements of insurance contract
1. Consent
a. Parties to the contract
i. Insurer - The party who assumes the risk of loss and undertakes, for a
consideration, to indemnify the insured upon the happening of the designated
peril. May be a corporation, partnership, or association duly authorized to
transact insurance business
● Sun Life
● Pru Life UK
● Manulife
● AXA
ii. Insured - The insured is the person in whose favor, the contract is
operative and who is indemnified against or is to receive a certain sum
upon the happening of a specified contingency or event. The party whose loss is
the occasion for the payment of the insurance proceeds by the insurer
● Self
● Spouse
● Children
● House
● Car
iii. Beneficiary - Person or entity legally designated to receive the proceeds upon
the maturity of an insurance contract.
2. Object
a. Obligation to pay, indemnify, or reimburse
b. On the condition that the insured party incurs a loss, damage, or liability
c. Dependent upon whether or not an unknown or contingent event caused the loss,
damage, or liability
3. Cause/Consideration - Premium paid by the insured

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a. Premiums payments may be through lump-sum or installment basis but the amount
must be agreed-upon and would generally depend on the predictability (likelihood and
magnitude) of incurring a loss, damage, or liability

4. Insurable Interest
a. What may be insured?
i. Any contingent or unknown event (fortuitous event), whether past or future,
which may damnify a person having an insurable interest, or create a liability
against him, may be insured against, subject to the provisions of this chapter
● Life and Health (Sec. 10)
○ Of himself, of his spouse and of his children;
○ Of any person on whom he depends wholly or in part for
education or support, or in whom he has a pecuniary interest;
○ Of any person under a legal obligation to him for the payment of
money, or respecting property or services, of which death or
illness might delay or prevent the performance; and
○ Of any person upon whose life any estate or interest vested in
him depends.
*An interest in the life or health of a person insured must exist
when the insurance takes effect, but need not exist thereafter or
when the loss occurs (Sec. 19)
● Property (Sec. 14)
○ An existing interest;
○ An inchoate interest founded on an existing interest; or
○ An expectancy, coupled with an existing interest in that out of
which the expectancy arises
*A mere contingent or expectant interest in any thing, not
founded on an actual right to the thing, nor upon any valid
contract for it, is not insurable (Sec. 16)
*The measure of an insurable interest in property is the extent to
which the insured might be damnified
by loss or injury thereof (Sec. 17)
*An interest in property insured must exist when the insurance
takes effect, and when the loss occurs, but need not exist in the
meantime (Sec. 19)
ii. General Rule: only future event may be insured except marine insurance
7.3 Characteristics and nature of insurance contract
1. Consensual and Personal
○ The contract is between the insured and the insurer, and there must be a concurrence of
offer and acceptance
○ The contract is Personal with each party having in view the character, credit, and
conduct of the other
○ An insurance contract cannot be normally transferred to another party without his
consent
2. Aleatory
○ An Aleatory Contract is where the performance of an agreement is dependent on a
certain event
○ The fulfillment of the promise indicated in the insurance policy is conditioned upon the
occurrence of a contingent event
3. Conditional
○ In insurance contracts, conditions must be first satisfied before the insurer fulfills its
promise to the insured
○ The obligation of the insurer to fulfill its promise is dependent upon the compliance of
the insured with the conditions stipulated in the insurance contract

4. Voluntary
○ Insurance contracts are voluntary in the sense that it is not compulsory and the parties
are free to incorporate such terms and conditions they may deem convenient
○ Exceptions:
i. Motor Vehicle Liability Insurance
ii. Employees
iii. Employees of the private sector covered by SSS
iv. Members of GSIS

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5. Executory and Reciprocal

○ The agreement is considered to be partially or completely unfulfilled. The promises are to
be executed in the futures and only after certain conditions (losses) occur
○ The fulfillment of a promise of one party is reciprocated with the other party's
performance
6. Contract of Adhesion
○ Fine Print Rule
○ Insurance contracts are already presented to the insured in its printed form on a “take it”
or “leave it” basis. As the insured, you merely affix your signature and signify your
adhesion to the contract.
○ Little to no opportunity to negotiate the terms and conditions set forth by the insurer
7. Uberrimae Fides Contract
○ Contract of utmost good faith
○ Full disclosure of all the material information in connection with the contract is required
between the insured and the insurer

7.4 Rights and obligations of insured and insurance company

I. Representation
A. Representation refers to a statement made by the applicant (insured person) that is
used by the insurer to assess whether the applicant is insurable or not and to determine
the price of the policy (International Risk Management Institute, Inc., n.d.).
B. If representation of an insured person is found to be false, the insurer has the right to
rescind from the contract (contract is void) the moment the representation becomes false
(Sec. 45).
1. This right must be exercised before the commencement of an action on the
contract (Sec. 48).
C. On the other hand, the insured has the right to alter or withdraw representation before
the insurance is in effect, but not afterwards (Sec. 41).
D. It is worth noting that if a policy of life insurance payable on the death of the insured had
been in force during the lifetime of the insured two (2) years from the date of the policy’s
issuance or last reinstatement, then the insurer no longer has the right to deem the
contract void due to misrepresentation of the insured or their agent (Sec. 48).
II. Concealment
A. Each party under a contract of insurance has an obligation to communicate with each
other all facts that are material to the contract (Sec. 28).
B. Concealment refers to the failure to communicate information that a party should ought
to know (Sec. 26).
C. When concealment is involved, this entitles the injured party the right to rescind or
cancel a contract of insurance (Sec. 27).
1. For example, intentional and fraudulent omission of information on the insured
person’s part entitles the insurer to rescind from the contract (Sec. 29).
D. The right to information of material facts regarding the contract may be waived because
of either the terms of insurance or by the neglect of a party to make inquiry about these
facts when they are implied in other information that has been communicated (Sec. 33).
III. Policy
A. A policy is a written form containing the parties involved in the contract, the amount to
be insured, the premium, the insured object, the interest of the insured, the risks insured
against, and the period of effectivity of the insurance (Sec. 49, 51).
B. The insured person has the right to change the beneficiary in the policy, provided that
they did not waive this right. If the insured does not change the beneficiary during their
lifetime, the designation is irrevocable (Sec. 11).

IV. Premium
A. The premium is the amount that the insured person has to pay for an insurance policy.
Once the insured object is subject to the risks insured against in the policy, the insurer
then has the right to be paid the premium (Sec. 77).
B. The policy or contract only becomes valid and binding once the premium has been paid,
except for life or industrial life insurances where a grace period is allowed or when a
ninety (90)-day credit is given under a broker and agency agreement (Sec. 77).
C. Insured persons are entitled to a return of premium as follows:

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Mobile : 0927 283 8234
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1. The insured person is entitled to a return of the whole premium if their interest
in the insured object has not been exposed to the risks insured against in the
policy; and
2. Where the insurance policy is for a definite period of time and the insured person
surrenders their policy, the insured person is entitled to a return of a portion of
the premium that corresponds with the unexpired time at a pro rate, unless
there is a short period date, after any claim for loss or damages under the policy
previously accrued has been deducted: provided, that no holder of a life
insurance policy may avail himself of the privileges of this paragraph without
sufficient cause as otherwise provided by law (Sec. 80).
D. If a risk insured against has existed and the insurer is liable during that period, then the
insured is no longer entitled to return of premiums (Sec. 81).
E. The insured person is also entitled to a return of premium if:
1. The contract is voidable and subsequently annulled under the provisions of the
Civil Code;
2. The contract is void due to fraud or misrepresentation by the insurer or of the
insured’s agent; or
3. When by any default of the insured other than actual fraud, the insurer never
incurred any liability under the policy (Sec. 82).
F. In case of over insurance, the insured person is entitled to a ratable return of the
premium that is proportioned to the amount by which the aggregate sum insured in all
policies exceeds the insurable value of the object at risk (Sec. 83).
G. Over-insurance can be described as having excess insurance coverage/policies that
covers the same risk or having insurance cover in excess (more than) of the value of the
possible loss that the insured can experience (Namibia Financial Institutions Supervisory
Authority, 2017).
V. Loss
A. Unless otherwise stated in the policy, the insurer is liable for loss once a risk insured
against is the proximate (immediate) cause of the loss, but they will not be liable if it is
found that the risk insured against is only a remote cause (Sec. 86).
1. Remote cause – takes place before the proximate cause (International Risk
Management Institute, Inc., n.d.).
B. The insured is also held liable if loss occurs in the process of rescuing an insured object
from a risk that is insured against in the policy (Sec. 87).
C. The insurer cannot be held liable for any loss caused by the willful act or through the
manipulation of the insured (Sec. 89).
VI. Notice of Loss
A. The insured, or other persons entitled to the benefit of the insurance, are obligated to
give a written notice of loss to the insurer (Sec. 90).
B. In cases of loss on an insurance against fire, the notice must be given to the insurer
without unnecessary delay, otherwise the insurer is exonerated or absolved. For other
types of non-insurance policies, the Commissioner may give a period for submission of
the notice of loss (Sec. 90).

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