Insurance & Reinsurance 2020 Comparisons

Last Updated January 20, 2020

Law and Practice


SyCip Salazar Hernandez & Gatmaitan (SyCipLaw) was founded in 1945. It is a full-service law firm and is one of the largest in the Philippines. The firm offers a broad and integrated range of legal services, with departments in the following fields: banking, finance and securities; special projects; corporate services; litigation and dispute resolution; employment law and immigration; intellectual property; and tax. The firm's insurance practice covers a broad range of transactions – from conducting due diligence for an acquisition, the sale or purchase of shares or assets, the establishment of a subsidiary or a branch office, securing from the Philippine Insurance Commission the necessary licences and approvals of products, to closure of an insurer. The firm has extensive experience in insurance coverage disputes.

Insurance and reinsurance in the Philippines are mainly regulated by laws enacted by the Philippine Congress. Decisions of the Supreme Court of the Philippines interpreting these laws have the force and effect of law. In addition to laws and Supreme Court decisions, the Philippine Insurance Commission (PIC), a regulatory body established by law to regulate the insurance industry, is empowered to issue rules and regulations that implement and aid in the interpretation of the statutes governing or affecting insurance and reinsurance.

The Civil Code of the Philippines provides that “[t]he contract of insurance is governed by special laws. Matters not expressly provided for in such special laws shall be regulated by [the Civil] Code.” The principal legislation on insurance and reinsurance in the Philippines is the Insurance Code of the Philippines (Presidential Decree (P.D.) No 612, as amended by Republic Act (R.A.) No 10607). Other special laws on insurance include the following: (i) Revised Government Service Insurance Act of 1977 (P.D. No 1146, as amended) (for government employees); ii) Social Security Act of 1954 (R.A. No 1161, as amended) (for employees of private entities); (iii) the Property Insurance Law (R.A. No 656, as amended); and (iv) R.A. No. 3591, as amended, which established the Philippine Deposit Insurance Corporation.

Insurance and reinsurance are regulated by various laws and regulations. The Insurance Code (the Code) is the main piece of legislation governing the insurance business. It grants the Insurance Commissioner “the duty to see that all laws relating to insurance, insurance companies and other insurance matters, mutual benefit associations, and trusts for charitable uses are faithfully executed and to perform the duties imposed upon him by the Code,” including the “sole and exclusive authority to regulate variable contracts as defined by law and to provide for the licensing of persons selling such contracts, and to issue reasonable rules and regulations governing the same. The Insurance Commissioner is empowered to issue such rulings, instructions, circulars, orders and decisions as may be deemed necessary to secure the enforcement of the provisions of the Insurance Code,” and such issuances of the Insurance Commissioner are part of the regulatory scheme governing the insurance industry in the Philippine jurisdiction. Decisions by the Insurance Commissioner are appealable to the Secretary of Finance. 

Other government agencies involved in the regulation of insurance and reinsurance in the Philippines include the Securities and Exchange Commission of the Philippines (SEC) and the Bangko Sentral ng Pilipinas (BSP, the Central Bank of the Philippines). The Anti-Money Laundering Council (AMLC) and the Philippine Competition Commission (PCC) also have regulations that are applicable to or affect the insurance industry.

As the government agency tasked to regulate corporations, partnerships and associations, entities intending to engage in the business of insurance must submit to the jurisdiction of the SEC and obtain the licence for the appropriate structure in order to be entitled to conduct insurance and reinsurance in the Philippines. The PIC exercises primary authority over insurance companies which are deemed special corporations under the Revised Corporation Code which governs corporations, partnerships and associations.

The BSP is the central monetary authority of the Philippines and supervises the operations and activities of banks and certain non-bank financial institutions. Certain issuances of the Monetary Board of the BSP affect the insurance industry because of, for instance, the inclusion of bancassurance in the Insurance Code.

Insurance companies, pre-need companies, and all other persons supervised or regulated by the PIC are considered “covered persons” under the Anti-Money Laundering Act of 2001 and the Terrorism Financing Prevention and Suppression Act of 2012. The Anti-Money Laundering Council, of which the Insurance Commissioner is a member, is tasked with implementing these laws, and may promulgate pertinent rules and regulations which will affect companies regulated by the PIC, including those engaged in insurance and reinsurance.

The PCC, created under the Philippine Competition Act, is tasked with the implementation of that Act, including the review of proposed mergers and acquisitions to the extent that the relevant transaction exceeds certain thresholds set out by law and regulations. This means that proposed mergers and acquisitions involving companies engaged in insurance and reinsurance may have to be submitted to the PCC for review and clearance.

The Insurance Code enumerates the entities that may pursue insurance business in the Philippines. These entities are corporations, partnerships, and associations. The term insurer or insurance company is deemed to include all partnerships, associations, co-operatives or corporations including government-owned or controlled corporations or entities, engaged as principals in the insurance business, excepting mutual benefit associations. It also includes professional reinsurers.

As a condition for an insurance company to transact any insurance business in the Philippines, including reinsurance, the appropriate certificate of authority must first be obtained from the Insurance Commissioner. An insurance company must meet certain standards and requirements in order to be eligible for the issuance of a certificate of authority. One statutory requirement for a domestic insurance company organised as a stock corporation is that it must possess paid-up capital equal to at least PHP1 billion. If organised as a mutual company, in lieu of such net worth, it must have available total members equity, in an amount determined by the PIC, above all liabilities for losses reported, expenses, taxes, legal reserve, and reinsurance of all outstanding risks; and a contributed surplus fund equal to the amounts required of stock corporations. The Insurance Commissioner may also require a minimum of PHP100 million in cash assets in addition to the paid-up capital stock. The PIC has also issued guidelines on the risk-based capital ratio and the risk-based capital requirement that must be complied with by all life and non-life insurance companies operating in the Philippines. An insurance company is not allowed to have any equity in an adjustment company, and vice versa. The rules are the same with respect to reinsurance.

Domestic insurance corporations are subject to income tax on income from sources within and without the Philippines. Foreign insurance corporations are subject to income tax only on income from Philippine sources. Domestic corporations are subject to ordinary corporate income tax (OCIT) of 30% on their taxable income (ie, gross income less allowable deductions) or minimum corporate income tax (MCIT) of 2% on their gross income, whichever is higher. Foreign corporations doing business in the Philippines (ie, resident foreign corporations) are subject to the same tax, although only on income from Philippine sources.

Premiums form part of the gross income of the insurance company for the purposes of computing the taxable income subject to the OCIT or for the purposes of computing the MCIT. They are also subject to business taxes and documentary stamp taxes (DST) depending on whether the premium is for life insurance or non-life insurance.

Premiums received by life insurance companies are subject to a 2% business tax based on the total premium collected, with the following exceptions:

  • premiums refunded for any reason within six months after payment to a person insured;
  • premium for reinsurance by a company that has already paid the tax;
  • premiums collected or received by any branch of a domestic company doing business outside the Philippines on account of any life insurance of a non-resident insured if any tax is imposed on the premium by the foreign country where that branch is established
  • premiums collected on account of reinsurance if the insured, in cases of personal insurance, resides outside the Philippines and any tax is imposed on such premiums by the foreign country where the original insurance has been issued; and
  • portion of premiums collected by insurance companies on variable contracts in excess of the amounts necessary to ensure the lives of the variable contract owners.

Fire, marine or miscellaneous insurance agents, authorised under the Insurance Code to procure insurance policies on risks located in the Philippines for companies not authorised to transact business in the Philippines, must pay twice the tax imposed above. Where owners of property obtain insurance directly with foreign companies, such owners must report to the Insurance Commissioner and pay tax of 5% on their premiums.

Premiums received by non-life insurance companies (except on crop insurance), including surety, fidelity, indemnity and bonding companies are subject to12% value-added tax.

Life insurance policies are subject to a one-time DST ranging from PHP20 to PHP200 depending on the amount of insurance.

Property insurance policies are subject to a DST of PHP0.50 on each PHP4, or fractional part thereof, of the amount of premium charged. Reinsurance contracts, or any other instruments by which acceptance of insurance risks under any reinsurance agreement is affected, are not subject to DST.

Fidelity bonds and other insurance policies are subject to DST of PHP0.50 on each PHP4, or fractional part thereof, of the premium charged.

Cities and municipalities may also impose local business taxes on premiums received by insurance companies at rates not exceeding 0.75% and 0.50%, respectively.

Overseas-based insurers or reinsurers, wishing to engage in insurance or reinsurance business in the Philippines, must obtain a certificate of authority to transact insurance business in the Philippines from the Insurance Commissioner. For this purpose, insurers or reinsurers must establish either a subsidiary incorporated in the Philippines, or a branch office with a licence to do business in the Philippines. A foreign insurer or reinsurer must also file with the Insurance Commissioner a written power of attorney designating a resident agent in the Philippines on whom any notice – provided by law or an insurance policy, and any other legal processes – may be served in all actions or legal proceedings involving the foreign insurer, and consenting that service upon that resident agent will be admitted and held valid as if served upon the foreign insurer at its home office.

Foreign insurers/reinsurers are also required to have unimpaired capital or assets and reserve of not less than PHP1 billion and must deposit, with the PIC, securities satisfactory to the Insurance Commissioner. A new branch office of a foreign insurance company may also be required to have an additional surplus fund in an amount determined by the PIC.

A fronting arrangement whereby a locally licensed insurance company acts as an agent of an unlicensed foreign insurance company to sell the latter’s insurance products in the Philippines is not allowed. However, it may be possible to structure a fronting activity as one where insurance products are sold in the Philippines by a locally licensed insurance company that reinsures the insurance risk, from the products thus sold, with a foreign unlicensed entity acting as reinsurer. In the Philippines, offshore reinsurance is regulated, and the Insurance Code requires that no insurance company doing business in the Philippines shall cede all or part of its risks situated in the Philippines by way of reinsurance directly to any foreign insurer not authorised to do business in the Philippines unless that foreign insurer is represented in the Philippines by a resident agent duly registered with the PIC. 

In order for a local insurer to have its insurance risks reinsured by a foreign reinsurer, there is a requirement that at least 10% of the outward reinsurance placed with unauthorised foreign reinsurers must be offered for cession to the National Reinsurance Corporation of the Philippines (NRCP). If the NRCP decides that it cannot take on more risk for reinsurance, it must issue a declination letter in accordance with the requirements issued by the PIC, which must be submitted by the local insurer along with the other requirements for applications for reinsurance placements abroad.

The insurance industry is one viewed to be imbued with public interest, and thus, is highly regulated. With respect to mergers and acquisitions relating to a domestic insurer, no person, other than an authorised insurer, is allowed to acquire control of any domestic insurer. There are also requirements to provide written notice to the domestic insurance company of the applicant’s intention to acquire control, and the approval of the Insurance Commissioner must be obtained, following the submission of certain documentary requirements. 

With respect to a merger or consolidation, two or more domestic insurance companies which intend to merge or consolidate into a single corporation, whether resulting in the survival of one of the constituent corporations or the formation of a new corporation, must provide written notice to the Insurance Commissioner at least 30 days prior to any board action to approve any plan of merger or consolidation. Such a plan must include certain provisions or documents required by the Insurance Commissioner, such as the proposed articles of merger or consolidation, or the by-laws of the surviving or acquiring company, among others. This plan of merger/consolidation and the articles of merger/consolidation are also subject to the approval of the Insurance Commissioner, whose endorsement is necessary before these may be filed with the SEC. All proposed mergers and consolidation must be completed within twelve months from the time the Insurance Commissioner was first notified of the intent to merge or consolidate, unless written requests to extend the deadline for completion are filed within the said period and approved by the Insurance Commissioner. 

In addition to these requirements and considerations, such mergers or acquisitions may be subject to mandatory notification to the PCC, should the transaction and the parties exceed the thresholds set by the law and the PCC regulations. Even if the insurer doing business in the Philippines is not a party to the merger or acquisition but the thresholds for compulsory notification are satisfied – which includes an examination of the assets in, and gross revenues from, the Philippines of the ultimate parent entities of the parties to such a merger or acquisition – then a notification must still be submitted to the PCC. 

Insurance and reinsurance products are distributed in the Philippines through direct sales by the insurers through their employees, through insurance agents, and through insurance brokers. Bancassurance is also recognised in this jurisdiction.

Insurance agents and brokers are required to have the appropriate licences before soliciting or procuring applications for insurance, or providing related services, which are to be renewed every three years. No insurance company doing business in the Philippines, nor any agent thereof shall pay any commission or other compensation to any person for services in obtaining insurance unless that person has the appropriate licence.

Insurance agents are persons who, for compensation, solicit or obtain insurance on behalf of any insurance company; or transmit, to a person other than himself or herself, applications for a policy or contract of insurance to or from that company; or act in the negotiating of such insurance. An applicant to be an insurance agent or a general agent is required to be a resident of the Philippines, to be trustworthy, and must pass the written examination for the kind of licence applied for (eg, life, non-life, accident and health, variable life). If the applicant is a partnership, association or corporation, that applicant must be domiciled in the Philippines and authorised by its constitutive documents to transact the kind of business applied for. The individual to be named in the licence applied for must possess the requirements previously mentioned. No person shall be licensed to act as an insurance agent or general agent of more than one life insurance company, and/or as general agent of more than one non-life insurance company, and as insurance agent for more than seven other non-life insurance companies. No official or employee of an insurance brokerage or an adjustment company, and no individual adjuster, shall be licensed to act as an insurance agent or general agent. Such a licence may be suspended or revoked upon a finding of violations of the above-mentioned rules and upon other applicable grounds. The PIC keeps a Negative List of insurance agents in relation thereto.

Insurance brokers are those who – for any compensation, commission or other thing of value – act or aid in any manner in soliciting, negotiating or procuring the making of any insurance contract or in placing risk or taking out insurance, on behalf of an insured other than himself or herself. 

A reinsurance broker is one who – for compensation and not being a duly authorised agent, employee or officer of an insurer in which any reinsurance is effected – acts or aids in any manner in negotiating contracts of reinsurance, or placing risks of effecting reinsurance, for any insurance company authorised to do business in the Philippines. 

Any new entrant intending to do business, either as an insurance broker or reinsurance broker, must have a minimum capitalisation or paid-up capital of PHP20 million and must maintain a net worth of at PHP20 million.

If the new entrant intends to do business as both, it must have a minimum capitalisation or paid-up capital of PHP50 million and must maintain a net worth of at least PHP50 million.

Certain prohibitions are also applicable to insurance brokers. No person licensed as an insurance agent or general agent shall be licensed as an insurance broker, nor shall a person licensed as an insurance broker be licensed as an insurance agent or general agent. No official or employee of an insurance broker shall be licensed to act as insurance agent or general agent. No broker, nor any of its stockholders and officers, shall have a controlling interest in any insurance or reinsurance company, or insurance adjustment company or vice versa. 

Bancassurance refers to the presentation and sale to bank customers by an insurance company of its insurance products within the premises of the head office of a bank duly licensed by the BSP or any of its branches, under such rules and regulations as the Insurance Commissioner and the BSP may promulgate. To engage in a bancassurance arrangement, a bank is not required to have equity ownership of the insurance company. However, the bank and the insurance company must belong to the same financial conglomerate, or a group of interrelated entities providing significant services in at least two different financial sectors, pursuant to BSP regulations. The bank must have also have secured prior Monetary Board approval to engage in the said activities. Bancassurance agreements entered into between the bank and the insurance company must also be submitted to the Insurance Commissioner for approval, and contain certain mandatory provisions, such as provisions stating that areas within the bank premises where bancassurance activities are conducted must be distinct and clearly marked from areas where bank products are being sold. Other requirements and regulations for the public’s interest must be complied with as the parties engage in bancassurance activities.

The Insurance Code states that each party to a contract of insurance must communicate to the other, in good faith, all facts within his or her knowledge which are material to the contract and as to which he or she makes no warranty, and which the other has no means of ascertaining. A fact is material depending on its probable and reasonable influence upon the party to whom the communication is due, in forming his or her estimate of the disadvantages of the proposed contract, or in making his or her inquiries. 

This right to being informed of material facts may, however, be waived, either by the terms of insurance or through neglect in making inquiries as to such facts, where they are distinctly implied in other facts of which information is communicated. Thus, in the case of the insurer, it must proactively seek more information from the insured if the communication made by the insured implies that there are other material facts that are relevant to the insurer with respect to the negotiation of the contract.

Failure to comply with the duty to communicate may amount to concealment, which is the neglect to communicate that which a party knows and ought to communicate, and entitles the injured party to rescind a contract of insurance. It has been held that if the insured has knowledge of a fact material to the risk – and honesty, good faith, and fair dealing require that he or she should communicate it – but intentionally withholds the same, this is concealment, and regardless of actual intent to defraud, entitles the injured party to rescind the contract. 

A representation is a statement, whether oral or written, made at the time of, or before, the issuance of a policy. If a representation made by a party is false in a material point, whether it is affirmative, which is a representation presumed to refer to the date on which the contract begins, or promissory, which is a representation as to the future, the injured party is entitled to rescind the contract from the time the representation becomes false.

It should be noted that, in life insurance, after a policy of life insurance made payable on the death of the insured has been in force during the lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement, the insurer can no longer prove that the policy is void or is rescindable by reason of the fraudulent concealment or misrepresentation of the insured or his or her agent.

An insurance agent is deemed to be acting on behalf of the insurer, and both the insurance agent and the insurance broker have certain fiduciary duties. The premium, or any portion thereof which an insurance agent or insurance broker collects from an insured and which is to be paid to an insurance company, is held by the agent or broker in a fiduciary capacity and must not be misappropriated or converted to his or her own use. Any insurer which delivers to an insurance agent or insurance broker a policy or contract shall be deemed to have authorised that agent or broker to receive on its behalf payment of any premium which is due on that policy or contract of insurance. Failure to abide by and comply with these fiduciary obligations is grounds for the denial, suspension, or revocation of the licence of an insurance agent or insurance broker.

A policy of insurance, or the written instrument in which a contract of insurance is set forth, is required to be printed, or in an electronic form subject to the pertinent provisions of the Electronic Commerce Act of the Philippines. Such a policy must be in a form approved by the Insurance Commissioner. In addition, the Insurance Code states that any contingent or unknown event, whether past or future, which may cause injury or loss to a person having an insurable interest, or create a liability against him or her, may be insured against, subject to certain exceptions and conditions provided under the Code. It can be gleaned from this provision that an insurable interest is a requirement in this jurisdiction. Every person is deemed to have insurable interest in the life and health:

  • of himself or herself, of his or her spouse and children;
  • of any person on whom he or she depends, wholly or in part, for education or support, or in whom he or she has a pecuniary interest;
  • of any person under a legal obligation to him or her 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 or her depends. 

An insurable interest in property may consist in:

  • an existing interest;
  • an inchoate interest founded on an existing interest; or
  • an expectation, coupled with an existing interest out of which the expectation arises. 

Examples of the latter two include the inchoate interest of a stockholder in the property of the corporation in which he or she owns stocks, and a farmer insuring future crops which will belong to him or her when produced.

The inclusion of the following terms in a policy of insurance are essential and are required by the Code, in addition to any other provisions required by further regulations issued by the Insurance Commissioner:

  • the parties to the contract;
  • the amount to be insured except in the cases of open or running policies;
  • the premium, or a statement of the basis and rates upon which the final premium is to be paid in certain instances;
  • the property or life insured;
  • the interest of the insured in the property insured, if he or she is not the absolute owner thereof;
  • the risks insured against; and
  • the period during which the insurance is to continue.

The rules are the same even if there are multiple insureds or potential beneficiaries under the contract.

The position is essentially the same with respect to reinsurance contracts, subject to any special regulations issued by the Insurance Commissioner specifically on reinsurance placement and treaties.

We are not aware of any companies in the Philippines subscribing to alternative risk transfer (ART) transactions, such as insurance loss warranty contracts and insurance-linked securities. Similarly, we have not encountered similar transactions in our practice.

Currently, PIC regulations do not make it clear if ART transactions are to be classified as insurance (or reinsurance) transactions. Given this regulatory gap, the prudent practice is to present the contract or arrangement to the IC. In any case, if the contract or arrangement has a risk distribution feature, the IC may consider it as an insurance (or reinsurance) transaction.

Furthermore, registration to the SEC may be required for insurance-linked securities. Generally, public offer and sale of securities (equity and debt instruments) in the Philippines to more than 19 persons within any 12-month period requires the registration of those securities with the SEC.

As mentioned, in 7.1 ART Transactions, the insurance regulations are not clear with respect to ART transactions.

Insurance contracts are usually interpreted using the plain and ordinary meaning of their text, much like any other contract. However, when doubt exists, courts have construed the doubtful provisions in favour of the insured and strictly against the insurer as insurance contracts are drafted solely by the insurer. Extraneous evidence is generally not permitted in proving the proper interpretation of an insurance contract.

Warranties mentioned in the insurance policy are not required to be expressly described or denominated as such. However, warranties that are merely pasted or attached to the insurance policy are not binding to the insured unless the descriptive name or title of those warranties are written on the blank spaces provided for in the insurance policy. Similarly, any warranty issued after the original policy should be countersigned by the insured or owner, except if it is applied for by the insured or owner.

If a material warranty is breached, the innocent party is entitled to rescind the insurance policy. However, a breach of warranty without fraud releases the insurer from further liability from the time it occurs; if the breach happens before the inception of the policy, that breach prevents the policy from attaching to the risk sought to be insured against.

We are not aware of any regulations expressly requiring conditions precedent to be described as such. However, the conditions for the insurer's liability – such as covered and excluded risks, warranties, representations and requirements for claims settlement – should be easily identifiable. An insurer who unjustifiably refuses to settle or pay claims is liable to pay damages consisting of attorney's fees and expenses incurred by the insured, plus interest at the rate of 12% per annum.

Disputes over coverage under any kind of insurance contract may be addressed by either going to court or by filing a complaint with the Insurance Commissioner. The Insurance Code gives the Insurance Commissioner concurrent jurisdiction with the civil courts for claims and complaints involving any loss, damage, or liability for which an insurer may be answerable under any kind of policy or contract of insurance, or for which a reinsurer may be sued under any contract of reinsurance that it may have entered into; where the amount of any such loss, damage, or liability – excluding interest, cost and attorney’s fees – being claimed or sued upon any kind of insurance, bond, reinsurance contract, or membership certificate does not exceed in any single claim PHP5 million. The filing of a complaint with the Insurance Commissioner precludes the civil courts from taking cognisance of a suit involving the same subject matter.

If the parties provide a limitation period for starting proceedings in respect of an insurance claim, the period shall not be for less than one year. In the absence of such a stipulation, the Civil Code of the Philippines, which sets a 10-year limitation for causes of action based on written contracts, will apply.

Jurisdiction over the subject matter is conferred by Philippine law and by the material allegations in the complaint, regardless of whether or not the plaintiff is entitled to recover all or only some of the claims or reliefs sought therein. It cannot be acquired through a waiver or enlarged by the omission of the parties or conferred by the acquiescence of the court.

When there is a conflict of law issue, after establishing that it has jurisdiction over the subject matter, a Philippine court is obliged to consider whether it is a convenient forum to the parties based on the facts of the case. The rule of forum non conveniens states that a Philippine court may assume jurisdiction over the case if it chooses to do so provided that:

  • the Philippine court is one to which the parties may conveniently resort to;
  • the Philippine court is in a position to make an intelligent decision as to the law and the facts; and
  • the Philippine court has, or is likely to have, power to enforce its decision.

As regards choice of law, the Philippine court will rely on the principles of lex loci celebrationis and lex contractus, and the state of the most significant relationship rule. Lex loci celebrationis means the law of the place of the ceremony or the law of the place where a contract is made. The doctrine of lex contractus or lex loci contractus means the law of the place where a contract is executed or to be performed. It controls the nature, construction, and validity of the contract and it may pertain to the law voluntarily agreed upon by the parties, or the law intended by them either expressly or implicitly. Under the state of the most significant relationship rule, to ascertain what state law to apply to a dispute, the court should determine which state has the most substantial connection to the occurrence and the parties. In a case involving a contract, the court should consider where the contract was made, negotiated, or to be performed; and the domicile, place of business, or place of incorporation of the parties. This rule takes into account several contacts and evaluates them according to their relative importance with respect to the particular issue to be resolved. All of these principles are considered together in relation to the factual circumstances of the case to determine the choice of law.

A civil action is initiated by the filing of a complaint by the plaintiff before a court vested with jurisdiction over the subject matter of the case. The court will then issue a summons requiring the defendant to file an answer to the complaint. After the last pleading has been filed, the case will be set for pretrial. As part of pretrial, the case will be referred to mediation, wherein a mediator will help the parties attempt to reach an amicable settlement. If no settlement is reached, the case will undergo judicial dispute resolution proceedings, wherein a judge will help the parties attempt to reach an amicable settlement. If there is still no settlement reached, the case will proceed to pretrial, wherein the parties will determine, among other things, the specific issues to be resolved in the case, the facts the parties are willing to stipulate on, and the exhibits and witnesses to be presented by the parties. During trial, the plaintiff will present its evidence first. After presenting the plaintiff’s last witness, the plaintiff will formally offer its documentary evidence to the court. After the court resolves the plaintiff’s formal offer of documentary evidence, the defendant will then present its evidence. After presenting the defendant’s last witness, the defendant will formally offer its documentary evidence to the court. The court will then issue a decision, which must state the facts and the law on which it is based. 

The aggrieved party may question the trial court’s decision by filing a motion for reconsideration within 15 days from receipt thereof. If the motion for reconsideration is denied, the aggrieved party may file a notice of appeal with the Court of Appeals within 15 days from receipt of the denial of the motion for reconsideration. After the Court of Appeals renders a decision, an aggrieved party is given 15 days from receipt thereof to file a motion for reconsideration. If the motion for reconsideration is denied, the aggrieved party may file a petition for review on certiorari to the Supreme Court, which is the court of last resort, within 15 days from receipt of the denial of the motion for reconsideration. After the Supreme Court renders a decision, the aggrieved party is given 15 days from receipt thereof to file a motion for reconsideration. Failure to file an appeal or to move for reconsideration on time will result in the decision becoming final and executory.

A judgment or final order of a tribunal in a foreign country, having jurisdiction to render the judgment or final order against a person, is presumptive evidence of a right as between the parties (and their successors in interest by a subsequent title). The said judgment or final order may be repelled by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

In order to enforce a foreign judgment in the Philippines, the winning party must file a verified petition for recognition and enforcement of the foreign judgment before the Philippine courts. The proceedings in court will follow substantially the same procedure outlined in 9.3 Litigation Process, solely to determine whether or not there exists any of the grounds for repelling the foreign judgment.

Arbitration clauses in commercial insurance and reinsurance contracts can be enforced.

If a party receives an award in a domestic arbitration, the award shall be included in the judgment of the arbitral tribunal and enforced like a court judgment. Any party to a domestic arbitration may petition the court having jurisdiction over the place in which one of the parties is doing business, where any of the parties reside, or where arbitration proceedings were conducted; to confirm, correct, or vacate a domestic arbitral award. An arbitral award shall enjoy the presumption that it was made and released in due course of arbitration and is subject to confirmation by the court.

On the other hand, any party to a foreign arbitration may petition the court to recognise and enforce a foreign arbitral award at any time after the receipt of that foreign arbitral award. The recognition and enforcement of a foreign arbitral award shall be governed by the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which the Philippines is a party, and Rule 13 of the Special Rules of Court on Alternative Dispute Resolution. It is presumed that a foreign arbitral award was made and released in due course of arbitration and is subject to enforcement by the court. The court shall recognise and enforce a foreign arbitral award unless a ground to refuse recognition or enforcement is established. The decision of the court recognising and enforcing a foreign arbitral award is immediately executory.

When court proceedings are filed with respect to any kind of insurance contract, before the case proceeds to trial, the matter will first be referred to mediation, wherein a mediator will help the plaintiff and the defendant attempt to reach an amicable settlement. If no settlement is reached, the case will undergo judicial dispute resolution proceedings, wherein a judge will help the parties attempt to reach an amicable settlement. Only after both modes of alternative dispute resolution are unsuccessful will the case proceed to trial.

Parties are also free to include an arbitration clause in their insurance contracts, such that any dispute under the insurance contract will have to be resolved through arbitration.

For microinsurance contracts, the PIC has issued regulations to the effect that the various modes of alternative dispute resolution are a prerequisite to the filing of a civil action.

Insurers who unreasonably deny or withhold the payment of claims shall be liable for damages, consisting of attorney’s fees and other expenses incurred as a result of the unreasonable denial or withholding of payment, and interest, in the amount of twice the ceiling prescribed by the Monetary Board, on the amount due under the claim of the insured. These damages and interests are in addition to the amount of the insurance claim.

A number of local insurers now have mobile apps through which applications for insurance coverage, and for other insurance transactions, can be lodged. Also, there are some insurance companies collaborating with telecom companies for the direct marketing of personal accident insurance to the telecom companies' subscribers.

The PIC has issued several guidelines on online transactions. For example, the PIC has said that clicking the "accept" button on an insurance application page is equivalent to signing an insurance application form. Further, the PIC has issued regulations relevant to rising insurtech developments, such as insurance aggregation and telemarketing.

We have noticed that there is an increased awareness of cyber-risks, such as those relating to violation of data protection and security. Also, there is growing concern over climate change risks, such as stronger typhoons and more severe droughts.

The PIC has not issued any specific regulation or guideline with respect to cyber-risks. Another regulator, the National Privacy Commission, is tasked with data privacy.

The PIC has regulations requiring minimum rates of cover for property damage caused by typhoons or earthquakes. These regulations were brought about by the increasing competition among insurers, given that the Philippines is prone to typhoons and earthquakes.

Cyber-insurance, which is specifically designed to cover the risk of hacking or data leaks, is now offered in the Philippines.

With respect to climate change risks, the Philippine Crop Insurance Corporation, a governed-owned corporation created by special law, has insurance policies for qualified farmers specifically designed to cover losses on crops due to typhoons and drought. Private insurers also offer similar products.

Based on recent news reports, the PIC is proposing amendments to the Insurance Code to introduce new rules on agricultural insurance, Islamic insurance, and catastrophe and parametric insurance; and to strengthen its enforcement powers.

The issuance of the Revised Corporation Code of the Philippines affects the establishment of local insurers and intermediaries and the reporting requirements of those that are already operating.

SyCip Salazar Hernandez & Gatmaitan (SyCipLaw)

SyCipLaw Center
105 Paseo de Roxas
Makati City 1226
Metro Manila

+632 8 982 3500

+632 8 817 3145
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Law and Practice in Philippines


SyCip Salazar Hernandez & Gatmaitan (SyCipLaw) was founded in 1945. It is a full-service law firm and is one of the largest in the Philippines. The firm offers a broad and integrated range of legal services, with departments in the following fields: banking, finance and securities; special projects; corporate services; litigation and dispute resolution; employment law and immigration; intellectual property; and tax. The firm's insurance practice covers a broad range of transactions – from conducting due diligence for an acquisition, the sale or purchase of shares or assets, the establishment of a subsidiary or a branch office, securing from the Philippine Insurance Commission the necessary licences and approvals of products, to closure of an insurer. The firm has extensive experience in insurance coverage disputes.