REPUBLIC ACT NO.

10607 CHAPTER I
THE CONTRACT OF INSURANCE
AN ACT STRENGTHENING THE INSURANCE
INDUSTRY, FURTHER AMENDING PRESIDENTIAL TITLE 1
DECREE NO. 612, OTHERWISE KNOWN AS THE WHAT MAY BE INSURED
INSURANCE CODE, AS AMENDED BY
PRESIDENTIAL DECREE NOS. 1141, 1280, 1455, Section 3. Any contingent or unknown event, whether
1460, 1814 AND 1981, AND BATAS PAMBANSA past or future, which may damnify a person having an
BLG. 874, AND FOR OTHER PURPOSES insurable interest, or create a liability against him, may
be insured against, subject to the provisions of this
Be it enacted by the Senate and House of chapter.
Representatives of the Philippines in Congress
assembled: The consent of the spouse is not necessary for the
validity of an insurance policy taken out by a married
Section 1. Presidential Decree No. 612, as amended, person on his or her life or that of his or her children.
is hereby further amended to read as follows:
All rights, title and interest in the policy of insurance
GENERAL PROVISIONS taken out by an original owner on the life or health of
the person insured shall automatically vest in the latter
Section 1. This Decree shall be known as ‘The Insurance upon the death of the original owner, unless otherwise
Code’. provided for in the policy.

Section 2. Whenever used in this Code, the following Section 4. The preceding section does not authorize an
terms shall have the respective meanings hereinafter insurance for or against the drawing of any lottery, or
set forth or indicated, unless the context otherwise for or against any chance or ticket in a lottery drawing
requires: a prize.

(a) A contract of insurance is an agreement whereby Section 5. All kinds of insurance are subject to the
one undertakes for a consideration to indemnify provisions of this chapter so far as the provisions can
another against loss, damage or liability arising from an apply.
unknown or contingent event.
TITLE 2
A contract of suretyship shall be deemed to be an PARTIES TO THE CONTRACT
insurance contract, within the meaning of this Code,
only if made by a surety who or which, as such, is doing Section 6. Every corporation, partnership, or
an insurance business as hereinafter provided. association, duly authorized to transact insurance
business as elsewhere provided in this Code, may be
(b) The term doing an insurance business or transacting an insurer.
an insurance business, within the meaning of this Code,
shall include: Section 7. Anyone except a public enemy may be
insured.
(1) Making or proposing to make, as insurer, any
insurance contract; Section 8. Unless the policy otherwise provides, where
a mortgagor of property effects insurance in his own
(2) Making or proposing to make, as surety, any name providing that the loss shall be payable to the
contract of suretyship as a vocation and not as merely mortgagee, or assigns a policy of insurance to a
incidental to any other legitimate business or activity of mortgagee, the insurance is deemed to be upon the
the surety; interest of the mortgagor, who does not cease to be a
party to the original contract, and any act of his, prior to
(3) Doing any kind of business, including a reinsurance the loss, which would otherwise avoid the insurance,
business, specifically recognized as constituting the will have the same effect, although the property is in the
doing of an insurance business within the meaning of hands of the mortgagee, but any act which, under the
this Code; contract of insurance, is to be performed by the
mortgagor, may be performed by the mortgagee
therein named, with the same effect as if it had been
(4) Doing or proposing to do any business in substance performed by the mortgagor.
equivalent to any of the foregoing in a manner
designed to evade the provisions of this Code.
Section 9. If an insurer assents to the transfer of an
insurance from a mortgagor to a mortgagee, and, at the
In the application of the provisions of this Code, the fact
time of his assent, imposes further obligations on the
that no profit is derived from the making of insurance assignee, making a new contract with him, the acts of
contracts, agreements or transactions or that no the mortgagor cannot affect the rights of said assignee.
separate or direct consideration is received therefor,
shall not be deemed conclusive to show that the making
thereof does not constitute the doing or transacting of TITLE 3
an insurance business. INSURABLE INTEREST

(c) As used in this Code, the term Commissioner means Section 10. Every person has an insurable interest in the
the Insurance Commissioner. life and health:

(a) Of himself, of his spouse and of his children;

(b) Of any person on whom he depends wholly or in Section 20. Except in the cases specified in the next four
part for education or support, or in whom he has a sections, and in the cases of life, accident, and health
pecuniary interest; insurance, a change of interest in any part of a thing
insured unaccompanied by a corresponding change of
(c) Of any person under a legal obligation to him for the interest in the insurance, suspends the insurance to an
payment of money, or respecting property or services, equivalent extent, until the interest in the thing and the
of which death or illness might delay or prevent the interest in the insurance are vested in the same person.
performance; and
Section 21. A change of interest in a thing insured, after
(d) Of any person upon whose life any estate or interest the occurrence of an injury which results in a loss, does
vested in him depends. not affect the right of the insured to indemnity for the
loss.
Section 11. The insured shall have the right to change
the beneficiary he designated in the policy, unless he Section 22. A change of interest in one or more of
has expressly waived this right in said policy. several distinct things, separately insured by one
Notwithstanding the foregoing, in the event the insured policy, does not avoid the insurance as to the others.
does not change the beneficiary during his lifetime, the
designation shall be deemed irrevocable. Section 23. A change of interest, by will or succession,
on the death of the insured, does not avoid an
Section 12. The interest of a beneficiary in a life insurance; and his interest in the insurance passes to
insurance policy shall be forfeited when the beneficiary the person taking his interest in the thing insured.
is the principal, accomplice, or accessory in willfully
bringing about the death of the insured. In such a case, Section 24. A transfer of interest by one of several
the share forfeited shall pass on to the other partners, joint owners, or owners in common, who are
beneficiaries, unless otherwise disqualified. In the jointly insured, to the others, does not avoid an
absence of other beneficiaries, the proceeds shall be insurance even though it has been agreed that the
paid in accordance with the policy contract. If the insurance shall cease upon an alienation of the thing
policy contract is silent, the proceeds shall be paid to insured.
the estate of the insured.
Section 25. Every stipulation in a policy of insurance for
Section 13. Every interest in property, whether real or the payment of loss whether the person insured has or
personal, or any relation thereto, or liability in respect has not any interest in the property insured, or that the
thereof, of such nature that a contemplated peril might policy shall be received as proof of such interest, and
directly damnify the insured, is an insurable interest. every policy executed by way of gaming or wagering,
is void.
Section 14. An insurable interest in property may
consist in: TITLE 4
CONCEALMENT
(a) An existing interest;
Section 26. A neglect to communicate that which a party
(b) An inchoate interest founded on an existing interest; knows and ought to communicate, is called a
or concealment.

(c) An expectancy, coupled with an existing interest in Section 27. A concealment whether intentional or
that out of which the expectancy arises. unintentional entitles the injured party to rescind a
contract of insurance.
Section 15. A carrier or depository of any kind has an
insurable interest in a thing held by him as such, to the Section 28. Each party to a contract of insurance must
extent of his liability but not to exceed the value communicate to the other, in good faith, all facts within
thereof. his knowledge which are material to the contract and as
to which he makes no warranty, and which the other has
Section 16. A mere contingent or expectant interest in not the means of ascertaining.
any thing, not founded on an actual right to the thing,
nor upon any valid contract for it, is not insurable. Section 29. An intentional and fraudulent omission, on
the part of one insured, to communicate information of
Section 17. The measure of an insurable interest in matters proving or tending to prove the falsity of a
property is the extent to which the insured might be warranty, entitles the insurer to rescind.
damnified by loss or injury thereof.
Section 30. Neither party to a contract of insurance is
Section 18. No contract or policy of insurance on bound to communicate information of the matters
property shall be enforceable except for the benefit of following, except in answer to the inquiries of the other:
some person having an insurable interest in the
property insured. (a) Those which the other knows;

Section 19. An interest in property insured must exist (b) Those which, in the exercise of ordinary care, the
when the insurance takes effect, and when the loss other ought to know, and of which the former has no
occurs, but need not exist in the meantime; and interest reason to suppose him ignorant;
in the life or health of a person insured must exist when
the insurance takes effect, but need not exist thereafter (c) Those of which the other waives communication;
or when the loss occurs.
(d) Those which prove or tend to prove the existence of proceeds from an agent of the insured, whose duty it is
a risk excluded by a warranty, and which are not to give the information.
otherwise material; and
Section 44. A representation is to be deemed false
(e) Those which relate to a risk excepted from the when the facts fail to correspond with its assertions or
policy and which are not otherwise material. stipulations.

Section 31. Materiality is to be determined not by the Section 45. If a representation is false in a material
event, but solely by the probable and reasonable point, whether affirmative or promissory, the injured
influence of the facts upon the party to whom the party is entitled to rescind the contract from the time
communication is due, in forming his estimate of the when the representation becomes false.
disadvantages of the proposed contract, or in making
his inquiries. Section 46. The materiality of a representation is
determined by the same rules as the materiality of a
Section 32. Each party to a contract of insurance is concealment.
bound to know all the general causes which are open to
his inquiry, equally with that of the other, and which Section 47. The provisions of this chapter apply as well
may affect the political or material perils contemplated; to a modification of a contract of insurance as to its
and all general usages of trade. original formation.

Section 33. The right to information of material facts Section 48. Whenever a right to rescind a contract of
may be waived, either by the terms of insurance or by insurance is given to the insurer by any provision of this
neglect to make inquiry as to such facts, where they are chapter, such right must be exercised previous to the
distinctly implied in other facts of which information is commencement of an action on the contract.
communicated.
After a policy of life insurance made payable on the
Section 34. Information of the nature or amount of the death of the insured shall have been in force during the
interest of one insured need not be communicated lifetime of the insured for a period of two (2) years from
unless in answer to an inquiry, except as prescribed by the date of its issue or of its last reinstatement, the
Section 51. insurer cannot prove that the policy is void ab initio or
is rescindable by reason of the fraudulent concealment
Section 35. Neither party to a contract of insurance is or misrepresentation of the insured or his agent.
bound to communicate, even upon inquiry, information
of his own judgment upon the matters in question.

TITLE 5
REPRESENTATION

Section 36. A representation may be oral or written.

Section 37. A representation may be made at the time

of, or before, issuance of the policy.

Section 38. The language of a representation is to be

interpreted by the same rules as the language of
contracts in general.

Section 39. A representation as to the future is to be

deemed a promise, unless it appears that it was merely
a statement of belief or expectation.

Section 40. A representation cannot qualify an express

provision in a contract of insurance, but it may qualify
an implied warranty.

Section 41. A representation may be altered or

withdrawn before the insurance is effected, but not
afterwards.

Section 42. A representation must be presumed to refer

to the date on which the contract goes into effect.

Section 43. When a person insured has no personal

knowledge of a fact, he may nevertheless repeat
information which he has upon the subject, and which
he believes to be true, with the explanation that he does
so on the information of others; or he may submit the
information, in its whole extent, to the insurer; and in
neither case is he responsible for its truth, unless it