Insurance Code – Chapter VI: Compulsory Motor Vehicle Liability Insurance
CHAPTER VI — COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE
SECTION 373. For purposes of this chapter:
(a) “Motor Vehicle” is any vehicle as defined in section three, paragraph (a) of Republic Act Numbered Four Thousand One Hundred Thirty‑Six, Otherwise known as the “Land Transportation & Traffic Code.”
(b) “Passenger” is any fare paying person being transported & conveyed in & by a motor vehicle for transportation of passengers for compensation, including persons expressly authorized by law or by the vehicle’s operator or his agents to ride without fare.
(c) “Third‑Party” is any person other than a passenger as defined in this section & shall also exclude a member of the household, or a member of the family within the second degree of consanguinity or affinity, of a motor vehicle owner or land transportation operator, as likewise defined herein, or his employee in respect of death, bodily injury, or damage to property arising out of & in the course of employment. (As amended by Presidential Decree No. 1814 & 1981)
(d) “Owner” or “Motor vehicle owner” means the actual legal owner of a motor vehicle, in whose name such vehicle is duly registered w/ the Land Transportation Commission;
(e) “Land transportation operator” means the owner or owners of motor vehicles for transportation of passengers for compensation, including school buses;
(f) “Insurance policy” or “Policy” refers to a contract of insurance against passenger & thirty‑party liability for death or bodily injuries & damaged to property arising fr. motor vehicle accidents. (As amended by Presidential Decree No. 1455 & 1814)
SECTION 374. It shall be unlawful for any land transportation operator or owner of a motor vehicle to operate the same in the public highways unless there is in force in relation thereto a policy of insurance or guaranty in cash or surety bond issued in accordance w/ the provisions of this chapter to indemnify the death, bodily injury, &/or damage to property of a third‑party or passenger, as the case may be, arising fr. the use thereof. (As amended by Presidential Decree No. 1455 & 1814)
SECTION 375. The Commissioner shall furnish the Land Transportation Commissioner w/ a list of insurance companies authorized to issue the policy of insurance or surety bond required by this chapter. (As amended by Presidential Decree No. 1814)
SECTION 376. The Land Transportation Commission shall not allow the registration or renewal of registration of any motor vehicle without first requiring fr. the land transportation operator or motor vehicle owner concerned the presentation & filing of a substantiating documentation in a form approved by the Commissioner evidencing that the policy of insurance or guaranty in cash or surety bond required by this chapter is in effect. (As amended by Presidential Decree No. 1455)
SECTION 377. Every land transportation operator & every owner of a motor vehicle shall, before applying for the registration or renewal of registration of any motor vehicle, at his option, either secure an insurance policy or surety bond issued by any insurance company authorized by the Commissioner or make a cash deposit in such amount as herein required as limit of liability for purposes specified in section three hundred seventy‑four.
(1) In the case of a land transportation operator the insurance guaranty in cash or surety bond shall cover liability for death or bodily injuries of third‑parties &/or passengers arising out of the use of such vehicle in the amount not less than twelve thousand pesos per passenger or third party & an amount, for each of such categories, in any one accident of not less than that set forth in the following scale —
(a) Motor vehicles w/ an authorized capacity of twenty‑six or more passengers: Fifty thousand pesos;
(b) Motor vehicles w/ an authorized capacity of fr. twelve to twenty‑five passengers: Forty thousand pesos;
(c) Motor vehicles w/ an authorized capacity of fr. six to eleven passengers: Thirty thousand pesos;
(d) Motor vehicles w/ an authorized capacity of five or less passengers: Five thousand pesos multiplied by the authorized capacity.
Provided, however, That such cash deposit made to, or surety bond posted w/, the Commissioner shall be resorted to by him in cases of accidents the indemnities for w/c to third‑parties &/or passengers are not settled accordingly by the land transportation operator &, in that event, the said cash deposit shall be replenished or such surety bond shall be restored w/ sixty days after impairment or expiry, as the case may be, by such land transportation operator, otherwise, he shall secure the insurance policy required by this chapter. The aforesaid cash deposit may be invested by the Commissioner in readily marketable government bonds &/or securities.
(2) In the case of an owner of a motor vehicle, the insurance or guaranty in cash or surety bond shall cover liability for death or injury to third parties in an amount not less than that set forth in the following scale in any one accident:
I. Private Cars
(a) Bantam : Twenty thousand pesos;
(b) Light : Twenty thousand pesos;
(c) Heavy : Thirty thousand pesos;
II. Other Private Vehicles
(a) Tricycles, motorcycles, & scooters : Twelve thousand pesos;
(b) Vehicles w/ an unladen weight of 2,600 kilos or less : Twenty thousand pesos;
(c) Vehicles w/ an unladen weight of between 2,601 kilos & 3,930 kilos : Thirty thousand pesos;
(d) Vehicles w/ an unladen weight over 3,930 kilos : Fifty thousand pesos.
The Commissioner may, if warranted, set forth schedule of indemnities for the payment of claims for death or bodily injuries w/ the coverages set forth herein. (As amended by Presidential Decree No. 1455 & 1814)
SECTION 378. Any claim for death or injury to any passenger or third party pursuant to the provisions of this chapter shall be paid without the necessity of proving fault or negligence of any kind; Provided, That for purposes of this section —
(a) The total indemnity in respect of any person shall not exceed five thousand pesos;
(ii) The following proofs of loss, when submitted under oath, shall be sufficient evidence to substantiate the claim:
(a) Police report of accident; &
(b) Death certificate & evidence sufficient to establish the proper payee; or
(c) Medical report & evidence of medical or hospital disbursement in respect of w/c refund is claimed.
(iii) Claim may be made against one motor vehicle only. In the case of an occupant of a vehicle, claim shall lie against the insurer of the vehicle in w/c the occupant is riding, mounting or dismounting fr.. In any other case, claim shall lie against the insurer of the directly offending vehicle. In all cases, the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained.
SECTION 379. No land transportation operator or owner of motor vehicle shall be unreasonably denied the policy of insurance or surety bond required by this chapter by the insurance companies authorized to issue the same, otherwise, the Land Transportation Commission shall require fr. said land transportation operator or owner of the vehicle, in lieu of a policy of insurance or surety bond, a certificate that a cash deposit has been made w/ the Commissioner in such amount required as limits of indemnity in section three hundred seventy‑seven to answer for the passenger &/or third‑party liability of such land transportation operator or owner of the vehicle.
No insurance company may issue the policy of insurance or surety bond required under this chapter unless so authorized under existing laws.
The authority to engage in the casualty &/or surety lines of business of an insurance company that refuses to issue or renew, without just cause, the insurance policy or surety bond therein required shall be withdrawn immediately. (As amended by Presidential Decree No. 1455 & 1814)
SECTION 380. No cancellation of the policy shall be valid unless written notice thereof is given to the land transportation operator or owner of the vehicle & to the Land Transportation Commission at least fifteen days prior to the intended effective date thereof.
Upon receipt of such notice, the Land Transportation Commission, unless it receives evidence of a new valid insurance or guaranty in cash or surety bond as prescribed in this chapter, or an endorsement of revival of the cancelled one, shall order the immediate confiscation of the plates of the motor vehicle covered by such cancelled policy. The same may be re‑issued only upon presentation of a new insurance policy or that a guaranty in cash or surety band has been made or posted w/ the Commissioner & w/c meets the requirements of this chapter, or an endorsement or revival of the cancelled one. (As amended by Presidential Decree No. 1455)
SECTION 381. If the cancellation of the policy or surety bond is contemplated by the land transportation operator or owner of the vehicle, he shall, before the policy or surety bond ceases to be effective, secure a similar policy of insurance or surety bond to replace the policy or surety bond to be cancelled or make a cash deposit in sufficient amount w/ the Commissioner & without any gap, file the required documentation w/ the Land Transportation Commission, & notify the insurance company concerned of the cancellation of its policy or surety bond. (As amended by Presidential Decree No. 1455)
SECTION 382. In case of change of ownership of a motor vehicle, or change of the engine of an insured vehicle, there shall be no need of issuing a new policy until the next date of registration or renewal of registration of such vehicle, & provided that the insurance company shall agree to continue the policy, such change of ownership or such change of the engine shall be indicated in a corresponding endorsement by the insurance company concerned, & a signed duplicate of such endorsement shall, within a reasonable time, be filed w/ the Land Transportation Commission.
SECTION 383. In the settlement & payment of claims, the indemnity shall not be availed of by any accident victim or claimant as an instrument of enrichment by reason of an accident, but as an assistance or restitution insofar as can fairly be ascertained.
SECTION 384. Any person having any claim upon the policy issued pursuant to this Chapter shall, without any unnecessary delay, present to the insurance company concerned a written notice of claim setting forth the nature, extent & duration of the injuries sustained as certified by a duly licensed physician. Notice of claim must be filed within six months fr. date of accident, otherwise, the claim shall be deemed waived. Action or suit for recovery of damage due to loss or injury must be brought, in proper cases, w/ the Commissioner or the Courts within one year fr. denial of the claim, otherwise, the claimant’s right of action shall prescribe. (As amended by Presidential Decree 1814 & Batasang Pambansa Blg. 874)
SECTION 385. The insurance company concerned shall forthwith ascertain the truth & extent of the claim & make payment within five working days after reaching an agreement. If no agreement is reached, the insurance company shall pay only the “no‑fault” indemnity provided in section three hundred seventy‑eight without prejudice to the claimant fr. pursuing his claim further, in w/c case, he shall not be required or compelled by the insurance company to execute any quit claim or document releasing it fr. liability under the policy of insurance or surety bond issued. (As amended by Presidential Decree No. 1455)
In case of any dispute in the enforcement of the provisions of any policy issued pursuant to this chapter, the adjudication of such dispute shall be within the original & exclusive jurisdiction of the Commissioner, subject to the limitations provided in section four hundred sixteen.
SECTION 386. It shall be unlawful for a land transportation operator or owner of motor vehicle to require his or its drivers or other employees to contribute in the payment of premiums.
SECTION 387. No government office or agency having the duty of implementing the provisions of this chapter nor any official or employee thereof shall act as agent in procuring the insurance policy or surety bond provided for herein. The commission of an agent procuring the said policy or bond shall in no case exceed ten per centum of the amount of the premiums therefor.
SECTION 388. Any land transportation operator or owner of motor vehicle or any other person violating any of the provisions of the preceding sections shall be punished by a fine of not less than five hundred pesos but not more than one thousand pesos &/or imprisonment for not more than six months. The violation of section three hundred seventy‑seven by a land transportation operator shall be a sufficient cause for the revocation of the certificate of public convenience issued by the Board of Transportation covering the vehicle concerned.
SECTION 389. Whenever any violation of the provisions of this chapter is committed by a corporation or association, or by a government office or entity, the executive officer or officers of said corporation, association or government office or entity who shall have knowingly permitted, or failed to prevent, said violation shall be held liable as principals.
Reference: University of the Philippines
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