AMENDING CERTAIN SECTIONS OF PRESIDENTIAL DECREE NO. 1460, OTHERWISE KNOWN AS THE INSURANCE CODE

• Number: Presidential Decree No. 1814
• Sections: 11

Preamble

WHEREAS, Presidential Decree No. 1460, otherwise known as

the Insurance Code, was promulgated primarily to promote and develop a strong

national insurance industry and to provide the necessary operating conditions

for its integration in the economic and social development of the

Philippines;

WHEREAS, the prevailing economic conditions necessitate the

amendment of said Decree to ensure the due execution and performance of

insurance contracts in the interests of the sound development of the national

economy;

WHEREAS, there is a need to amend the said Decree to further

assure reasonable insurance services for the protection of the interests of the

policyholders and the public;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers vested in me by the Constitution, do hereby

decree and order the amendment of Presidential Decree No. 1460 otherwise known

as the Insurance Code, as follows:

Section 1

SECTION 1. Section 305, Title I, Chapter IV, of Presidential

Decree No. 1460 otherwise known as the Insurance Code is hereby amended to read

as follows:

"SEC. 305. An application for the issuance or renewal of a

license to act as an insurance agent or insurance broker may be refused, or such

license, if already issued or renewed, shall be suspended or revoked if the

Commissioner finds that the applicant for, or holder of, such

license:

has willfully violated any provision of this Code; or

has intentionally made a material misstatement in the application to qualify

for such license; or

has obtained or attempted to obtain a license by fraud or misrepresentation;

or

has been guilty of fraudulent or dishonest practices; or

has misappropriated or converted to his own use or illegally withheld moneys

required to be held in a fiduciary capacity;

has not demonstrated trustworthiness and competence to transact business as

an insurance agent or insurance broker in such manner as to safeguard the

public; or

has materially misrepresented the terms and conditions of policies or

contracts of insurance which he seeks to sell or has sold; or

has failed to pass the written examination prescribed, if not otherwise

exempt from taking the same.

In addition to the foregoing causes, no license to act as insurance agent or

insurance broker shall be renewed if the holder thereof has not been actively

engaged as such agent or broker in accordance with such rules as the

commissioner may prescribe.

Section 2

SEC. 2. Paragraph (c) of Section 373, Chapter VI, of

Presidential Decree No. 1460, otherwise known as the Insurance Code is hereby

amended to read as follows:

"(c) 'Third Party' is any person other than a passenger as defined in this

section and 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 or bodily injury, arising out of and in the course

of employment;

Section 3

SEC. 3. Paragraph (f) of Section 373 of the same Decree is

hereby amended to read as follows:

"(f) 'Insurance Policy' or 'Policy' refers to a contract of insurance against

passenger and third-party liability for death of bodily injuries arising from

motorvehicle accidents."

Section 4

SEC. 4. Section 374 of the same Decree is hereby amended to

read as follows:

"SEC. 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 with the provisions of this chapter

to indemnify the death or bodily injury of a third party or passenger, as the

case may be, arising from the use thereof."

Section 5

SEC. 5. Section 377 of the same Decree is hereby amended to

read as follows:

"SEC. 377. Every land transportation operator and 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 an 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 or guaranty

in cash or surety bond shall cover liability for death or bodily injuries of

third parties and/or passengers arising out of the use of such vehicle in the

amount not less than twelve thousand pesos per passenger or third-party and 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 with an authorized capacity of twenty-six or more

passengers: fifty thousand pesos;

(b) Motor vehicles with an authorized

capacity of from twelve to twenty-five passengers: forty thousand pesos;

(c)

Motor vehicles with an authorized capacity of from six to eleven passengers:

thirty thousand pesos;

(d) Motor vehicles with 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 with, the Commissioner shall be resorted to by him in cases of accidents

the indemnities for which to third-parties and/or passengers are not settled

accordingly by the land transportation operator and, in that event, the said

cash deposit shall be replenished or such surety bond shall be restored within

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 and/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, and scooters: twelve thousand pesos;

(b)

Vehicles with an unladen weight of 2,600 kilos or less: twenty thousand

pesos;

(c) Vehicles with an unladen weight of between 2,601 kilos and 3,930

kilos: thirty thousand pesos;

(d) Vehicles with 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 with the coverages set forth

herein."

Section 6

SEC. 6. Section 379 of the same Decree is hereby amended to

read as follows:

Section 7

SEC. 7. Section 384 of the same Decree is hereby amended to

read as follows:

"SEC. 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 and duration of the injuries sustained as certified by a duly

licensed physician. Notice of claim must be filed within six months from date of

the accident, otherwise, the claim shall be deemed waived. Action or suit for

recovery of damage due to injury must be brought with the Commissioner or the

Courts within one year from date of accident, otherwise, the claimant's right of

action shall prescribe.

Section 8

SEC. 8. All laws, decrees, rules and regulations which are

inconsistent herewith are hereby repealed or modified accordingly.

Section 9

SEC. 9. This Decree shall take effect immediately.

Done in the City of Manila, this 16th day of January, in the year of Our

Lord, nineteen hundred and eighty-one.

(Sgd.) FERDINAND E. MARCOS

President of the

Philippines

By the President:

(Sgd.) JUAN C. TUVERA

Presidential Executive

Assistant

Vol. 25, Vital Documents, Presidential Decree 1980-1981

Section 379

SEC. 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 the insurance companies authorized to issue the same,

otherwise, the Land Transportation Commission shall require from 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 with

the Commissioner in such amount required as limits of indemnity in section three

hundred seventy-seven to answer for the passenger and/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 and/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."