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

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 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:

1. has willfully violated any provision of this Code; or
2. has intentionally made a material misstatement in the application to qualify
   for such license; or
3. has obtained or attempted to obtain a license by fraud or misrepresentation;
   or
4. has been guilty of fraudulent or dishonest practices; or
5. has misappropriated or converted to his own use or illegally withheld moneys
   required to be held in a fiduciary capacity;
6. 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
7. has materially misrepresented the terms and conditions of policies or
   contracts of insurance which he seeks to sell or has sold; or
8. 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.

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;

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.”

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.”

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.”

SEC. 6. Section 379 of the same Decree is hereby amended to
read as follows:

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.”

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.

SEC. 8. All laws, decrees, rules and regulations which are
inconsistent herewith are hereby repealed or modified accordingly.

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