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.