Issues Leading to Amendments
- Complaints from various transport groups and regional offices include non-payment/underpayment of taxes, graft and corruption, and non-implementation of a computerized data bank.
- Transport groups proposed a two-group insurance system to participate in the program.
- Proposal objectives: minimize fake certificates, ensure tax payments, reduce graft/corruption, promote prompt claim payments, establish a computerized data bank at no government cost.
Amendment to Memorandum Circular No. 99-011
- Paragraph seven amended to require insurance policies/certificates of cover approved by the Insurance Commission and issued by either of the two authorized groups only as proof of compliance.
- Emphasizes assurance of proper tax payment, fraud elimination, prompt claims, and data bank creation.
Creation of the Two-Group System
- One existing group: Passenger Accident Managers, Inc. (PAMI).
- Other insurance companies must join PAMI or form a second group to participate.
- Requirements for each group to remain in good standing:
- At least 10 insurance companies with valid Insurance Commission licenses.
- Aggregate paid-up capitalization of at least PHP 500 million.
- Compliance with a computerized data system as required by the Board.
- Claim payments within 7 calendar days upon submission of required documents.
- Issuance of standardized certificates approved by the Insurance Commission and LTFRB.
- Submission of all reports and compliance with Board orders.
Odd-Even System for Insurance Group Allocation
- PUVs with an even middle digit in LTO license plates must have insurance from the first group (PAMI).
- Those with an odd middle digit must have insurance from the second group.
- The odd-even allocation alternates yearly for fairness.
- Exceptions allowing choice of insurance group:
- Operators with 50 or more registered units.
- Verified petition to the Board showing benefits of switching groups without predatory pricing.
- No other discretionary switching allowed without Board en banc approval.
Effectivity of the Two-Group System
- Scheduled to take effect March 1, 2001, unless extended by the Board en banc.
Interim Guidelines Pending Full Implementation
- Predatory pricing prohibited: no selling below reasonable industry average costs to harm competitors.
- Commissions/discounts must be approved in writing by the LTFRB and coordinated with the Insurance Commission.
- Only authorized branch offices with designated officers-in-charge can issue or market policies/certificates.
- Claims must be paid within 7 calendar days of complete document submission.
- Violations can result in permanent ban from the program for companies, officers, shareholders, and successors-in-interest after notice and hearing.
- LTFRB may issue cease and desist orders up to 30 days pending investigation.
- Insurance companies blacklisted by any government agency or court are disallowed from participation.
- Pre-existing individual insurance policies before the two-group system remain valid until expiration; original companies remain liable.
Repealing Clause
- Modifies or supersedes inconsistent prior issuances or parts thereof to conform with the new directive.
Separability Clause
- Declares that if any provision is declared unconstitutional, the remaining provisions remain valid.
Effectivity Clause
- The amendatory circular takes effect 15 days after filing three copies with the UP Law Center, under Presidential Memorandum Circular No. 11 (October 9, 1992).