Republic of the Philippines
House of Representatives
Quezon City

FIFTEENTH CONGRESS
First Regular Session

House BiLLNO._37 58

Introduced by Hon. GINA P. DE VENECIA

EXPLANATORY NOTE

Agriculture is very much vulnerable to the unpredictability of nature. With agricultural
production representing a major source of livelihood for many Filipinos, the impact of
natural disasters and other agricultural risks cannot be taken lightly. The need to
safeguard the livelihood and interests of local farmers should be properly addressed.

Data from the Department of Agriculture indicates vulnerability of the sector to the
unpredictability of nature. Droughts, floods and typhoons have been wreaking havoc on
crops and causing untold miseries among farmers. In 2009, monsoon rains and floods
brought about by Typhoons Ondoy and Peping struck Central and Northern Luzon within a
three-week period and destroyed properties and infrastructure worth billions of pesos.
The crops sub-sector bore the major brunt of the immediate losses (P23.5 billion),
followed by the fisheries sub-sector (P1.2 billion). In all, the storms adversely affected a
total of about 480,000 farmers in seven regions of Luzon.

Agricultural and fisheries products need insurance coverage to mitigate the debilitating
effects of natural disasters and other agricultural risks. Agricultural insurance is a risk
management tool designed to ease property and production losses of subsistence farmers
and fisherfolks. It also serves as a financial mechanism to stabilize financial fluctuations
suffered by the country’s lending instit

At present, Republic Act 8175 otherwise known as the “Revised Charter of the Philippine
Crop Insurance Corporation {PCIC) Act of 1995” covers both agricultural crop and non-
crop related insurance. Almost eighty five percent (85%) of the crop-related insurance
coverage is focused on rice and corn, while the rest are on high-value crops and livestock.
Non-crop insurance, on the other hand, covers agricultural machineries and personal life
insurance of farmers and fisher folks.


Meanwhile, Republic Act 8550 otherwise known as the “Fisheries Code of 1998” and
Fisheries Administrative Order No. 215, series of 2001 (Insurance for Aquaculture
Crops/Stocks) provide for limited insurance coverage of aquaculture under the insurance
program of the PCIC but the program has yet to be implemented. However, while PCIC
has extended insurance coverage to the fisheries sector, it still has no operational

insurance program for the sector's fishponds, fish pens, fish cages and other aquaculture
projects due to appropriations problem.

Extending a more comprehensive and sustainable agricultural insurance coverage to both
the agriculture and the fisheries sectors ((i.e. coverage for losses caused not only by force
majeure but also by plant and fish diseases) through legislation is therefore necessary to
hasten effective implementation of the program. Policy setting via administrative fiat or
through a corporate board's authorization is only ad hoc in nature and lacks the
enforceability of a law.

PCIC remains in dire need of financial resources to implement its various programs.
Under RA 8175, authorized capital stock of PCIC was increased from P750 million to P2
billion, but as of December 2009 PCIC’s paid up capital only stood at P1.23 billion.
Moreover, total receivables from the national government in terms of premium subsidy
arrearages have reached P523 million (from 1981 to 2009). The shortfalls in capital
contribution and premium shares greatly diminished PCIC’s investment capacity, making
investment income barely enough to cover indemnity and administrative costs. But more
importantly, this funding constraint has limited PCIC’s reach to provide insurance cover to
more than 5.4 million smallholder farmers and fisherfolks in the country. Only three (3%)
percent of these have some form of risk protection from PCIC.

To help sustain the agricultural insurance’s funding requirement and expand insurance
coverage, this proposed measure requires the Philippine Amusement and Gaming
Corporation (PAGCOR) to earmark one-half percent (0.5%) of its net earnings to the
insurance program. Currently, RA 8175 requires the Philippine Charity Sweepstakes
Office (PCSO) to contribute ten percent (10%) of its net earnings to PCIC.

To help safeguard PCIC’s limited resources and hasten the release of claims to legitimate
applicants, this bill imposes heavier fines to spurious claimants. Erring agency personnel
who help facilitate processing of false claims are likewise meted with stiffer penalties
which include dismissal and forfeiture of separation benefits. With these additional
provisions, it is hoped that the viability and sustainability of the program would be
enhanced.

In view of the foregoing, approval of this proposed measure is earnestly sought.

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Republic of the Philippines
House of Representatives
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. _ 37 58

Introduced by Hon. GINA P. DE VENECIA

AN ACT STRENGTHENING THE PHILIPPINE CROP INSURANCE SYSTEM BY
EXPANDING ITS PROGRAM COVERAGE, INCREASING ITS FUNDING SOURCE AND
IMPOSING HEAVIER PENALTIES ON SPURIOUS CLAIMS, AMENDING PRESIDENTIAL
DECREE NO. 1467, AS AMENDED, OTHERWISE KNOWN AS THE CHARTER OF THE
PHILIPPINE CROP INSURANCE CORPORATION (PCIC)

Be it enacted by the Senate and the House of Representatives of the Congress of the
Philippines in session assembled:

Section 1. Title. — This Act shall be known as the "STRENGTHENED CHARTER OF THE
PHILIPPINE CROP INSURANCE CORPORATION ACT OF 2009".

Sec. 2. Declaration of Policy. — It is hereby declared the policy of the State to develop
and support an agricultural insurance program as a mechanism for managing risks
inherent to both the agricultural and fisheries sectors. These risks could include but not
limited to losses to crops and damages to agricultural infrastructures brought about by
natural calamities especially typhoons and crop pests and diseases.

To effectively implement this policy and ensure payment of benefits to legitimate
insurance claimants, the State shall:

a. seek all available funding sources, including earmarked funding from revenue
generating institutions like Philippine Charity Sweepstakes Office (PCSO) and the
Philippine Amusement and Gaming Corporation (PAGCOR);

b. ensure that insurance claims are awarded only to real beneficiaries by imposing
stiff penalties to spurious claimants and corrupt functionaries within the
corporation


Sec. 3. Section 1 of Presidential Decree No. 1467, as amended, is hereby further
amended, to read as follows:

"Sec. 1. Creation of the Philippine Crop Insurance Corporation. — There is hereby
created a body corporate to be known as the "Philippine Crop Insurance Corporation”
{PCIC and herein called the Corporation) which shall be attached to the Department of
Agriculture for budgetary purposes. The Corporation shall insure qualified farmers AND
FISHERFOLKS against losses arising from natural calamities, plant AND FISH diseases, and
pest infestations. The Corporation shall provide insurance coverage for palay and corn
crops, high-value commercial crops, livestock and AQUACULTURE and later on to other
crops, without prejudice to the inclusion of other non-crop agricultural AND
AQUACULTURE assets such as but not limited to machineries, equipment, transport
facilities, and other related infrastructures, as the Board of Directors of the Corporation
may determine. Such crop insurance shall cover, in every case, the cost of production
inputs, the value of the farmer's AND FISHERFOLK’S own labor and those of the members
of his household, including the value of the labor of hired workers, and a portion of the
expected yield as the Board of Directors may determine. Such insurance protection,
however, shall exclude losses arising from avoidable risks emanating from or due to the
negligence, malfeasance or fraud committed by the insured or any member of his
immediate farm OR FISHPOND/FISHPEN/FISH CAGE household or employee or the failure
of the insured to follow proven farm OR FISHPOND/FISHPEN/FISHCAGE practices."

Sec. 4. Subsection 3.5 of Section 3 of Presidential Decree No. 1467, as amended, is
hereby further amended, to read as follows:

“3.5 To insure the palay, corn AND OTHER CROPS production of farmers AND FISH
PRODUCTION OF FISHERFOLKS against loss, damage and destruction caused by natural
calamities such as typhoons, floods, drought, earthquake, volcanic eruptions, rodents,
vermins, disease, insects and other pests; and to carry on any business necessary, related
to, and expedient for the above purpose.”

Sec. 5. Section 5 of Presidential Decree No. 1467, as amended, is hereby further
amended, to read as follows:

"Sec. 5. Rate of Premium and Its Sharing. — The rate of premium, as well as the
allocated sharing thereof by the farmers, THE FISHERFOLKS, the lending institutions, the
Government of the Republic of the Philippines (herein called the Government) and other
parties, shall be determined by the Board of Directors of the Corporation: provided, that
the share of the Government in the premium cost, in the form of premium subsidy, shall
be limited to subsistence farmers AND FISHERFOLKS: Provided, however, that each of
these subsistence farmers AND FISHERFOLKS is EITHER cultivating not more than seven
(7) hectares OF FARMLAND OR OPERATING/OWNING FISHPOND OR SEAWEED, OYSTER
OR MUSSEL FARMS WITH LESS THAN FIVE (5) HECTARES OR FISHCAGES OF LESS THAN
400 SQUARE METERS, RESPECTIVELY, by themselves or with the help of the labor of the


members of their households or hired labor, the premium rate and sharing to be
determined by the Board of Directors subject to approval by the President of the
Pl es: Provided, further, that the premium share of the subsistence farmer OR
FISHERFOLK shall be reasonably affordable by him: Provided, furthermore, that the
Government shall share in the premium cost only in insurance coverage against
unforeseen and unavoidable risks such as, but not limited to, typhoons, droughts,
outbreaks or pests and diseases: Provided, finally, that premium subsidy and/or insurance
benefits shall, upon the accumulation of surplus funds, be increased to such amount as
may be determined by the Board, taking into consideration that the Corporation has been
established not only for profit but mainly to help the insured in their direst hours of
need."

Sec. 6. Section 6 of Presidential Decree No. 1467, as amended, is hereby amended by
adding one (1) new paragraph to be designated as subsection 6.6 to read as follows:

"6.6 ONE-HALF PERCENT (0.5%) OF THE NET EARNINGS OF PAGCOR FROM ITS CASINO
OPERATIONS AND OTHER RELATED BUSINESSES SHALL BE EARMARKED FOR THE CROP
INSURANCE PROGRAM AND SAID AMOUNT SHALL BE DIRECTLY REMITTED BY THE
PAGCOR TO THE CORPORATION EVERY SIX (6) MONTHS UNTIL THE AMOUNT OF
GOVERNMENT SUBSCRIPTION IS FULLY PAID."

Sec. 7. Section 8-A of Presidential Decree No. 1467, as amended, is hereby further
amended, to read as follows:

"Sec. 8-A. A state reserve fund for catastrophic losses in the amount of Five hundred
million pesos (P500,000,000) shall be created exclusively to answer for the proportion of
all loses in excess of risk (pure) premium under the Corporation's Crop Insurance Program
for small farmers AND FISHERFOLKS. The Fund shall be administered by a government
financial institution to be designated by the Corporation's Board of Directors. Such sum as
may be necessary for the purpose shall be funded by the National Government through
the annual General Appropriations Act starting the calendar year immediately following
the approval of this Act and every year thereafter until the full amount is completed. The
mechanics of claims against the fund and to what extent the Fund shall be liable shall be
determined jointly by the financial institution administering the Fund, subject to the
approval by the President.”

Sec. 8. Subsection 9.1 of Section 9 of Presidential Decree No. 1467, as amended, is
hereby further amended to read as follows:

"9.1. The powers of the Corporation shall be vested in and exercised by a Board of
Directors now composed of EIGHT (8) members, and made up of the following: the
President of the Land Bank of the Philippines (LBP), the President of the Corporation, THE
SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, the Executive Director of the
Agricultural Credit Policy Council (ACPC), a representative from the private insurance



industry to be nominated by the Secretary of Finance and three (3) representatives from
the subsistence farmer's/FISHERFOLK’S sector who shall be selected and nominated by
the different farmer AND FISHERFOLK organizations and/or cooperatives. The respective
nominees of the private insurance industry and the farmer's/FISHERFOLK’S sector shall be
submitted to and appointed by the President. The chairman of the Board of Directors
shall be appointed by the President from among the members of the Board of Directors.
The President of the Corporation shall also be appointed by the President and shall be ex-
officio vice chairman who shall assist the chairman and act in his stead in case of absence
or incapacity. In case of absence or incapacity of both the chairman and the vice
chairman, the Board of Directors shall designate a temporary chairman from among its
members. Except for the President of the LBP and the Executive Director of the ACPC, all
members of the Board of Directors, including the President of the Corporations, shall be
appointed by the President within a reasonable period of time after the approval of this
Act."

Sec. 9. Subsection 9.4 of Section 9 of Presidential Decree No. 1467, as amended, is
hereby further amended, to read as follows:

"9.4, The Chairman and the members of the Board shall each receive a per diem of not
less than FIVE thousand five hundred pesos (P5,000) for each meeting of the Board
personally attended, but in no case to exceed FIFTEEN thousand pesos (P15,000) a
month: provided, however, that in the case of the representatives of subsistence
farmers'/FISHERFOLK’S sector, the Board is authorized to determine reasonable traveling
and necessary expenses in going to and returning from said Board meetings to be
disbursed to them in addition to their per die

Sec. 10. Subsection 10.2 of Section 10 of Presidential Decree No. 1467, as amended, is
hereby further amended, to read as follows:

“10.2 To formulate and adopt policies and plans, and to promulgate rules and
regulations for the management, operation and conduct of the affairs and business of the
Corporation and for this purpose may limit or refuse insurance in any area or on any
farmer OR FISHERFOLK because of the risk involved or may expand the subject of
insurance coverage to crops other than THOSE EXPRESSLY STIPULATED HEREIN, provided

such coverage on other crops shall be approved by the BOARD OF DIRECTORS OF THE
CORPORATION.”

Sec. 11. Section 11-B of Presidential Decree No. 1467, as amended, is hereby further
amended, to read as follows:

"Sec. 11-B. No Claim Benefits. — Any insured farmer who has not filed any claim during
the immediately preceding three (3) crop seasons OR ANY INSURED
FISHPOND/FISHCAGES OPERATOR WHO HAS NOT FILED ANY CLAIM DURING THE
IMMEDIATELY PRECEDING FOUR (4) HARVEST SEASONS shall be entitled to a no-claim


benefit of at least ten percent (10%) of his premium share paid for said crop seasons to be
deposited in a trust fund and to be managed by the Corporation. Such trust fund may be
used to finance premium rebate or premium credit applicable to the immediately
following crop seasons as determined by the Board of Directors of the Corporation."

Sec. 12. Section 17-A of Presidential Decree No. 1467, as amended, is hereby further
amended, to read as follows:

"Sec. 17-A. Penal Provisions. — Any person who through malfeasance, misfeasance or
nonfeasance allows a spurious claim to be paid, including the claimant himself, shall,
upon final conviction, be punished by imprisonment of not less than THREE (3) YEARS but
not more than EIGHT (8) years or a fine of not less than ONE HUNDRED THOUSAND
PESOS (P100,000) but not more than SIX hundred thousand pesos (P600,000) or both at
the discretion of the court. The PCIC personnel who allowed the commission of the
offense shall, in addition, be dismissed from office, and forfeit all privileges and benefits
which may accrue to him."

Sec. 13. Review. — The PCIC Board shall undertake periodic review of the Corporation's
activities and shall submit to both Houses of Congress at least once A YEAR a report
which shall include, among others, a recommendation for improving services to the target
sectors and the financial viability of the Corporation.

Sec. 14. Separability Clause. — \f any provision or part hereof is held unconstitutional or
invalid, the remainder of the law, or the provisions not otherwise affected shall remain
valid and subsisting.

Sec. 15. Repealing Clause. — Any provisions of Presidential Decree No. 1467, as
amended, and all other laws, inconsistent herewith is hereby repealed or modified
accordingly.

Sec. 16. Effectivity. — This Act shall take effect fifteen (15) days after its complete
publication in at least two (2) newspaper of general circulation.