Republic of the Philippines
HOUSE OF REPRESENTATIVES.
Quezon City

SIXTEENTH CONGRESS
First Regular Session

469

Introduced by
HON. AGAPITO H. GUANLAO

EXPLANATORY NOTE

This bill has already been passed on Third Reading during the Fifteenth
Congress under Committee Report No. 2664 and House Bill No. 6883.

Essentially, this Act seeks to further amend certain provisions of the already
amended Presidential Decree No.1467 entitled An Act Creating the Philippine
Crop Insurance Corporation (PCIC) Prescribing its Powers and Activities,
Providing for its Capitalization and for the Required Government Premium
Subsidy, and for Other Purposes.

This bill focuses its attention on addressing present realities concerning
changing climate patterns that damage agricultural crops thus causing economic
dislocations among marginalized farmers and fisherfolk.

By doing so, this bill further proposes funding sources for its objectives. During
the 15" Congress this proposed measure hurdled the scrutiny of the House
Committee on Appropriations.

In this light, with the urgency of the conditions that should be responded,
passage of this piece of legislation is being earnestly sought.

AG: H. 6BYANLAO


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

SIXTEENTH CONGRESS
First Regular Session
469

House Bill No.

Introduced by
HON. AGAPITO H. GUANLAO

AN ACT
STRENGTHENING THE PHILIPPINE CROP INSURANCE
CORPORATION, AMENDING FOR THE PURPOSE PRESIDENTIAL
DECREE NO. 1467 AS AMENDED

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

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

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“Section 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. The Corporation shall insure qualified
farmers and fisherfolk against losses arising from natural
calamities, fortuitous events, plant and fish diseases and pest
infestations. The Corporation shall provide insurance coverage for
palay and corn crops, high-value commercial crops, livestock,
aquaculture and fishery products, agroforestry crops and forest
plantations: non-crop agricultural assets such as but not limited to
machineries, equipment, transport facilities and other related
infrastructures; and life and accident term insurance coverage and
life and accident term insurance coverage for farmers and
fisherfolk, 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 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 in its discretion, decide to insure.
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 household or employee or the failure of the
insured to follow proven farm practices.”

The Corporation shall also insure properties and facilities
which are owned and/or used by government agencies involved in
agri-fishery-forestry projects/activities and government-financed
agri-firestry projects. The corporation shall provide reinsurance
coverage to agrifishery-forestry properties and facilities
underwritten by private and government insurance companies.


SEC. 2. Subsections 3.5 and 3.11 of Section 3 of PD No. 1467, as

amended, are hereby further amended to read as follows:

“Sec. 3. Powers. The Corporation shall have the following powers:
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“3.5. To insure the produce of farmers and fisherfolk 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;

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"3.11. To generate intemal funds by floating bonds,
expansion to other insurance lines and extending coverage to other
areas of agriculture, Livestock, aquaculture livestock, aquaculture
and fishery, agroforestry and forest plantations in order to address
the insurance needs of the target sector and to do and perform acts
and things and to exercise all the general powers conferred by law
upon the Corporation as are incidental or conducive to the
attainment of the objectives of the Corporation.”

SEC. 3. Section 5 of PD 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 fisherfolk, 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 fisherfolk: Provided, however, That each
of these subsistence farmers is cultivating not more than seven (7)
hectares of farmlands and each fisherfolk is cultivating not more
than five (5) hectares of the fishpond, seaweed, oyster or mussel
farm by themselves or with the help of the labor of the members of
their households or hired help, the premium rate and sharing to be
determined by the Board of Directors subject to approval by the
President of the Philippines: 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 of pests and diseases: Provided,
finally, That premium subsidy and/or insurance benefits shall, upon
the accumulation of surplus funds, be increased to such amounts
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. 4. Subsections 6.3 and 6.5 of Section 6 of PD No. 1467, as

amended, are hereby further amended to read as follows:


“Sec. 6. Premium Subsidy
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“6.3. Unappropriated and/or unreleased government
premium subsidy for policies written for the period from May 1,
1981 up to December 31, 2011 computed on the basis of premium
rates and sharing previously approved by the President as
authorized by law shall be programmed for payment by the
Government and the yearly sums shall be included in the budgetary
appropriations for submission to Congress, starting the fiscal year
following approval hereof, in addition to the premium subsidy
requirement of the year involved

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“6.5. (Ten percent (10%) of the net earnings of the] THE
Philippine Charity Sweepstakes Office (PCSO) shall contribute a
yearly amount of Five Million Pesos (P5,000,000) from its Charity
Fund to the Crop Insurance Program and said amount shall be
directly remitted by the PCSO to the Corporation yearly until the
unreleased premium subsidy is fully paid.”

SEC. 5. Subsections 8.1, 8.3, 8.4.1, 8.4.3, and 8.5 of Section 8 of PD
1467, as amended, are hereby further amended, to read as follows:

“Sec. 8. Capital Stock

“8.1. The authorized capital stock of the Corporation is ten
billion pesos (P10,000,000,000) divided into seventy five million (P
75,000,000) common shares with a par value of One hundred
pesos (P 100) each share, which shall be fully subscribed by the
Government and twenty five million (P 25,000,000) preferred
shares with a par value of One hundred pesos (P 100) per share
which shall have the features as provided in Section 8.4 hereof and
shall be issued in accordance with the provisions of Section 8.5
hereof.

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“8.3. The additional common capital stock of six billion pesos
(P 6,000,000,000) shall be fully subscribed by the Government and
the necessary funds shall be appropriated by Congress unless
otherwise provided by existing laws: Provided, That Congress shall
provide, on an annual basis, the needed capital, until the authorized
capital stock is fully paid up.”

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“8.4.1 Preferred as to dividends at a minimum of one and
one-half percent (1.5%) or the prevailing 360-day treasury bill rate
at the time of declaration of dividends, whichever is higher;

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“8.4.3 NON-Participating:


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“8.5. At least Five Hundred Million Pesos (P 500,000,000.00)
of preferred shares shall be subscribed and paid for by the Land
Bank of the Philippines the balance of the preferred shares may be
available for sale or to subscription by the general public.”

SEC. 6. Section 8-A of PD No. 1467, as amended, is hereby amended, to
read as follows:

“Sec. 8-A. Reserve Fund for Catastrophic Losses. 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 losses in excess of risk (pure)
premiums under the Corporation’s Crop Insurance Program for
small farmers and fisherfolk. The Fund may be increased subject
to the approval of the President. 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. 7. Separability Clause. — If any provision or part hereof is held
unconstitutional or invalid, the other provisions not affected shall remain in force
and effect.

SEC. 8. Repealing Clause. - All laws, executive orders, and other
issuances or parts thereof inconsistent with this Act are hereby repealed or
modified accordingly.

SEC. 9. Effectivity. - This Act shall take effect fifteen (15) days after its
complete publication in at least two (2) newspapers of general circulation.

Approved,