FIFTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
i ! 
i 
~_ 
S. NO. 2 S 6 
.... ~. . ," 
r:r 
-----~ 
Introduced by Senator Antonio "Sonny" F. Trillanes IV 
EXPLANATORY NOTE 
The Philippines has been devastated by countless numbers of calamities every year. An 
average of 20 typhoons is expected to hit our country every year. Aside from typhoons, 
floods, droughts, volcanic eruptions and earthquakes endanger countless lives and 
livelihood as they strike the country. 
On the average, damages caused by typhoons a year totaled to about PIS billion. These 
typhoons render a lot of our people homeless, most of them the poor, and damaging most 
of our agriculture thereby putting the economic growth of our country to a halt. 
This proposed measure provides some solutions to mitigate the debilitating effects of 
disasters on the lives and properties of Filipinos. It intends to create the "Philippine 
Catastrophe Insurance and Reinsurance Corporation" by renaming the Philippine Crop 
Insurance Corporation. The newly created office shall administer not only the country's 
crop insurance program but also the insurance/ reinsurance of participating persons 
against loss oflives and properties due to natural disasters. 
In view of the foregoing, immediate approval of this measure is earnestly sought. 
RILLANESIV 
Senator 
I 
... 


FIFTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S.NO. 288 
., 
Introduced by Senator Antonio "Sonny" F. TriIlanes IV 
AN ACT 
PROVIDING FOR A MORE COMPREHENSIVE PROTECTION PROGRAM 
AGAINST LOSS OF LIVES AND PROPERTIES DUE TO NATURAL 
DISASTERS AND SIMILAR ACTS OF NATURE, AMENDING PRESIDENTIAL 
DECREE NO. 1467 OTHERWISE KNOWN AS THE CHARTER OF THE 
"PHILIPPINE CROP INSURANCE CORPORATION" TO EMBODY THE 
ELABORATIONS 
WITHIN 
ITS 
POWERS 
AND 
RESPONSIBILITIES, 
PROVIDING FUNDS THEREFOR, CHANGING ITS CORPORATE NAME TO 
"PHILIPPINE 
CATASTROPHE 
INSURANCE 
AND 
REINSURANCE 
CORPORATION" AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled. 
I 
Section 1. Short Title. - This Act sha11 be known as the "Charter ofthe Philippine 
2 
Catastrophe Insurance and Reinsurance Corporation." 
3 
4 
. Sec. 2. Declaration oj Policy. - It is hereby declared the policy of the State to 
5 
develop and support an adequate catastrophe insurance (or quasi-insurance) and 
6 
reinsurance program as a mechanism to mitigate the debilitating effects of natural 
7 
disasters such as typhoons, floods, droughts, earthquakes, volcanic eruptions, and similar 
8 
acts ofnature on the lives and properties of Filipinos. 
9 
It is widely recognized that natural disasters have resulted in loss of income and 
10 
investments and consequently loss of credit standing of the victims which in tum affected 
II 
the finances of lending institutions and constricted their re-loaning capabilities as we11 as 
12 
their willingness to extend loans to finance activities inherently exposed to natural perils, 
13 
i.e. agriculture, which furthermore stunted development of the rural areas and spawned 
14 
social issues such as but not limited to agrarian problem, population congestion in the 
IS 
metropolitan areas and growing number of urban poor. 
1 


Considering the destabilizing effects of calamitous events which could reach the 
2 
proportions of a national problem, it is hereby declared as part of this policy to provide a 
3 
wide range of security services and disability benefits that would enable victims of 
4 
natural disasters to resume normal lives shortly after such crisis situations thereby 
5 
minimizing the snowball effects on the national economy as a whole. 
6 
Furthermore, it is hereby declared as part of this policy to complement rather than 
7 
compete with the private insurance industry's efforts to cover such risks. Inasmuch as the 
8 
structure of private insurers to provide specific needs of the countryside with only 
9 
minim!)l costs. 
10 
Considering that majority of the population live below poverty line and cannot 
. II 
afford the cost of protection from private insurers, it is likewise declared as patt of this 
12 
policy to extend to poor members of the economy such subsidies as may be called for in 
13 
order to bring the benefits of this progrmn within their reach. 
14 
15 
Sec. 3. Creation of the Philippine Catastrophe Illsurance alld Reinsurallce 
16 
Corporatioll. - The Philippine Crop Insurance Corporation shall hereby be renamed 
17 
"Philippine Catastrophe Insurance and Reinsurance Corporation" (PCIRC) and herein 
18 
called "corporation" which shall, in addition to the administration of the country's crop 
19 
insurance progrmn and related functions, provide insurance/ reinsurance protection to 
20 
participating persons, whether natural or juridical, against loss of lives and properties due 
21 
to natural disasters such as typhoons, floods, droughts, earthquakes, volcanic eruptions, 
22 
and similar acts of nature. The corporation shall likewise develop and implement 
23 
guarantee programs and such other collateral substitute schemes as may be necessary to 
24 
encourage banks and other institutional sources of ftmds to lend to small entrepreneurs 
25 
without being too concerned about collateral. 
26 
Furthermore, the corporation shall make available to private insurers its 
27 
organizational structure to enable them to provide protection services in the countryside 
28 
at minimum incremental overhead costs and at premium levels affordable by rural folks. 
29 
Protection services shall be introduced progressively in relation to the financial 
30 
capability of the corporation. 
31 
32 
33 
34 
Sec. 4. Place of Busilless and Term of Existence. -
4.1 
The corporation shall have its principal place of business in Metro 
, 
Manila; 
2 


I 
2 
3 
4 
5 
6 
7 
8 
9 
10 
II 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
4.2 
The term of legal existence of the corporation shall be fifty (50) 
years from and after the date of the approval of this Act. 
Sec. 5. Powers. -
5.1 
To prescribe, repeal and alter its own by-laws; to determine its 
operating policies and to issue such rules and regulations as may be necessmy to 
implement the insurance and reinsurance programs as well as the guarantee and 
other collateral substitute schemes; 
To adopt and use a corporate seal; 
To use and be sued; 
To have continuous succession until dissolved by law; 
5.2 
5.3 
5.4 
5.5 
To insure persons, whether natural or juridical, against loss oflives 
and properties due to natural disasters and to carryon any business necessary, 
related to, expedient for the above purpose; 
5.6 
To accept cessions of risks from duly registered insurance/ 
reinsurance companies operating in the Philippines; 
5.7 
To guarantee the production and production-related loans granted 
by lending institutions to small entrepreneurs against default; 
5.8 
To implement other collateral substitute schemes; 
5.9 
To insure/ reinsure in the Philippines or abroad all or any risks of 
the corporation; 
5.10 
To act as underwriting agent for and in behalf of private insurance 
compames; 
5.11 
To develop loss prevention programs for managing the devastating 
effects of natural disaster and calamities and to set up facilities and structures for 
the purpose; 
5.12 
To purchase or otherwise acquire ownership and manage any or all 
parts of the business, property and liabilities of any person or company carrying 
on any business which the corporation is authorized to carryon or possess; 
5.13 
To acquire by purchase or othetwise acquire ownership of and to 
invest in, hold, sell or otherwise dispose of stock or bonds or any interest in either, 
or any obligation or evidence of indebtedness, of any person, firm or corporation 
and as owner of such stocks, bonds, or interest therein, or other obligations or 
evidence of indebtedness, to exercise the rights, powers mId privileges of 
3 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
ownership, including the right to vote thereon or consent in respect thereto fer any 
and all lawful purposes; 
5.14 
To purchase, or otherwise acquire, sell, lease, convey, mortgage, 
eneumber, and otherwise deal with any property, real or personal, or any interest 
therein; extend credit on the security of real estate or movable propelty; exercise 
easement right or privilege over or in respect to any property real or personal, as 
may be pennitted by law and as may be reasonably necessary to calTY out the 
purpose for which the corporation is fonned or as mayor hereafter be permitted 
by law; 
5.15 
To establish branches whenever it may be expedient and 
necessary; 
5.16 
To do or perfonn acts and things, and to exercise all the general 
13 
powers conferred by law upon corporation, as are incidental or conducive to the 
14 
attainment of the objectives of the corporation. 
15 
16 
Sec. 6. Wllo SlIall Be Insured! Reinsured! Guaranteed. - Any person, whether 
17 
natural or juridical, residing in the Philippines may be insured against loss of lives and 
18 
properties due to natural disasters under such insurance schemes as shall be designed by 
19 
the Board of Directors of the corporation. Provided that in case the person has secured 
20 
loans from government sponsored credit program to finance agricultural production 
21 
activities, coverage shall be compulsory upon such person. 
22 
Likewise, any duly registered insurance! reinsurance companies operating in the 
23 
Philippines may reinsure their risks with the corporation under such reinsurance schemes 
24 
as shall be designed by the Board of Directors of the corporation. 
25 
Further, any accredited bank! lending institutions may be covered by guarantee 
26 
for the production-related loans extended by said bank! lending institution to small 
27 
entrepreneurs under such guarantee scheme as shall be desigued by the Board of 
28 
Directors of the corporation; Provided that any guarantee payment received by said bank! 
29 
lending institution from the corporation shall be returned by the fenner to the latter 
30 
within five (5) years from receipt of such guarantee payment. 
31 
32 
Sec. 7. Premium Subsidy.- Premium (or enrolment fee) for life insurance and 
33 
property insurance or households with income below poverty line (to be detenni~ed from 
34 
time to time by the proper government body) shall be subsidized by the government 
35 
through contributions from barangay fnnds and other sources and earnings of the state 
4 


catastrophe insurance trust funds as set up in Section 8 hereof: Provided, that sum insured 
2 
shall not exceed such limits to be established by the Board of Directors of the 
3 
corporation; Provided fUlther that compensation for damages of widespread effect 
4 
suffered on account of covered perils may be limited by the Board to such amount that 
5 
will not endanger its corporate existence. 
6 
7 
Sec. 8. State Catllstroplle Insurance Trust FU1Id. - There shall be created a State 
8 
Catastrophe Insurance Trust Fund in the amount of five hundred million pesos 
9 
(P500,000,000.00) out of the funds of the national treasury not othelwise appropriated to 
lObe administered by the corporation, the earnings of which trust fund shall be used to 
II 
operationalize the subsidized catastrophe insurance scheme for households with income 
12 
below poverty line. 
13 
14 
Sec. 9. Capital Stock. - The capital stock of the corporation shall be as follows: 
15 
9.1 
The authorized capital stock of the corporation shall be four billion 
16 
pesos divided into thirty five million (35,000,000) common shares with a par 
17 
value of one hundred pesos (PIOO.OO) each share which shall be fully subscribed 
18 
by the government; and five million (5,000,000) preferred shares with a par value 
19 
of one hundred pesos (P100.00) per share which shall have the features as 
20 
provided in Section 9.4 hereof and shall be issued in accordance with the 
21 
provisions of Section 9.5 hereof. 
22 
9.2 
The paid-in capital of the corporation upon its organization shall be 
23 
one billion pesos (PI ,000,000,000.00) and shall be appropriated as follows: 
24 
9.2.1 
Five Hundred Million Pesos (P500,000,000.00) to be 
25 
subscribed and paid in by the government. Its paid-in capital in PCIC shall 
26 
form part of the government's contributions; Provided that if the amount 
27 
by which the net assets (net of liabilities and paid-in preferred shares) 
28 
exceed five hundred million pesos (P500,000,000.00), the government 
29 
shaH make the necessary contributions to bring the amount to the required 
30 
level. 
31 
9.2.2 
An 
additional 
Two 
Hundred 
Fifty 
Million 
Pesos 
32 
(1'250,000,000.00) to be likewise subscribed and paid in by the 
33 
government out of the investible funds of the Special Revolving Trust 
34 
Fund (SRTF), under LOI 1242, cUlTentiy administered by PCIC. 
5 


I 
2 
3 
4 
5 
6 
7 
8 
9 
10 
II 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
9.2.3 
One Hundred Million Pesos (PlOO,OOO,OOO.OO) preferred 
stocks to be subscribed and paid in by the Land Bank of the Philippines 
(LBP) out of its paid-in capital in PCIC. 
9.2.4 
Another 
One 
Hundred 
Fifty 
Million 
Pesos 
(PI50,000,000.00) preferred shares to be subscribed and paid in by the 
LBP. The remaining common capital stock of Two Billion Seven Hundred 
Fifty Million Pesos (P2,750,000,000.00) shall be subscribed by the 
government and the necessary funds shall be appropriated, programmed 
and paid by the proper office, entity or agency of the government within 
four (4) years from approval of this Act. 
9.3 
The preferred shares shall be entitled to a preference over common 
shares in any declaration of dividends. They shall also be given priority in the 
distribution of assets in the event of liquidation of the corporation. They shall 
have the following specific features: 
9.3.1 
Preferred as to dividends at a minimum of six percent (6%); 
9.3.2 
Cwnulative; 
9.3.3 
9.3.4 
Participating; 
Non-voting; 
9.3.5 
Dividends thereon shall be exempt from income tax; 
9.3.6 
Redeemable at the option of the corporation at the 
prevailing book value but in no case less than par after five (5) years from 
insurance thereof. 
9.4 
The preferred shares may be available for sale or to subscription by 
the general public. 
26 
Sec. 10. Governmellt Premium Subsidy. - Unappropriated and! or unreleased 
27 
government premium subsidy for rice and com crop insurance policies written for the 
28 
period from May I, 1981 up to the approval of this act computed on basis of premium 
29 
rates and sharing as previously approved by the President of the Philippines as authorized 
30 
by law shall be programmed for payment by the government within a period of ten (10) 
31 
years and the yearly sums shall be included in budgetary appropriations for submission to 
32 
Congress, statting the fiscal year following approval hereof, in addition to the premium 
33 
subsidy requirement for the year involved. 
34 
35 
6 


Sec. t 1. Board of Directors. -
2 
t 1. t 
The power of the corporation shall be vested in and exercised by a 
3 
Board of Directors composed of thirteen (13) members and made up of the 
4 
following: the Secretaty of Finance, the Secretary of Agriculture, the President of 
5 
the Land Bank of the Philippines, the Secretaty of Agrarian Reform, the Secretary 
6 
of Labor, the Secretary of National Defense, the Secretary of Public Works and 
7 
Highways, the Secretary of Interior and Local Government, the Director of the 
8 
Cooperative Development Authority, the Budget Secretat'y and the President of 
9 
the Corporation, and in addition, a nominee of the Secretary of Finance, 
10 
preferably representing the private insurance industry and a nominee of the 
II 
Se~retary of Agriculture, preferably representing the farmers sector. The 
12 
Chairman of the Boat'd of Directors shall be the Secretary of Finance and that the 
13 
'President of the corporation shall be the Ex-Officio Vice Chairman, as such, shall 
14 
assist the Chairman and act in his stead in case of absence or incapacity, In case 
15 
of absence or incapacity of both the Chairnlan and the Vice-Chairman, the Board 
16 
of Directors shall designate a temporary chainnan from among its members, 
17 
11.2 
The members of the Board shall have their respective alternates 
18 
who shall attend the meetings, and act as Members of the Board in the absence or 
19 
incapacity of the regular members; 
20 
11.3 
The Boat'd of Directors shall meet regularly at least once a month 
21 
and as often as the exigencies of the corporation's affairs dematld, The presence 
22 
of at least seven (7) members shall constitute a quorum which shall be necessary 
23 
for the transaction of any business. The Board may be convoked either by the 
24 
Chairman or in his absence by the Vice-Chairmatl; 
2S 
t].4 
The Chairman and the members of the Board shall each receive a 
26 
per dien; of One Thousand Five Hundred Pesos (PI,SOO.OO) for each session of 
27 
the Board attended, but in no case to exceed Ten Thousatld Pesos (PI 0,000.(0) a 
28 
month. 
29 
30 
Sec. 12. Powers and Functions of tile Boanl of Directors. - The Board shall, 
31 
without limiting the generality of the foregoing have the following powers and functions: 
32 
12.1 
To implement the provisions atld purposes of this Act; 
33 
12.2 
To formulate atld adopt policies and platls, and to promulgate rules 
34 
atld regulations for the matlagement, operation and conduct of the affairs and 
35 
business of the corporation atld for this purpose may limit or refuse insuratlce/ 
7 
• 


I 
2 
3 
4 
5 
6 
7 
8 
9 
10 
reinsurance in any area or on any person because of the risk involved or may 
expand the subject of insurance/ reinsurance coverage as the Board may deem 
appropriate to attain the goals and objectives of the corporation; 
12.3 
To borrow funds from local and international financing sources or 
institutions for the purpose of financing the program and projects deemed vital for 
the attainment of the corporation's goal and objectives; 
12.4 
To enter into, make and execute contracts of any kind or nature as 
may be necessary, or incidental to the accomplislnnent of the purposes of the 
corporation; 
U.S 
To approve the budget of the corporation and to fix the reasonable 
II 
compensation of its personnel; Provided that the Board of Directors shall have 
12 
exclusive and final authority to promote, transfer, assign or reassign personnel of 
13 
the corporation and these personnel actions are deemed made in the interest of the 
14 
service and not disciplinary, and provision of existing law to the contrary 
15 
notwithstanding; 
16 
12.6 
To establish policies and guidelines for employment on the basis of 
17 
merit, technical competence and moral character, and approve a staffing pattern of 
18 
personnel defining their powers and duties; 
19 
12.7 
To exercise the general powers mentioned in the corporation law in 
20 
so far as they are not inconsistent or incompatible with the provisions of this Act. 
21 
22 
Sef. 13. Management. - The management of the corporation shall be vested in 
23 
the President of the corporation who shall be a person of known integrity, competence in 
24 
technical and executive field related to the purposes of this Act. He shall be appointed by 
25 
the Board,and shall not be removed except for cause. He may have such Vice President(s) 
26 
as the Board of Directors may decide, to be appointed by the latter. He shall have the 
27 
following powers and duties: 
28 
13.1 
To execute and administer the policies, plans and programs and the 
29 
rules and regulations approved or promulgated by the Board; 
30 
13.2 
To direct and supervise the operation and internal administration of 
31 
the corporation and for this purpose, to delegate some or any of his powers and 
32 
duties to subordinate officials; 
33 
13.3 
To recommend to the Board the appointment, promotion, transfer, 
34 
assignment, re-assignment, demotion, dismissal and compensation of personnel; 
8 


2 
3 
13.4 
To exercise such powers and perform such other duties as may be 
directed by the Board of Directors. 
4 
Sec. 14. Personnel. - All personnel of the PCIC shall form part of the corporation 
5 
without reduction in rank or diminution in pay and benefits: Provided, that in the hiring 
6 
of other personnel, preference shall be given to civil service eligibles certified by the 
7 
Commission on Civil Service and that such hiring be subject to civil service rules and 
, 
8 
regulations: Provided further, that employees of the corporation holding technical 
9 
positions shall be exempted from the government's position classification and 
10 
compensation standards. 
11 
12 
Sec. 15. Commission on Audit. - The Commission on Audit shall be the Ex-
13 
Officio Auditor of the corporation. 
14 
15 
Sec. 16. Legal Counsel. - The corporation have its own legal department, the 
16 
Chief and Members of which shall be appointed by the Board of Directors. 
17 
18 
Sec. 17. Inter-Agency Linkages. - To support and promote the operations of the 
19 
corporation, all government departments, bureaus, offices, agencies and instrumentalities, 
20 
national or local, all lending institutions, government or private, now or hereafter 
21 
engaged in the supervised credit program, namely: Department of Finance, Depatiment 
22 
of Trade and Industry, Department of Interior and Local Government, Department of 
23 
Labor, Depatiment of National Defense, National Economic and Development Authority, 
24 
Armed Forces of the Philippines, Philippine National Police, Cooperative Development 
25 
Authority, National Irrigation Administration, Bureau of Soils, Bureau of Animal 
26 
Industry, Bangko Sentral ng Pilipinas, Rural Banks, Cooperative Rural Banks and 
27 
Development Banks, all barangay associations, and such other public or private entities 
28 
as may be called upon by the corporation, shall act as cooperating agencies to the 
29 
corporation, and for this purpose, are hereby deirected to design their policies, programs, 
30 
rules and regulations so as to attune and synchronize them with the objectives of the 
31 
corporation. 
32 
33 
Sec. 18. Utilization of Profits. -
The profits of the corporation shall be 
\ 
34 
determined on the calendar yeat· basis and the manner of its distribution shall be 
35 
determined by the Boat'd of Directors. 
9 


I 
Sec. 19. Exemptioll/rom Taxes. - In furtherance of the effective achievement of 
2 
the purpose of this Act, the corporation shall be exempt to the extent allowed by national 
3 
policy from all national, provincial, municipal and city taxes and assessments now 
4 
enforced or hereafter, established, provided that said exemptions shall apply only to such 
5 
taxes and assessments for which the corporation itself would otherwise be liable and shall 
6 
not apply to taxes and assessments payable by persons or other entities doing business 
7 
with the corporation. 
8 
9 
Sec. 20. Repealillg alld Separability Clause. - All laws, decrees, charters, 
10 
executive orders, administrative orders, proclamations, rules and regulations, or parts 
11 
thereof in conflict with this Act are hereby repealed or modified accordingly. If any 
12 
provision, part of parts of this decree is or are declared unconstitutional, such declaration 
13 
shall not invalidate the other provisions hereof. 
14 
15 
Sec. 21. Applicability 0/ P. D. No. 612. - The provisions of the insurance code 
16 
insofar as they are not in conflict or inconsistent with or repugnant to the provisions of 
17 
this decree shall apply to the corporation. 
18 
, 
19 
Sec. 22. Effectivity. - This Act shall take effect fifteen (15) days after its 
20 
public!jtion in any newspaper of general circulation. 
Approved, 
10