Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Ks).
RECEIVED
© wre 17 OCT 2016 ¥

Seventeenth Congress
First Regular Session

House BILLNo,__ 4107

Introduced by AGRI PARTYLIST
Representative Orestes T. Salon and Representative Delphine Gan Lee

EXPLANATORY NOTE

This bill seeks to provide for a more comprehensive and sustainable
agricultural insurance coverage to both the agriculture and fisheries sectors,
amending for the purpose Presidential Decree No. 1467 entitled, “Creating The
Philippine.Crop Insurance Corporation, Prescribing Its Powers And Activities,
Providing For Its Capitalization And For The Required Government Premium
Subsidy, And For Other Purposes,” as amended.

Presidential Decree No. 1467 (PD 1467) was signed by then President
Ferdinand Marcos in 1978 to implement a crop insurance scheme that will
‘provide relief to our rice producers from the heavy burdens and loss caused by
such disasters as well as to stabilize the finances of lending institutions” and
because “crop insurance can serve as strong incentive to the intensification of
the government food production program as well as minimize the erosion of the
financial capability, and the willingness of lending institutions to provide
‘financial support to rice production program.”

Since the law was enacted, several amendments have been introduced
through Presidential Decree No. 1733 which was enac! d in 1980 and Republic
‘Act No. 8175, in 1995. These laws, though they further strengthened the
provisions of PD 1467, are still lacking in many aspects, particularly in
protecting production losses of subsistence farmers and fisherfolks. While it is
commendable that the Philippine Crop Insurance Corporation (PCIC) has
extended insurance coverage to the fisheries sector, it still has no operational



insurance program for fishponds, fish pens, fish cages and other aquaculture
projects due to limited funds.

The Philippines has been battered by a deluge of typhoons in the past
decades, particularly during the last five years wherein we saw the devastation
delivered by the most powerful calamities the country has ever faced. Billions
of pesos worth of produce are destroyed each time in both the crops and
fisheries sectors. This leaves our farmers and fisherfolks in a sorry state, as most
of them borrow money for capital or engage in tie-ups with land owners or
capitalists, Losing their produce during natural calamities almost certainly
means another round of borrowing money or engaging in usurious transactions
in order to get by. Hence, this unending cycle further brings our farmers and
fisherfolks deeper into the pit of hopelessness and poverty.

Expanding the insurance coverage given by the PCIC ensures our farmers
and fisherfolks of financial security throughout the year. Aside from protecting
crops and aquaculture and fishery products, it also provides life and accident
insurance to both farmers and fisherfolks. The funds of the PCIC are also
increased, for the agency to further boost its investment capacity and to
adequately cover 11 million farmers and fisherfolks in the country. The
government owes this to them, who contribute nearly twenty percent to the
country’s gross domestic product.

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

S

ei

REP. ORESTES T. SALON REP. DELPIANE GAN LEE
AGRI Partylist AGRI Partylist


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

venteenth Congress
First Regular Session

HOUSE BILL NO. 4107

Introduced by AGRI PARTYLIST
Representative Orestes T. Salon and Representative Delphine Gan Lee

AN ACT

PROVIDING FOR A MORE COMPREHENSIVE AND SUSTAINABLE
AGRICULTURAL INSURANCE COVERAGE FOR THE
AGRICULTURE AND FISHERIES SECTORS, AMENDING FOR THE
PURPOSE PRESIDENTIAL DECREE NO. 1467, AS AMENDED,
ENTITLED, “CREATING THE PHILIPPINE CROP INSURANCE
CORPORATION, PRESCRIBING ITS POWERS AND ACTIVITIES,
PROVIDING FOR ITS CAPITALIZATION AND FOR THE REQUIRED
GOVERNMENT PREMIUM SUBSIDY, AND FOR OTHER PURPOSES”

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

SECTION 1. 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 FISHERFOLK
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against losses arising from natural calamities, FORTUITOUS
EVENTS, plant AND FISH diseases and pest infestations.
[Initially,] [t]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; [and later on to other crops without prejudice to
the inclusion of other] 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 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 OR
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, 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 or FISHPOND/


4B FISHCAGE household or employee or the failure of the insured to

44 follow proven farm OR FISHPOND/FISHCAGE practices.

45 THE CORPORATION SHALL ALSO INSURE
46 PROPERTIES AND FACILITIES WHICH ARE OWNED OR
a7 USED BY GOVERNMENT AGENCIES INVOLVED IN AGRI-
48 FISHERY-FORESTRY PROJECTS OR ACTIVITIES AND
49 GOVERNMENT-FINANCED AGRI-FISHERY-FORESTRY
50 PROJECTS. THE CORPORATION SHALL PROVIDE
51 REINSURANCE COVERAGE TO AGRI-FISHERY,
52 FORESTRY PROPERTIES AND FACILITIES
53 UNDERWRITTEN BY PRIVATE AND GOVERNMENT
54 INSURANCE COMPANIES.”

55 SEC. 2. Subsections 3.5 and 3.11 of Section 3 of Presidential Decree No.

56 1467, as amended, are hereby further amended to read as follows:

57 “SEC. 3. Powers. — The Corporation shall have the
58 following powers:

59 XXX

60 3.5 To insure the [rice production] CROPS of farmers AND
61 FISH PRODUCTION OF FISHERFOLKS against loss, damage
2 and destruction caused by natural calamities such as typhoons,
6 floods, drought, earthquake, volcanic eruptions, rodents, vermin[s],


64 disease, insects and other pests; and to carry on any business

65 necessary, related to, and expedient for the above purpose;

66 XXX

67 3.11 To generate internal funds by floating bonds,
68 [expansion to other] EXPANDING THE CORPORATION'S
6 insurance lines and extending coverage to other areas of
70 agriculture SUCH AS LIVESTOCK, AQUACULTURE,
nm FISHERY, AGROFORESTRY, AND FOREST PLANTATIONS
n in order to address insurance needs of the target sector and to do
B and perform acts and things and to exercise all the general powers
” conferred by law upon the Corporation as are incidental or
75 conducive to the attainment of the objectives of the Corporation.”
76 SEC. 3. Section 5 of Presidential Decree No. 1467, as amended, is

77 hereby further amended to read as follows:

78 “SEC. 5. Rate of Premium and its Sharing. ~ The rate of
9 premium, as well as the allocated sharing thereof [by the] OF
80 farmers, FISHERFOLKS, [the] lending _ institutions, the
81 Government of the Republic of the Philippines (herein called the
82 Government) and other parties, shall be determined by the Board
83 of Directors of the Corporation: Provided, That the share of the
84 Government in the premium cost in the form of premium subsidy,


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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 FARMLANDS OR 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 labor, the
premium 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 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 dire hours of need.”


105 SEC. 4. Subsections 6.3 and 6.5 of Section 6 of Presidential Decree No.

106 1467, as amended, are hereby further amended to read as follows:

107 “SEC. 6. Premium Subsidy. —

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109 6.3. Unappropriated and/or unreleased government
110 premium subsidy for policies written for the period from May 1,
an 1981 up to [the approval of this Act] DECEMBER 31, 2011
12 computed on the basis of premium rates and sharing previously
13 approved by the President as authorized by law shall be
a4 programmed for payment by the Government [within a period of
15 ten (10) years from the approval of this Act], and the yearly sums
us shall be included in the budgetary appropriations for submission to
uw Congress, stating the fiscal year following approval hereof, in
18 addition to the premium subsidy requirement of the year involved.
119 XXX

120 6.5. [Ten percent (10%) of the net camings of] [t]The
aaa Philippine Charity Sweepstakes Office (PCSO) [from its lotto
122 operation shall be carmarked for] SHALL CONTRIBUTE A
123 YEARLY AMOUNT OF FIVE MILLION PESOS
124 (P5,000,000.00) FROM ITS CHARITY FUND TO the Crop
125 Insurance Program and said amount shall be directly remitted by


16 the PCSO to the Corporation [every six (6) months] YEARLY

127 until the [amount of government subscription] UNRELEASED
128 PREMIUM SUBSIDY is fully paid.”
129 SEC. 5. Subsections 8.1, 8.3, 8.4.1 and 8.4.3, and 8.5 of Section 8 of

130 Presidential Decree No. 1467, as amended, are hereby further amended to read

131 as follows:

132 C. 8. Capital Stock. —

133, 8.1. The authorized capital stock of the Corporation is [Two
134 billion pesos (P2,000,000,000.00)] TEN BILLION PESOS
135 (P10,000,000,000.00) divided into ‘[Fifteen__ million
136 (P15,000,000.00)] SEVENTY-FIVE MILLION (75,000,000)
137 common shares with a par value of One hundred pesos (P100) each
138 share, which shall be fully subscribed by the Government and
139 [Five million (P5,000,000.00)]} TWENTY-FIVE MILLION
140 (25,000,000.00) preferred shares with a par value of One hundred
at pesos (P100) per share which shall have the features as provided in
12 Section 8.4 hereof and shall be issued in accordance with the
143, provisions of Section 8.5 hereof.

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145 8.3. The additional common capital stock of [One billion
146 pesos (P1,000,000,000.00)} SIX BILLION PESOS


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(P67,000,000,000.00) 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, [at least fifty percent (50%) of]
the needed capital, until the authorized capital stock is fully paid
up.

8.4. 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:

8.4.1. Preferred as to dividends at a minimum of [six
percent (6%)] ONE AND ONE-HALF PERCENT (1.5%) OR
THE PREVAILING THREE HUNDRED SIXTY (360)-DAY
TREASURY BILL RATE AT THE TIME OF DECLARATION
OF DIVIDENDS, WHICHEVER IS HIGHER;

XXX

8.4.3. Non-Participating;

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8.5. AT LEAST FIVE HUNDRED MILLION PESOS

(P500,000,000.00) OF PREFERRED SHARES SHALL BE


168 SUBSCRIBED AND PAID FOR BY THE LAND BANK OF

169 THE PHILIPPINES. THE BALANCE OF [T]The preferred

170 shares may be available for sale or to subscription by the general

a public.”

172 SEC. 6. Section 8-A of Presidential Decree No. 1467, as amended, is

173 hereby amended to read as follows:

174 “SEC. 8-A. RESERVE FUND FOR CATASTROPHIC
175 LOSSES. — A State reserve fund for catastrophic losses in the
176 amount of Five hundred million pesos (P500,000,000.00) shall be
ww created exclusively to answer for the proportion of all losses in
78 excess of risk (pure) premiums under the Corporation’s Crop
19 Insurance Program for small farmers AND FISHERFOLK. THE
180 FUND MAY BE INCREASED SUBJECT TO THE APPROVAL
181 OF THE PRESIDENT. The fund shall be administered by a
182 government financial institution to be designated by the
183 Corporation’s Board of Directors. Such sum as may be necessary
184 for the purpose shall be funded by the National Government
185 through the annual General Appropriations Act stating the calendar
186 year immediately following the approval of this Act and every year
187 thereafter until the full amount is completed. The mechanics of
188 claims against the [f]Fund and to what extent the Fund shall be


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liable shall be determined jointly by the financial institution

administering the Fund, subject to the approval by the President.”

SEC. 7. Subsection 9.1 of Section 9 of Presidential Decree No. 1467, as

amended, is hereby further amended to read follows:

SEC.9. Board of Directors. —

9.1. The powers of the Corporation shall be vested in and
exercised by a Board of Directors now composed of seven (7)
members and made up of the following: the President of the Land
Bank of the Philippines (LBP), the President of the Corporation,
the [Executive Director of the Agricultural Credit Policy Council
(ACPC)| SECRETARY OF THE DEPARTMENT OF
AGRICULTURE (DA), a representative from the private insurance
industry to be nominated by the Secretary of Finance and three (3)
representatives from the subsistence farmers sector, preferably
representing agrarian reform beneficiaries’ cooperatives!
associations coming from Luzon, Visayas and Mindanao, who
shall be selected and nominated by the different farmers
organizations and/or cooperatives. The respective nominees of the
private insurance industry and the farmer’s sector shall be
submitted to and appointed by the President. The chairman of the

Board of Directors shall be appointed to and appointed by the

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210 President from among the members of the Board of Directors. The

a President of the Corporation shall also be appointed by the
212 President and shall be ex officio vice chairman who shall assist the
213 chairman and act in his stead in case of absence or incapacity. In
214 case of absence or incapacity of both the chairman and the vice
215 chairman, the Board of Directors shall designate a temporary
216 chairman from among its members. Except for the President of the
27 LBP and the [Executive Director of the ACPC] SECRETARY OF
218 AGRICULTURE, all members of the Board of Directors,
219 including the President of the Corporation, shall be appointed by
220 the President within a reasonable period of time after the approval
221 of this Act.”

222 SEC. 8. Section 11-B of Presidential Decree No. 1467, as amended, is

223 hereby further amended, to read as follows:

224 “SEC. 11-B. No Claim Benefits. — Any insured farmer who
225 has not filed any claim during the immediately preceding three (3)
226 crops seasons OR ANY INSURED FISHPOND/FISHCAGES
227 OPERATOR WHO HAS NOT FILED ANY CLAIM DURING
228 THE IMMEDIATELY PRECEDING THREE (3) HARVEST
229 SEASONS shall be entitled to a no-claim benefit of at least ten

230 percent (10%) of his premium share paid for said crop seasons to


231 be deposited in a trust fund and to be managed by the Corporation.

232 Such trust fund may be used to finance premium rebate or
233 premium credit applicable to the immediately following crop
234 seasons as determined by the Board of Directors of the
235 Corporation.”

236 SEC. 9, Section 17-A of Presidential Decree No. 1467, as amended, is

237 hereby further amended to read as follows:

238 “SEC. 17. Penal Provisions. — Any person who through
239 malfeasance, misfeasance or nonfeasance allows a spurious claim
240 to be paid, including the claimant himself, shall, upon final
2a conviction, be punished by imprisonment of not less than [one (1)
2a year] TWO (2) YEARS but not more than [six (6) years] EIGHT
203 (8) YEARS or a fine of not less than [Fifty thousand pesos
244 (P50,000.00)} ONE HUNDRED THOUSAND PESOS
245 (P100,000.00) but not more than [Five hundred thousand pesos
246 (P500,000.00)} SIX HUNDRED THOUSAND PESOS
247 (P600,000.00) or both at the discretion of the court. The PCIC
248 personnel who allowed the commission of the offense shall, in
249 addition, be dismissed from office, and forfeit all privileges and

250 benefits which may accrue to him.”


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SEC. 10. Review. — The PCIC Board shall undertake periodic review of
the Corporation’s activities and shall submit to both Houses of Congress at least
once [every two (2) years] 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. 11. Separability Clause. — \f any provision or part hereof is held
unconstitutional or invalid, the other provisions not affected shall remain in full
force and effect.

SEC. 12. Repealing Clause. ~ All laws, executive orders and other
issuances, or parts thereof inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.

SEC. 13. Effectivity. — This Act shall take effect fifteen (15) days after
its publication in the Official Gazette or in a newspaper of general circulation.

Approved,