Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH CONGRESS
Third Regular Session

COMMITTEE REPORT No. 264

Submitted by the Committee on Govemment Enterpnses & Privatization on
SU AN 2

RE House Bil 6883

Recommending its approval in substitution of House Bill Nos. 2825, 3758 and 4184

Sponsors: Representatives Erico Basilio A. Fabian, Agapito H. Guanlao, Walden F. Bello,
Gina P. De Venecia, Angelo B. Palmones, Kaka J. Bag-ao and Rufus B. Rodriguez.

Mr. Speaker

‘The Committee on Goverment Enterprises & Privatization to which were referred
House Bill No. 2825 introduced by Representatives Walden F. Bello and Kaka J. Bag-ao,
entitled:

“AN ACT
FURTHER AMENDING PRESIDENTIAL DECREE NO. 1467, AS
AMENDED, OTHERWISE KNOWN AS THE CHARTER OF THE
PHILIPPINE CROP INSURANCE CORPORATION, IN ORDER TO EXPAND
AND IMPROVE AGRICULTURAL INSURANCE IN THE PHILIPPINES
AND PROMOTE SMALL AGRICULTURAL PRODUCERS’ RESILIENCE
TO CLIMATE CHANGE”

House Bill No, 3758, introduced by Representatives Gina P. De Venecia, Erico B
Aumentado, Giorgidi B. Aggabao, Arthur C. Yap and Augusto Syjuco, entitled

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 DECREEE NO.
1467, AS AMENDED, OTHERWISE KNOWN AS THE CHARTER OF
THE PHILIPPINE CROP INSURANCE CORPORATION (PCIC)



And House Bill No. 4184, introduced by Representatives Angelo Palmones, Erico B
Aumentado and Jeci A. Lapus, entitled:

“AN ACT
FURTHER AMENDING PRESIDENTIAL DECREE NO. 1467
OTHERWISE KNOWN AS THE PHILIPPINE CROP INSURANCE
CORPORATION DECREE AND REPUBLIC ACT NO. 8175
OTHERWISE KNOWN AS THE REVISED CHARTER OF THE
PHILIPPINE CROP INSURANCE CORPORATION AND FOR OTHER
PURPOSES”

entitled:

“AN ACT

STRENGTHENING THE PHILIPPINE CROP INSURANCE

CORPORATION, AMENDING FOR THE PURPOSE PRESIDENTIAL

DECREE NO. 1467 AS AMENDED”
be approved in substitution of House Bill Nos. 2825, 3758 and 4184, with Representatives
Walden F. Bello, Kaka J. Bag-ao, Gina P. De Venecia, Erico B. Aumentado, Angelo
Palmones, Jeci A. Lapus, Giorgidi B. Aggabao, Arthur C. Yap, Augusto Syjuco, Erico
Basilio A. Fabian, Agapito H. Guanlao, and Rufus B. Rodriguez, as authors thereof.

‘THE HONORABLE SPEAKER
HOUSE OF REPRESENTATIVES
Quezon City


Republic of the Philippines
Hlouse of Representatives
Quezon City

FIFTEENTH CONGRES
Third Regular Session

HouSBill No 6883

(In substitution of House Bill Nos. 2825, 3758, and 4184)

Introduced by Representatives Walden F. Bello, Kaka 1. Bag-ao, Gina P. De
Venecia, Erico B. Aumentado, Angelo B. Palmones, Jeci A. Lapus, Giorgidi B. Aggabao,
Arthur ©. Yap, Augusto Syjuco, Agapito H. Guanlao, Rufus B, Rodnguez, and Erico
Basilio A. Fabian

AN ACT

STRENGTHENING THE PHILIPPINE CROP INS!
CORPORATION, AMENDING FOR THE PURPOSE
DECREE NO. 1467 AS AMENDED

Be it ena. ted by the Senate and the House of Representatives in Congress assembled:

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

“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 [for budgetary
purposes}. The Corporation shall insure qualified farmers AND
FISHERFOLK against losses arising from natural _ calamities,
FORTUITOUS EVENTS, plant AND FISH diseases and pest infestations.
{Initially,] The Corporation shall provide insurance coverage for palay
AND CORN crops, HIGH-VALUE COMMERCIAL CROPS,
LIVESTOCK, AQUACULTURI AND FISHERY PRODUCTS,
AGROFORESTRY CROPS AND FOREST PLANTATIONS, [and later
‘en 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 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 in its discretion. decide to insure. Such insurance



protection, however, shall exclude losses arising from avoidable risks

it
2 emanating from or due to the negligence, malfeasance or fraud committed
3 by the insured or any member of his immediate farm household or
4 employee or the failure of the insured to follow proven farm practices.”
5
6 THE CORPORATION SHALL ALSO INSURE PROPERTIES
7 AND FACILITIES WHICH ARE OWNED AND/OR USED BY
8 GOVERNMENT AGENCIES INVOLVED IN AGRI-FISHERY-
9 FORESTRY PROJECTS/ACTIVITIES AND GOVERNMENT-
10 FINANCED AGRI-FISHERY-FORESTRY PROJECTS. THE
1 CORPORATION SHALL ALSO PROVIDE REINSURANCE
12 COVERAGE TO AGRI-FISHERY-FORESTRY PROPERTIES AND
13 FACILITIES UNDERWRITTEN BY PRIVATE AND GOVERNMENT
14 INSURANCE COMPANIES
15
16 SEC. 2, Subsections 3.5 and 3.1 of Section 3 of PD No. 1467, as amended, are
17 hereby further amended to read as follows
18
19 “Sec. 3. Powers. The Corporation shall have the following powers:
20
21 Xxx
22
23 “3.5, To insure the [rice production] PRODUCE of farmers AND
24 FISHERFOLK against loss, damage and destruction caused by natural
25 calamities such as typhoons, floods, drought, earthquake, volcanic
26 eruptions, rodents, vermins, disease, insects and other pests, and to carry
27 on any business necessary, related 10, and expedient for the above
28 purpose:
29
30 XXX
31
32 “3.11, To generate intemal funds by floating bonds, expansion to
33 other insurance lines and extending coverage to other areas of agriculture,
34 LIVESTOCK, AQUACULTURE AND FISHERY, AGROFORESTRY
35 AND FOREST PLANTATIONS in order to address the insurance needs
36 Of the target sector and to do and perform acts and things and to exercise
37 all the general powers conferred by law upon the Corporation as are
38 incidental or conducive to the attainment of the objectives of the
39 Corporation.”
40
41 SEC. 3. Section 5 of PD No. 1467. as amended. is hereby further amended to read
42 as follows
43
44 “Sec. 5. Rate of Premium and its Sharing. — The rate of premium,
45 as well as the allocated sharing thereof by the farmers, THE
46 FISHERFOLK, the lending institutions, the Goverment of the Republic


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hereby

of the Philippines (herein called the Govemment) and other parties, shall
be determined by the Board of Directors of the Corporation: Provided,
‘That the share of the Govemment 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
further amended to read as follows:

“Sec. 6. Premium Subsidy
Xxx

“6.3. Unappropriated and/or unreleased govemment premium
subsidy for policies written for the period from May 1, 1981 up to [the
approval of this Act] 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 Govemment
[within a period of ten (10) years from the approval of this Act,] 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

XXX

“6.5. [Ten percent (10%) of the net eamings of the] THE
Philippine Charity Sweepstakes Office (PCSO) [from its lotto operations,
shall be earmarked for] 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


BSScmraunsene

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by the PCSO to the Corporation [every six (6) months] YEARLY until the
[amount of govemment subscription] 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 [Two
billion pesos _(P2,000,000,000.00)]_ TEN BILLION PESOS
(P10,000,000,000) divided into {Fifteen million (15,000,000) SEVENTY
FIVE MILLION (75,000,000) common shares with a par value of One
hundred pesos (P100) each share, which shall be fully subscribed by the
Government and [Five million (5,000,000)] TWENTY FIVE MILLION
(25,000,000) preferred shares with a par value of One hundred pesos
(P100) 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.
XXX

“8.3. The additional common capital stock of [One billion pesos
(P1,000,000,000)] SIX BILLION PESOS (P6,000,000,000) 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, [at least fifty
percent (50%) of] the needed capital, until the authorized capital stock is
fally paid up.”

Xxx
“8.4.1 Preferred as to dividends at a minimum of [six per cent
(6%)] 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:
Xxx
“8.4.3 NON-Participating:
Xxx
“8.5 [The preferred shares] AT LEAST FIVE HUNDRED

MILLION PESOS OF PREFERRED SHARES SHALL BE
SUBSCRIBED AND PAID FOR BY THE LAND BANK OF THE


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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 Govemment 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.


FACT SHEET

House Bill No. 6883
(As Approved On )

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

Introduced by:
REPRESENTATIVES WALDEN F. BELLO, KAKA J. BAG-AO, GINA P. DE VENECIA,
ERICO B. AUMENTADO. ANGELO B. PALMONES, JEC/ A. LAPUS, GIORGIDI 8.
AGGABAO, ARTHUR C. YAP, AUGUSTO SYJUCO, ERICO BASILIO A. FABIAN,
AGAPITO H. GUANLAO, AND RUFUS B. RODRIGUEZ

Committee Referral: COMMITTEE ON GOVERNMENT ENTERPRISES &
PRIVATIZATION
Committee Chairperson: Rep. ERICO BASILIO A. FABIAN

OBJECTIVES

* To expand the coverage of crop insurance
* Tostrengthen the financial capacity of PCIC

KEY PROVISIONS:

* Seeks to expand insurance coverage from current farmers to fisherfolk and
include other agricultural crops such as com, high value commercial crops,
livestock, aquaculture and fishery products, agroforestry crops and forest
plantations.

* Mandates PCSO to contribute P5 M annually until the unreleased premium
subsidy is fully paid;

* Increases the authorized capital stock of PCIC from P2 B to P10 B

RELATED LAWS:
¢ Republic Act No. 8175
« Presidential Decree No. 1467