Republic of the Philippines
HOUSE OF REPRESENTATIVES — RECEIVED

Quezon Cit
sf pate:_30 JUN 2016
SEVENTEENTH CONGRES: TIME:_J2: 2¢
First Regular Session BY:
House Bill 40 REGISTRATION UNIT

BILLS AND INDEX SERVICE

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

EXPLANATORY NOTE

On 11 June 1978, via Presidential Decree No. 1467, the Philippine
Crop Insurance Corporation (PCIC) was created.

At that time, there was food production government initiative,
focusing on palay and/or rice production. This was coupled with supervised
rice production credit program.

However, the recurrent natural disasters resulted to farmers suffering
from heavy financial losses due to the destruction of their standing crops.
Consequent to the loss of their income was the loss of their credit standing.
This is turn, seriously affected the finances of lending institutions
participating in the supervised credit program. It considerably constricted the
loaning capabilities of the banks and their willingness to extend loans to rice
farmers.

Thus, a crop insurance scheme was implemented under the said
decree. It was to provide relief to the rice producers from the heavy burdens
and loss caused by the disasters, as well as to stabilize the finances of
lending institutions. It served as a strong incentive to the intensification of
the food production initiative, minimized the erosion of the financial
capability, and the willingness of lending institutions to provide financial
support to rice production program.

In 29 December 1995, Republic Act No. 8175 or the Revised Charter
of the Philippine Crop Insurance Corporation Act was ordained.

The PCIC was strengthened. Among other amendments to PCIC’s
charter, crop insurance was no longer limited to palay. It was extended to
other crops. Also, there was an inclusion of other non-crop agricultural
assets such as machineries, equipment and transport facilities. The coverage

HOUSE OF REPRESENTATIVES



of the insurance was likewise broadened such that the cost of production
inputs, the value of the farmer's own labor and that of hired workers, and a
portion of the expected yield, became insurable.

Nevertheless, crop insurance under RA 8175 remained to be
mandatory only upon all farmers obtaining production loans for palay under
the supervised credit program. It remained optional on the part of self-
financed farmers who can secure crop insurance only if they agree to place
themselves under the supervision of agricultural production technicians.
Thus, only the financial institutions remained secure, even if a disaster
oceurs

A larger part of the farmer’s population, and consequently a bigger
portion of the expected production output, remained uninsured.

‘The other major problems sought to be remedied by PD No. 1467
have again resurfaced. There are continuing financial burden to farmers
affected by disasters, and this resulted to diminishing agricultural production
and threats to food security.

And in recent times, these problems have grown by geometric
proportions. This is because typhoons, and other calamities and disasters,
natural or otherwise, including, as recently experienced, floodings brought
about by spilling of dam waters, became more frequent, powerful and
intense. Therefore, a very big and ever escalating portion of the country’s
expected agricultural production is, and continuous to be, adversely affected.

As an example, very recently, the National Disaster Risk Reduction
and Management Council (NDRRMC) reported that typhoon Pedring
damaged P9.437 billion worth of agricultural products and properties, while
Quiel’s destruction was estimated at P115 million.

On the other hand, the PCIC's preliminary assessment showed about
333.93 million worth of crops, mostly palay, were insured in 30 provinces
covering the entire Luzon.

The insured crops of P334 Million is therefore represent only 3% of
the almost P10 Billion damaged crops.

Under this proposed measure, participation in the insurance for palay
and other essential crops shall become compulsory.

For farmers who cannot secure crop insurance by themselves, the
National Food Authority (NFA) shall be the one to secure the insurance for
them. The NFA shall pay for the insurance premium and shall become at
least a fifty percent (50%) beneficiary of the insurance proceed or claim.

With these amendments to the PCIC Charter, all expected farm output
shall be fully insured. If the hazard insured against occurs, such as natural or


manmade disasters, the farmers will not financially suffer. The banks and
financial institutions shall also not suffer as the farmers shall continue to
have the means to pay for their loans even though their crops were damaged.
‘There shall be continuity of agricultural credit and financing. Food security
shall not be compromised because the farmers, and the government through
the NFA, shall have the money (from the insurance proceeds), to procure
replacement food supply and grains and seeds for the next planting season.

It is in this view that the immediate passage of this bill, filed as House
Bill No. 418 in the Sixteenth Congress by the undersigned, is eamestly
sought.

AR c. YAP
Representative


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

40

House Bill No.

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

AN ACT

TO PROVIDE COMPENSATION TO FARMERS WHO
SUFFER FROM RECURRENT DISASTERS AND
CALAMITIES, TO SUSTAIN AGRICULTURAL CREDIT
AND FINANCING, AND TO ENSURE FOOD SECURITY,
BY MAKING INSURANCE MANDATORY FOR PALAY
AND OTHER ESSENTIAL CROPS, AMENDING FOR
THE PURPOSE SECTION 4 OF PRESIDENTIAL
DECREE NO. 1467, AS AMENDED BY REPUBLIC ACT
NO. 8175, OR THE "REVISED CHARTER OF THE
PHILIPPINE CROP INSURANCE CORPORATION
(PCIC) ACT OF 1995”, AND FOR OTHER PURPOSES

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

SECTION 1. Short Title. — This Act shall be known as the
“Expanded Crop Insurance Act of 2016”.

SECTION 2. Declaration of Policy. — It is hereby declared the policy
of the State to:

1. Ensure food security, intensify food production, promote agricultural
credit and broaden the coverage of mandatory crop insurance,
especially amidst the recurrence of disasters and calamities, natural or

otherwise, including floods, typhoons, heavy rains, drought, that


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destroys crops, especially palay and other grains and crops necessary
for food security;

2. Alleviate the financial burden of farmers due to uncompensated losses
arising from destruction of crops wrought by said disasters and
calamities, keep them away from perpetual indebtedness, enhance
their credit standing, and provide additional government support to
increase agricultural production; and,

3. To assist banks and financial institutions, not to constrict their loaning
capabilities, and kindle their willingness to extend loans to farmers.
SECTION 3. Amendment of the Revised Charter of the Philippine

Crop Insurance Corporation. — Section 4 of Presidential Decree No. 1467,
otherwise known as the Charter of the Philippine Crop Insurance
Corporation (PCIC), as amended by Republic Act No. 8175 or the "Revised
Charter of the PCIC Act of 1995”, is hereby further amended, to read as
follows:

“SECTION 4. Who Shall Be Insured. —
PARTICIPATION IN THE INSURANCE FOR PALAY
AND OTHER CROPS DETERMINED TO BE
ESSENTIAL FOR FOOD SECURITY SHALL BE
COMPULSORY UPON ALL FARMERS. FOR FARMERS
WHO CANNOT SECURE CROP INSURANCE BY
THEMSELVES, THE NATIONAL FOOD AUTHORITY
(NFA) SHALL BE THE ONE TO SECURE FOR THEM.

THE NFA SHALL PAY FOR THE INSURANCE

PREMIUM AND SHALL BECOME AT LEAST A FIFTY


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PERCENT (50%) BENEFICIARY OF THE INSURANCE
PROCEED OR CLAIM. FOR ALL OTHER CROPS,
[P]participation [in the palay crop insurance] shall be
compulsory upon all farmers obtaining production loans [for
palay] under the supervised credit program, and optional on the
part of self-financed farmers provided they agree to place
themselves under the supervision of agricultural production
technicians. The term "supervised credit program" as used in
this Decree shall mean the production credit program wherein
the farmer who obtained production loans [for palay] agree in
writing that he will apply proven farm practices necessary to
conserve the land, improve its fertility and increase its
production, and abide by the approved farm plan and budget
jointly prepared by him and the duly accredited supervised
credit technician. The term "supervision of agricultural
production technician" shall mean the supervision undertaken
by agricultural production technicians who are duly accredited
by the appropriate government agencies concerned, as required
under the supervised credit system.
XXX”

SECTION 4. Implementing Rules. — Within sixty (60) days after the
effectivity of this Act, the Secretary of the Department of Agriculture, the
Administrator of the NFA and the President of the PCIC shall be constituted
into a Committee mandated to issue the Implementing Rules and

Regulations of this Act.


SECTION 5. Separability Clause. - If any provision of this Act, or
any parts thereof, is declared unconstitutional, the same shall not affect the
validity and effectivity of the other portions.

SECTION 6. Repealing Clause. - All laws, executive orders,
presidential decrees, proclamations, rules, regulations, issuances and
enactments of parts thereof inconsistent with this Act are hereby repealed or
modified accordingly.

SECTION 7. Effectivity. - This Act shall take effect fifteen (15) days
from its complete publication in the Official Gazette of in a newspaper of
general circulation in the Philippines, whichever comes earlier.

APPROVED