Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 1212

Introduced by REP. FAUSTINO ‘INNO’ A. DY V

EXPLANATORY NOTE

Agriculture remains as the sole source of income and employment for many
Filipinos. It is also the sector most vulnerable to the worsening climate crisis and its
accompanying droughts, storms, and typhoons.

There is thus a cogent need to insure crops against loss and damage inherent to
the industry, to mitigate the risks in order to safeguard the precious capital raised by
Filipino farmers.

Government has laid out the foundation for providing the financial infrastructure
to insure against agricultural losses. In 1978, the Philippine Crop Insurance Corporation
(PCIC) was created. The PCIC’s principal mandate is to provide insurance protection to
farmers and fisherfolks against losses arising from natural calamities, plant diseases and
pest infestations of their crops. However, the PCIC has oftentimes failed to adequately
protect subsistence farmers and fisherfolk from the effects of calamities — often
paying far less than the actual value of the projected harvest.

Hence, this Bill which has the following key provisions:

a. Augments the financial capacity of PCIC in order to provide a more extensive
insurance coverage for palay and com crops, high-value commercial crops,
livestock, aquaculture and fishery products, agroforestry crops, and forest
plantations; non-crop agricultural assets such as machineries, equipment,
transport facilities, and other related infrastructure; and life and accident term
insurance coverage for subsistence farmers and fisherfolk;

b. Authorizes PCIC to insure properties and facilities which are owned or used by
government agencies involved in agri-fishery-forestry projects or activities and
government-financed agri-fishery-forestry projects;

c. Increases the capital stock of PCIC to P10 Billion to be subscribed by the
national government, the Land Bank of the Philippines (LBP) and the general


public;
d. Mandates that ten percent (10%) of the net earnings of the Philippine Charity

Sweepstakes Office from its lotto operation shall be earmarked for the Crop
Insurance Program.

By improving the PCIC, we give better protection to the farmers and farming
families it is meant to serve.

In viewof the foregoing, the immediate passage of this bill is earnestly sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL NO. “1212

Introduced by REP. FAUSTINO ‘INNO’ A. DY V

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AN ACT
STRENGTHENING THE PHILIPPINE CROP INSURANCECORPORATION,
REPEALING 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. Short Title. — This Act shall be known as the “Revised Charter of the
Philippine Crop Insurance Corporation”.

SECTION 2. Declaration of Policy. ~ It is hereby declared the policy of the State to
provide support to agriculture through adequate financial, production, marketing and
other support services. Towards this end, the State shall:

a. Ensure food security, intensity food production, promote agricultural credit, and
broaden the coverage of mandatory crop insurance amidst the recurrence of
disasters and calamities, natural or otherwise, such as floods, typhoons, heavy
rains, and drought that destroy crops, especially palay and other grains and crops
necessary for food security;

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

c. Assist banks and financial institutions by enhancing their capabilities to extend
loans to farmers; and

dQ Strengthen the organizational capability and expand the coverage of the
Philippine Crop Insurance Corporation (PCIC), to provide insurance protection


to farmers and fisherfolk against losses arising from natural calamities,
fortuitous events, plant and fish diseases, and pest infestations.

SECTION 3. Expanded Purposes and Coverage of the PCIC. — The Philippine Crop
Insurance Corporation (PCIC), a government-owned corporation established pursuant to
Presidential Decree No. 1467, with its principal place of business in Metro Manila,
shall insure qualified farmers and fisherfolk against losses arising from natural
calamities, fortuitous events, plant and fish diseases, and pest infestations.

The PCIC 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 machineries, equipment,
transport facilities, and other related infrastructure; and life and accident term insurance
coverage for farmers and fisherfolk. Such crop insurance shall cover, in every case, the
cost of production inputs, the value of the labor of the farmers or fisherfolk, and
members of their households including the value of the labor of hired workers, and a
portion of the projected value of the crops. 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 the immediate farm
household or employee, or the failure of the insured to follow proven farm practices.

The PCIC shall also insure properties and facilities which are owned or used by
government agencies involved in agri-fishery-forestry projects or activities and
government-financed agri-fishery-forestry projects. It shall also provide reinsurance
coverage to agri-fishery-forestry properties and facilities underwritten by private and
government insurance companies, and weather index-based insurance (WIBI) and
reinsurance for palay and corn crops, high-value commercial crops, livestock,
aquaculture and fishery products, agroforestry crops, and forest plantation.

SECTION 4. Powers. — The PCIC shall continue to exercise the following powers and

functions:

.. To prescribe, repeal, and amend its own by-laws;

. To adopt and use a corporate seal;

. To sue and be sued;

|. To have continuous succession until dissolved by law,

. To determine its operating policies and to issue such rules and regulations as may
be necessary to implement the crop insurance scheme;

~ To insure the crops of farmers and fishpond, seaweed, oyster, or mussel farm of
fisherfolk against losses, damages and destruction caused by rodents, vermin,
diseases, insects, and other pests and natural calamities such as typhoons, floods,
droughts, earthquakes, volcanic eruptions; and to carry on any business necessary,
related to and expedient for the above purpose;

. To insure in the Philippines or abroad, all or any risk of the PCIC;

|. To purchase or otherwise acquire ownership and manage any and all parts of the
business, property, and liabilities of any person or company carrying on any
business which the PCIC is authorized to carry on or possess;

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i. To acquire by purchase or otherwise acquire ownership of and to invest in, hold,
sell, or otherwise dispose of, stocks or bonds or any interest in either, or any
obligation or evidence of indebtedness of any corporation, domestic or foreign,
or the bonds 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 and
privileges of ownership, including the right to vote thereon or consent in respect
thereto for any and all lawful purposes;

j. To purchase or otherwise acquire, sell, lease, convey, mortgage, encumber, or
otherwise deal with any property, real or personal, or any interest therein; extend
credit on the security of real estate or movable property; exercise easement right
or privilege over or in respect to any property, real or personal, as may be
permitted by law and as may be reasonable or necessary to carry out the purposes
for which the PCIC is formed or as may or hereafter be permitted by law,

k. To establish branches whenever it may be expedient and necessary; and

|. To generate internal funds by floating bonds, expanding the PCIC’s insurance
lines to include agricultural guarantee loans, and extending coverage to other
areas of agriculture, such as livestock, aquaculture, 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 PCIC as are incidental or conducive to the attainment
of the objectives of the PCIC.

SECTION 5. Who Shall Be Insured. — It shall be compulsory for farmers to take out
insurance for palay and other crops essential for food security, as determined by the
Department of Agriculture (DA). For other crops, insurance coverage shall be
compulsory upon all farmers obtaining production loans under the supervised credit
program of the government and optional on the part of self-financed farmers: Provided,
That they agree to place themselves under the supervision of agricultural production
technicians.

As used in this Act, the term supervised credit program refers to the production
credit program wherein the farmer who obtains production loans agrees in writing to
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 such farmer and the duly accredited supervised credit technician.

The term supervision of agricultural production technician refers to the
supervision, pursuant to Presidential Decree No. 409, dated March 11, 1974, undertaken
by agricultural production technicians who are duly accredited by the appropriate
government agencies concerned, as required under the supervised credit program of the
government.

SECTION 6. Rate of Premium, Sharing, and Amount of Indemnity. — The rate of
premium, as well as the allocated sharing thereof of farmers, fisherfolk, lending
institutions, the government of the Republic of the Philippines, hereinafter referred to


as the Government, and other parties, shall be determined by the Board of Directors of
the PCIC, hereinafter referred to as the Board: 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 farmland and each fisherfolk
is cultivating not more than five (5) hectares of 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 rate and sharing to be determined by the Board: Provided,
further, That the premium share of the subsistence farmer or fisherfolk shall be
reasonably affordable: Provided, furthermore, That the Government shall share in the
premium cost only in insurance coverage against unforeseen and unavoidable risks such
as typhoons, droughts, rainfall, or outbreaks of pests or diseases; Provided, finally, That
premium subsidy or insurance benefits shall, upon the accumulation of surplus funds, be
increased to such amount as may be determined by the Board.

The amount of indemnity shall be determined by the Board, which shall take into
account the value of the potential harvest of crops at the ripening stage, actual cost of
production inputs already applied at the time of loss per farm plan and budget subject to
limits stipulated in the policy contract, pro-rated cost of the harvested crops, the salvage
value, if any, and the percentage of yield loss.

SECTION 7. Premium Subsidy. —

(a) The required government premium subsidy, as determined by the Board and
approved by the President of the Philippines, shall be deemed appropriated from the
funds of the National Treasury not otherwise appropriated, and shall be drawn, on a
month-to-month or other periodic bases, depending upon the actual amount of insurance
underwritten by the PCIC. For this purpose, the PCIC shall bill the Government the sum
of money corresponding to the computed amount of subsidy;

(b) Yearly projections of the premium subsidy shall be submitted by the PCIC to
the President of the Philippines, and upon approval, shall be included in the
government’s budgetary appropriation;

(c) Calamity funds earmarked by the government shall include a certain percentage
for crop insurance and shall be released to and administered by the PCIC;

(d) Ten percent (10%) of the net earnings of the Philippine Charity Sweepstakes
Office (PCSO) from its lotto operation shall be earmarked for the Crop Insurance
Program and said amount shall be directly remitted by the PCSO to the PCIC every six
(6) months until the amount of government subscription is fully paid.

SECTION 8. Capital Stock. -

(a) The authorized capital stock of the PCIC is Ten billion (P10,000,000,000.00)
pesos, divided into seventy-five million (75,000,000) common shares with par value of
One hundred (P100) pesos per share, which shall be fully subscribed by the government,
and twenty-five million (25,000,000) preferred shares with a par value of One hundred
(P100) pesos per share;

(b) The common capital stock of One billion five hundred million
(P1,500,000,000.00) pesos having been fully paid to the PCIC, the balance of Six



billion (P6,000,000,000.00) pesos to be subscribed by the government shall be
appropriated annually by Congress.

(c) The preferred shares shall be given priority over common shares in the
declaration of dividends and in the distribution of assets in the event of liquidation of the
PCIC. Preferred shares shall have the following specific features:

i. As to dividends, they shall be entitled to a minimum interest rate of one
and half percent (1.5%) or the prevailing 360-day Treasury bill rate at the
time of declaration of dividends, whichever is higher;

ii, They shall be cumulative, non-participating, and nonvoting;

iii, The dividends thereon shall be exempt from income tax;

iv. They shall be redeemable at the option of the PCIC at the prevailing book
value but in no case less than par after five (5) years from issuance
thereof; and

vy. They shall be transferable.

(d) At least Five hundred million (P500,000,000.00) pesos of preferred shares
shall be subscribed and paid for by the Land Bank of the Philippines (LANDBANK). The
balance of the preferred shares may be available for sale or subscription by the general
public.

SECTION 9. Reserve Fund for Catastrophic Losses. — A State Reserve Fund, herein
referred to as the Fund, for catastrophic losses in the amount of Five hundred million
(P500,000,000.00) pesos shall be created exclusively to answer for the proportion of
all losses in excess of risk or pure premium under the PCIC’s Crop Insurance Program
for small farmers and fisherfolk. The Fund may be increased, subject to the approval of
the President of the Philippines. The Fund shall be administered by the government
financial institution to be designated by the PCIC’s Board. Such sum as may be
necessary for the purpose shall be funded by the government through the annual General
Appropriations Act. The mechanics of claims against the Fund and to what extent the
Fund shall be liable shall be determined jointly with the financial institution
administering the Fund, subject to the approval of the President of the Philippines.

SECTION 10. Reinsurance. — In order to spread the risk of the PCIC, it is hereby
authorized to seek reinsurance protection whenever it may be available.

SECTION 11. Board of Directors. — The powers of the PCIC shall be vested in and
exercised by its Board of Directors, composed of seven (7) members as follows:
1. President of the LANDBANK;
2. President of the PCIC;
3. Secretary of the Department of Agriculture (DA);
4. Representative from the private insurance industry to be nominated by the
Secretary of Finance; and
5. Three (3) representatives from the subsistence farmers’ sector, preferably
representing agrarian reform beneficiaries, cooperatives, or associations coming
from Luzon, Visayas, and Mindanao, who shall be selected and nominated by the
different farmers’ organizations or cooperatives.


‘The respective nominees of the private insurance industry and the farmers’ sector
shall be submitted to and appointed by the President of the Philippines. The Chairperson
of the Board shall be appointed by the President of the Philippines from among the
members of the Board. The President of the PCIC shall also be appointed by the
President of the Philippines and shall be the ex officio Vice Chairperson who shall
assist and act as Chairperson in case of the latter’s absence or incapacity.

In case of absence or incapacity of both the Chairperson and Vice Chairperson,
the Board shall designate a temporary Chair from among its members. Except for the
President of the LANDBANK and the Secretary of the DA, all members of the Board,
including the President of the PCIC, shall be appointed by the President of the
Philippines within a reasonable period of time after the approval of this Act.

The members of the Board may designate their respective alternates who shall
attend the meetings in their absence or incapacity. The Board shall meet regularly at
least twice a month or as often as the exigencies of the PCIC’s affairs demand. The
presence of at least five (5) members shall constitute a quorum which shall be necessary
for the transaction of any business. In the absence of the Chairperson, the Vice
Chairperson shall preside over the meeting of the Board.

‘The Chairperson and the members of the Board shall each receive per diem
pursuant to existing law for each meeting of the Board actually attended: Provided, That
in the case of the representatives of the subsistence farmers’ sector, the Board is
authorized to provide funds to defray the cost of reasonable travel expenses and, if
necessary, subsistence expenses in addition to per diem.

SECTION 12. Powers and Functions of the Board of Directors. — The Board shall
have the following powers and functions:

a. Implement the provisions and purpose of this Act;

b. Determine the rate of premium, as well as the allocated sharing thereof of
farmers, fisherfolk, lending institutions, the Government, and other
parties;

c. Formulate and adopt policies and plans, and promulgate rules and
regulations for the management, operation and conduct of the affairs and
business of the PCIC and, for this purpose, may limit or refuse insurance
in any area or on any farmer because of the risk involved or may expand
the subject of insurance coverage to crops other than palay and other
crops essential for food security: Provided, That such coverage on other
crops shall be approved by the President of the Philippines;

d. Borrow funds from local and international financing sources or
institutions and issue bonds up to five (5) times the value of its authorized
capital stock for the purpose of financing the programs and projects
deemed vital for the attainment of the PCIC’s goals and objectives;

e. Enter into, make, and execute contracts of any kind or nature as may be
necessary or incidental to the accomplishment of the purposes of the
PCIC;


f, Approve the budget of the PCIC and fix the reasonable compensation of
its personnel: Provided, That the Board shall have exclusive and final
authority to promote, transfer, assign or reassign personnel of the PCIC:
Provided further, That these personnel actions are deemed made in the
interest of the service and not disciplinary in nature or purpose;

g. Establish the policies and guidelines for the employment of personnel on
the basis of merit, technical competence and moral character, and approve
a staffing pattern of personnel defining their powers and duties; and

h. Exercise the general powers mentioned in Republic Act No. 11232,
otherwise known as the “Revised Corporation Code of the Philippines”,
insofar as these are not inconsistent or incompatible with the provisions
of this Act.

SECTION 13. Management. — The management of the PCIC shall be vested in its
President, who shall be a person of known integrity and technical and managerial
competence. There shall also be Vice Presidents as the Board may decide, to be
appointed by the Board. The President of the PCIC shall have the following powers and
duties:

a. Execute and administer the policies, plans and rules and regulations
approved and promulgated by the Board;

b. Submit for the consideration of the Board such policies, plans and
programs deemed necessary to carry out the provisions and purposes of
this Act;

¢. Direct and supervise the operations and internal administration of the
PCIC and, for this purpose, to delegate some or any power and duty to
subordinate officials;

d. Recommend to the Board the appointment, promotion, transfer,
assignment, reassignment, demotion, dismissal, and compensation of
personnel; and

e. To exercise such other powers and perform such other duties as may be
directed by the Board.

SECTION 14. Settlement of Claims. —

(a) Claims for indemnity against the PCIC shall be settled by the PCIC’s
regional manager concerned or the appropriate officer to whom the function is
delegated. However, if in the opinion of the regional manager the claim is novel,
difficult, or controversial, the matter may be elevated by the regional manager to the
President of the PCIC for decision;

(b) The claimant aggrieved by the decision of the regional manager may, within

thirty (30) days from receipt of the decision, request for reconsideration
thereof, and if not satisfied therewith, elevate the matter to the President of the PCIC;

(c) Any party aggrieved by a decision, order, or ruling of the President of the
PCIC may appeal said decision, order, or ruling to the Board;

(d) Any claim not acted upon within sixty (60) days from submission of
complete claims documents to the PCIC shall be considered approved.


SECTION 15. No Claim Benefits. — Any insured farmer or fisherfolk who has not
filed any claims during the immediately preceding three (3) crop seasons, or any insured
fishpond or fish cage operator who has not filed any claim during the immediately
preceding three (3) harvest seasons shall be entitled to a no-claim benefit of at least ten
percent (10%) of premium share paid for said crop seasons, to be deposited in a trust
fund to be managed by the PCIC. Such trust fund may be used to finance premium rebate
or premium credit applicable to the immediately following crop seasons as determined
by the Board.

SECTION 16. Commission on Audit. — The Chairperson of the Commission on Audit
shall be the ex officio auditor of the PCIC.

SECTION 17. Legal Counsel. - The PCIC shall have its own Legal Department, the
head and members of which shall be appointed by the Board.

SECTION 18. Interagency Linkages. —

(a) To support and promote the objectives of the PCIC, all government
departments, bureaus, offices, agencies and instrumentalities, national or local, all
lending institutions, government or private, now or hereafter engaged in the supervised
credit program to farmers and fisherfolk and such other public or private entities as may
be called upon by the PCIC, shall act as its cooperating agencies and, for this purpose,
are hereby directed to harmonize their policies, programs, rules, and regulations with
the objectives of the PCIC.

(b) All lending institutions granting production loans for palay, corn, and other
crops under the supervised credit program of the government shall automatically act as
underwriters for and on behalf of the PCIC. As such, they shall receive and process
applications for insurance coverage, approve those found in order and collect premiums
therefor. Premiums so collected, together with the premiums payable by the lending
institution itself, shall be remitted in the manner and within such period as the PCIC may
prescribe.

SECTION 19. Utilization of Profits. - The profits of the PCIC shall be determined on
acalendar year basis and the manner of its distribution shall be determined by law.

SECTION 20. Tax Subsidy. - The PCIC may avail of the Tax Expenditure subsidy
administered by the Fiscal Incentives Review Board (FIRB), subject to the provisions of
Title XII (Tax Incentives) of the National Internal Revenue Code of 1997, as amended,
Executive Order No. 93, as amended and the annual General Appropriations Act:
Provided, That persons or other entities transacting business with the PCIC shall pay the
applicable taxes.

SECTION 21. Penal Provisions. —

(a) The claimant or any person who, through malfeasance or misfeasance or
nonfeasance, allows a spurious claim to be paid, including that of the claimant, shall
upon final conviction be punished by imprisonment of not less than three (3) years but
not more than eight (8) years or a fine of not less than One hundred thousand


(P100,000.00) pesos but not more than Six hundred thousand (P600,000.00) pesos, or
both imprisonment and fine, at the discretion of the Court. The PCIC’s personnel who
allowed the commission of the offense shall, in addition, be dismissed from office and
forfeit all privileges and benefits which may accrue to such personnel;

(b) Any person or entity granting production loan for palay under the supervised
credit program of the government without requiring crop insurance therefor or having
collected premiums from farmers, would fail to remit the same within the time and
place specified in the rules and regulations of the PCIC shall, upon conviction, be
punished by a fine not exceeding Ten thousand (P10,000.00) pesos or imprisonment not
exceeding six (6) months or both, at the discretion of the Court;

(c) Any person who shall violate any provision of this Act or any rule or
regulation issued for its implementation, for which no penalty is provided, shall be
deemed guilty of a penal offense and, upon conviction, be punished by a fine not
exceeding Five thousand (P5,000.00) pesos or imprisonment of two (2) months, or
both, at the discretion of the court. Whenever any violation of the provisions of this
section is committed by a corporation or association, or by a government office or
entity, the executive officer or officers of said corporation, association, or government
office or entity who shall have knowingly permitted or failed to prevent said violation
shall be liable as principal.

SECTION 22. Applicability of Presidential Decree (PD) No. 612, as Amended. —
The provisions of Presidential Decree No. 612, as amended, otherwise known as the
“The Insurance Code”, insofar as they are not in conflict or inconsistent with or
repugnant to the provisions of this Act, shall apply to the PCIC.

SECTION 23. Term of Existence and Periodic Review. — The PCIC’s term of legal
existence, which was set to last for fifty (50) years starting from the date of approval of
Presidential Decree No. 1467 on June 11, 1978, shall continue and is hereby affirmed.
To ensure the PCIC’s continuing relevance, the Board shall undertake periodic reviews
of the PCIC’s activities and shall submit to both houses of Congress, at least once a year,
a report which shall include a recommendation for improving its services to the target
sectors and the financial viability of the PCIC.

SECTION 24. Transitory Provisions. — The members of the Board representing the
private insurance industry and the three (3) representatives from the farmers’ sector
shall, in an interim capacity, continue to exercise their powers and functions as part of
the Board and carry out the provisions of this Act without need to be issued new
appointments until a new Board is constituted and organized.

To prevent disruption in the delivery of services, the PCIC shall, pending the full
implementation of this Act, continue to operate and provide services to its clients and
all its officials and employees shall continue to perform their duties and functions and
receive their corresponding salaries and benefits. The approval of this Act shall not
cause any demotion in rank or diminution of salary, benefits, and other privileges of the
incumbent personnel of the PCIC: Provided, That qualified officers and employees may
voluntarily elect for retirement or separation from service and shall be entitled to


benefits under existing laws.

SECTION 25. Separability Clause. — If any provision or part hereof is held
unconstitutional or invalid, the other provisions not affected shall remain in force and
effect.

SECTION 26. Repealing Clause. — Presidential Decree No. 1467, as amended by
Presidential Decree No. 1733 and Republic Act No. 8175, is hereby repealed. All other
Jaws, executive orders, and other issuances or parts thereof inconsistent with this Act
are hereby repealed or modified accordingly.

SECTION 27. Effectivity. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,