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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 1467
PRESIDENTIAL DECREE NO. 1467
- 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
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chanroblesvirtualawlibrary
WHEREAS,
while the achievements of the on-going supervised rice production
credit program has been substantial, the financial burden on the part
of the farmers and the lending institutions in terms of uncompensated
losses arising from destruction of standing crops wrought by floods,
typhoons, heavy rains, drought and other natural calamities has not
only tended to keep the farmers in perpetual indebtedness but has also
considerably constricted the loaning capabilities of lending
institutions and their willingness to extend loans to rice farmers;chanroblesvirtualawlibrary
WHEREAS, as a result of the recurrent natural disasters our farmers
suffer heavy losses due to the destruction of their standing crops
resulting in loss of income and the consequent loss of their credit
standing through no fault of their own, which in turn seriously affects
the finances of lending institutions participating in the supervised
credit program;chanroblesvirtualawlibrary
WHEREAS, implementing a crop insurance scheme can serve to 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;chanroblesvirtualawlibrary
WHEREAS, 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; chanroblesvirtualawlibrary
WHEREAS, a study conducted by an Inter-Agency Committee sponsored by
the Land Bank of the Philippines (LBP) disclosed the feasibility of
providing crop insurance protection to rice farmers covered by the
supervised credit program, as well as to self-financed farmers who
place themselves under the supervision of duly accredited technicians;chanroblesvirtualawlibrary
WHEREAS, because of its important role, the crop insurance scheme
requires inter-agency operational linkages and support to insure the
successful and economical attainment of its laudable objectives;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of
the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby decree and order:cralaw:red
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 provide insurance protection to farmers
against losses arising from natural disasters as well as plant diseases
and pest infestation, initially to palay crops and later on to other
crops. Such insurance protection, however, shall exclude losses arising
from avoidable risks emanating from or due to neglect, malfeasance or
fraud by the insured or any member of his immediate farm household or
employee or the failure of the insured to follow proven farm practices,
and that the indemnity for such losses shall not exceed at all time the
cost born by the insured farmer in the production of the crop.
Section 2. Place of Business and Term of Existence. —chanroblesvirtualawlibrary
2.1 The Corporation shall have its principal place of
business in Metro Manila;chanroblesvirtualawlibrary
2.2 The term of legal existence of Corporation shall
be fifty (50) years from and after the date of the approval of this
Decree.
Section 3. Powers. — The Corporation shall have the
following powers:cralaw:red
3.1 To prescribe, repeal and alter its own by-laws;
to determine its operating policies and to issue such rules and
regulations as may be necessary to implement the crop insurance scheme;chanroblesvirtualawlibrary
3.2 To adopt and use a corporate seal;chanroblesvirtualawlibrary
3.3 To sue and to be sued; chanroblesvirtualawlibrary
3.4 To have continuous succession until dissolved by
law;chanroblesvirtualawlibrary
3.5 To insure the rice production of farmers against
loss, damage and destruction caused by natural calamities such as
typhoons, floods, drought, earthquake, volcanic eruptions, rodents,
vermins, disease, insects and other pests; and to carry on any business
necessary, related to, and expedient for the above purpose;chanroblesvirtualawlibrary
3.6 To insure in the Philippines or abroad all or any
risks of the Corporation;chanroblesvirtualawlibrary
3.7 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 Corporation is
authorized to carry on or possess;chanroblesvirtualawlibrary
3.8 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 other obligations 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;chanroblesvirtualawlibrary
3.9 To purchase, or otherwise acquire, sell, lease,
convey, mortgage, encumber, and 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/necessary to carry out the
purposes for which the corporation is formed or as may or hereafter be
permitted by law;chanroblesvirtualawlibrary
3.10 To establish branches whenever it may be
expedient and necessary;chanroblesvirtualawlibrary
3.11 To do and perform acts and things, and to
exercise all the general powers conferred by law upon Corporations, as
are incidental or conducive to the attainment of the objectives of the
Corporation.
Section 4. Who shall be Insured. — 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. chanroblesvirtualawlibrary
Section 5. Rate of Premium and Its Sharing. — The
rate of premium, as well as the allocated sharing thereof by the
farmers, the lending institutions, the Government of the Republic of
the Philippines (herein called the Government) and other parties, shall
be determined by the Board of Directors of the Corporation subject to
approval by the President of the Philippines.
Section 6. Premium Subsidy. —chanroblesvirtualawlibrary
6.1 For the first year of the operation of the
Corporation, 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 basis, depending upon the actual amount of insurance
underwritten by the Corporation. For this purpose, the Corporation
shall bill the Government the sum of money corresponding to the
computed amount of subsidy; chanroblesvirtualawlibrary
6.2 For subsequent years, yearly projections of the
premium subsidy shall be submitted by the Corporation to the President
of the Philippines, and upon his approval shall be included in the
government budgetary appropriations.
Section 7. Transfer of the Agricultural Guarantee
Funds to the Corporation and Abolition of the Agricultural Guarantee
Fund Board. The assets, liabilities and administration of the
Agricultural Guarantee Fund at present being administered by the Land
Bank of the Philippines to guarantee rice production loans under the
supervised production credit program as well as the Agricultural
Guarantee Fund created under Section 13 of Republic Act 6390, as
amended, are hereby transferred to the Corporation as part of the
contribution of the government to the capital of the Corporation as
provided in Section 8 hereof: Provided, That the termination or
cessation of the guarantee operations under both funds shall be left to
the discretion of the Board of Directors of the Corporation. The
agricultural Guarantee Fund Board, created under Section 13 of Republic
Act 6390, as amended, is hereby abolished.
Section 8. Capital Stock — chanroblesvirtualawlibrary
8.1 The authorized capital stock of the Corporation
is SEVEN HUNDRED FIFTY MILLION PESOS (P750,000,000.00) divided into
FIVE MILLION (5,000,000) common shares with a par value of ONE HUNDRED
PESOS (P100.00) each share, which shall be fully subscribed by the
Government; and TWO MILLION FIVE HUNDRED THOUSAND (2,500,000) preferred
shares with a par value of ONE HUNDRED PESOS (P100.00) 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. chanroblesvirtualawlibrary
8.2 The paid-in capital of the Corporation upon its
organization shall be TWO HUNDRED FIFTY MILLION PESOS
(P250,000,000.00), and shall be appropriated and paid in as follows:cralaw:red
8.2.1 ONE HUNDRED FIFTY MILLION PESOS (P150,000,000)
to be subscribed and paid in by the Government out of the net assets
transferred from the Agricultural Guarantee Funds as provided in
Section 7 hereof: Provided, That the amount by which the net assets
exceed ONE HUNDRED FIFTY MILLION PESOS (P150,000,000) shall be
considered contributed surplus and treated as such on the books of the
Corporation;chanroblesvirtualawlibrary
8.2.2 An additional ONE HUNDRED MILLION PESOS
(P100,000,000) to be likewise subscribed and paid in by the Government
out of funds of the National Treasury not otherwise
appropriated. chanroblesvirtualawlibrary
8.3 The remaining common capital stock of TWO HUNDRED
FIFTY MILLION PESOS (P250,000,000) shall be fully subscribed by the
Government and the necessary funds shall be appropriated, programmed,
and paid by the proper office, entity or agency of the government as
the financial needs of the Corporation shall require and 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:cralaw:red
8.4.1 Preferred as to dividends at a minimum of six
per cent (6%);chanroblesvirtualawlibrary
8.4.2 Cumulative;chanroblesvirtualawlibrary
8.4.3 Participating;chanroblesvirtualawlibrary
8.4.4 Non-voting;chanroblesvirtualawlibrary
8.4.5 Dividends thereon shall be exempt from income
tax;chanroblesvirtualawlibrary
8.4.6 Redeemable at the option of the Corporation at
the prevailing book value but in no case less than par after five (5)
years from issuance thereof;chanroblesvirtualawlibrary
8.4.7 Transferable.
8.5 The preferred shares may be available for sale or
to subscription by the general public. chanroblesvirtualawlibrary
Section 9. Board of Directors. — chanroblesvirtualawlibrary
9.1 The power of the Corporation shall be vested in
and exercised by a Board of Directors composed of nine (9) members and
make up of the following: the Secretary of Finance, the Secretary of
Agriculture, the President of the Land Bank of the Philippines, the
Secretary of Agrarian Reform, the Secretary of Labor, the Secretary of
National Defense, the Budget Commission, and the President of the
Corporation; and in addition, a nominee of the Secretary of Finance,
preferably representing the private insurance industry. The Chairman of
the Board of Directors shall be appointed by the President of the
Philippines from among the members of the Board of Directors; and that
the President of the Corporation shall be ex-officio Vice Chairman who,
as such, shall assist the Chairman and act in his stead in case of
absence of incapacity. In case of absence or incapacity of both the
Chairman and the Vice-Chairman, the Board of Directors shall designate
a temporary Chairman from among its members. chanroblesvirtualawlibrary
9.2 The members of the Board shall have their
respective alternates who shall attend the meetings, and act as members
of the Board in the absence or incapacity of the regular members;chanroblesvirtualawlibrary
9.3 The Board of Directors shall meet regularly at
least twice a month and as often as the exigencies of the Corporations
affairs demand. The presence of at least five (5) members shall
constitute a quorum which shall be necessary for the transaction of any
business. The Board may be convoked either by the Chairman or in his
absence by the Vice Chairman;chanroblesvirtualawlibrary
9.4 The Chairman and the members of the board shall
each receive a per diem of THREE HUNDRED PESOS (P300.00) for each
session of the Board attended, but in no case to exceed THREE THOUSAND
(P3,000.00) a month.
Section 10. Power and Functions of the Board of
Directors. — The Board shall, without limiting the generality of the
foregoing have the following powers and functions:cralaw:red
10.1 To implement the provisions and purposes of this
Decree
10.2 To formulate and adopt policies and plans, and
to promulgate rules and regulations for the management, operation and
conduct of the affairs and business of the Corporation 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, provided such coverage on other
crops shall be approved by the President of the Philippines.
10.3 To borrow funds from local and international
financing sources or institutions for the purpose of financing the
programs and projects deemed vital for the attainment of the
Corporation's goal and objectives; chanroblesvirtualawlibrary
10.4 To 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 Corporation.
10.5 To approve the budget of the Corporation and to
fix the reasonable compensation of its personnel; Provided, That the
Board of Directors shall have exclusive and final authority to promote,
transfer, assign or re-assign personnel of the Corporation and these
personnel actions are deemed made in the interest of the service and
not disciplinary, any provision of existing law to the contrary
notwithstanding;chanroblesvirtualawlibrary
10.6 To establish policies and guidelines for
employment on the basis of merit, technical competence and moral
character, and approve a staffing pattern of personnel defining their
powers and duties;chanroblesvirtualawlibrary
10.7 To exercise the general powers mentioned in the
Corporation Law in so far as they are not inconsistent or incompatible
with the provisions of this Decree.
Section 11. Management. — The management of the
Corporation shall be vested in the President of the Corporation who
shall be a person of known integrity, competence in technical and
executive fields related to the purposes of this Decree. He shall be
appointed by the Board and shall not be removed except for cause. He
may have such Vice President(s) as the Board of Directors may decide,
to be appointed by the latter. He shall have the following powers and
duties: chanroblesvirtualawlibrary
11.1 To execute and administer the policies, plans
and programs and the rules and regulations approved or promulgated by
the Board;chanroblesvirtualawlibrary
11.2 To submit for the consideration of the Board
such policies, plans and programs as he deems necessary to carry out
the provisions and purposes of this Decree;chanroblesvirtualawlibrary
11.3 To direct and supervise the operations and
internal administration of the Corporation and for this purpose, to
delegate some or any of his powers and duties to subordinate officials;chanroblesvirtualawlibrary
11.4 To recommended to the Board the appointment,
promotions, transfer, assignment, re-assignment, demotion, dismissal
and compensation of personnel;chanroblesvirtualawlibrary
11.5 To exercise such other powers and perform such
other duties as may be directed by the Board of Directors.
Section 12. Commission on Audit. — The Commission on
Audit shall be the ex-officio auditor of the Corporation. chanroblesvirtualawlibrary
Section 13. Legal Counsel. — The Corporation shall
have its own Legal Department, the Chief and members of which shall be
appointed by the Board of Directors.
Section 14. Inter-Agency Linkages. — To support and
promote the operations of the Corporation, 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, namely: Department of
Finance, Department of Local Government and Community Development,
Department of Agriculture, Department of Agrarian Reform, Department of
Labor, Department of National Defense, National Economic and
Development Authority, Armed Forces of the Philippines, Philippine
Constabulary, Bureau of Cooperative Development, National Food and
Agriculture Council, Bureau of Agricultural Extension, National
Irrigation Administration, Bureau of Soils, Bureau of Plant Industry,
Bureau of Animal Industry, Central Bank of the Philippines, Department
of Rural Banks and Savings and Loans Associations, Land Bank of the
Philippines, Agricultural Credit Administration, Philippine National
Bank, Development Bank of the Philippines, All Rural Banks, Cooperative
Rural Banks and Development Banks, all Barangay Associations and
Samahang Nayon organizations, and such other public or private entities
as may be called upon by the Corporation, shall act as cooperating
agencies to the Corporation, and for this purpose, are hereby directed
to design their policies, programs, rules and regulations so as to
attune and synchronize them with the objectives of the Corporation.
Section 15. Utilization of Profits. — the profits of
the Corporation shall be determined on the calendar year basis and the
manner of its distribution shall be determined by the Board of
Directors. chanroblesvirtualawlibrary
Section 16. Exemption from Taxes. — In furtherance
of the effective achievement of the purposes of this Decree, the
Corporation shall be exempt to the extent allowed by national policy
from all national, provincial, municipal and city taxes and assessments
now enforced, Provided, That said exemption shall apply only to such
taxes and assessments for which the Corporation itself would otherwise
be liable and shall not apply to taxes and assessments payable by
persons or other entities doing business with the Corporation.
Section 17. Repealing and Separability Clause. — All
decrees, charters, executive orders, administrative orders,
proclamations, rules and regulations, or parts thereof in conflict with
this Decree are hereby repealed or modified accordingly. If any
provision, part or parts of this Decree is or are declared
unconstitutional, such declaration shall not invalidate the other
provisions hereof.
Section 18. Applicability of P.D. No. 612. — the
provisions of the Insurance Code insofar as they are not in conflict or
inconsistent with or repugnant to the provisions of this Decree shall
apply to the Corporation.
Section 19. Effectivity. — This Decree shall take
effect upon approval. The Corporation shall commence business not later
than six (6) months from the appointment of the Chairman of its Board
of Directors and payment of the initial capital contributions of the
Government as herein prescribed.
Done in the City of Manila,
this 11th day of June in the year of Our Lord, nineteen hundred and
seventy-eight.
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