RA 656 - Property Insurance Law

Republic Act No.
656
An Act to Create and Establish a Property Insurance Fund and to

Provide for its Administration and for other Purposes
Section 1. This Act shall be known as the Property Insurance Law.
Section 2. In order to indemnify or compensate the Government as defined in

this Act for any damage to, or loss of, its properties due to fire, earthquake,
storm, or other casualty there is hereby established the Property Insurance
Fund, which shall consist of all moneys resulting from the liquidation of the
insurance constituted in section three hundred forty of the Revised
Administrative Code and from premiums and other incomes.
Section 3. For the effectuation of the purpose of this Act, the administration of
the Fund is hereby placed under the Government Service Insurance System
with powers and authority to reinsure with private insurance companies under
such terms and conditions that may be mutually agreed upon any excess risk
it may deem advisable; to prescribe necessary rules and regulations, including
such incidental powers as are necessary for its operation; and to appoint
personnel, who are certified as eligibles by the Civil Service, prescribe their
duties, and fix their remuneration. Section fifteen of Commonwealth Act
Numbered One hundred eighty-six shall not be applicable to the personnel of
the Fund.
Section 4. Definitions. For the purposes of this Act
(a) System means the Government Service Insurance System created under
Commonwealth Act Numbered One hundred and eighty-six.
(b) Fund means the Property Insurance Fund created under this Act.
(c) Property includes vessels and craft, motor vehicles, machineries,

permanent buildings, properties stored therein, or in buildings rented by the
Government, or properties in transit.
(d) The word Government as used in this Act refers to the National, provincial,
city, or municipal government, agency, commission, board or enterprises owned
or controlled by the Government.
(e) Disposable Surplus means the amount left after the necessary insurance
reserves and other reserves have been set aside together with the expenses
incidental to the administration of the Fund.
Section 5. Every government, except a municipal government below first class,
is hereby required to insure its properties, with the Fund against any insurable
risk herein provided and pay the premiums thereon, which, however, shall not
exceed the premiums charged by private insurance companies: Provided,
however, That the System reserves the right to disapprove the whole or a
portion of the amount of insurance applied for: Provided, further, That such
property or part thereof as may not be insurable or acceptable for insurance
may be insured with any private insurance company. A municipal government
below first class may upon application insure its properties in the Fund under
such rules and regulations as the System may prescribe.
Section 6. Collection and payment of premiums. (a) In accordance with such

rules and regulations as the System may prescribe under section three of this
Act, the premiums on insurance under section five hereof shall be paid in
advance to the System by the government concerned.
(b) Penalties. Any cashier, treasurer, or any government official responsible for
the collection and/or remittance of the premiums hereinabove prescribed, who
refuses or habitually neglects to comply with the instructions of the System
and to collect or accept payments of the said premiums, issue receipts therefor,
and/or remit the same within the time prescribed by the System, shall be held
liable for the payment of said premiums and shall pay to the System a fine of
two per centum per month of said premiums from their due dates until
received by the System.
Section 7. (a) There shall be collected, classified, analyzed, and kept under the
custody of the System such statistical data as may be necessary for the proper
determination of risks and rates of premiums for the issuance of properties
herein defined.
(b) The records and accounts of the Fund shall be kept separate and distinct
from those of other funds of the System.
(c) During the month of October of each year, the System shall submit to the
President a report of the operations of the Fund during the preceding year.
Section 8. The Auditor General and the Government Corporate Counsel shall
be the ex-officio auditor and legal adviser of the Fund, respectively. The Auditor
General, or his authorized representative, shall submit to the System soon
after the close of each fiscal year audited statements showing its financial
condition and progress for the fiscal year just closed and the actuary shall
likewise make an actuarial examination and valuation of the fund.
Section 9. Any disposable surplus that may result from the operation of this
Fund once declared by the System shall be apportioned in accordance with the
schedule approved by the System among the governments whose properties are
insured in the Fund.
The Government of the Republic of the Philippines hereby guarantees the

fulfillment of the obligations of the Fund when and as they shall become due.
Section 10. Upon approval of this Act, the System shall require the inventory
of the property belonging to each government, determine the value thereof for
purposes of insurance, and advise the government concerned of the total
premiums each shall pay to the Fund. The government concerned shall, upon
receipt of advice from the System, set aside from any savings in its
appropriation the amount needed for such premiums and certify to the
availability thereof, and the Auditor General or his duly authorized
representative shall forthwith release the same to the credit of the System by
means of a journal voucher drawn for the purpose. Thereafter, the official
concerned shall remit it to the System immediately: Provided, That the
premiums corresponding to the insurance of properties belonging to an entity
operated with a special fund shall be payable from said fund; otherwise, from
the general fund.
Section 11. Each government as defined herein shall include in its annual
appropriation the amount necessary to cover the premiums for the insurance
of its properties during each fiscal period and remit the same immediately to
the System as provided in section ten hereof.
Section 12. Chapter sixteen of the Revised Administrative Code, as amended,

is hereby repealed, and all the present assets and liabilities of the Property
Insurance Fund created thereunder shall be liquidated upon approval of this
Act and turned over to the System. The Auditor General and the Commissioner
of the Budget or their authorized representative shall carry out the provisions
of this section: Provided, That the properties insured under the Property
Insurance Fund shall continue to be governed by existing law until they shall
have been insured anew with the fund under the provisions of this Act.
Section 13. This Act shall take effect on the first day of the third calendar
month following that of its approval.
Approved, June 16, 1951.

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Republic Act No.

An Act to Create and Establish a Property Insurance Fund and to

Section 1. This Act shall be known as the Property Insurance Law.

Section 2. In order to indemnify or compensate the Government as defined in

Section 4. Definitions. For the purposes of this Act

(c) Property includes vessels and craft, motor vehicles, machineries,

Section 6. Collection and payment of premiums. (a) In accordance with such

The Government of the Republic of the Philippines hereby guarantees the

Section 12. Chapter sixteen of the Revised Administrative Code, as amended,

Approved, June 16, 1951.

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