April 17, 2019

AN ACT ESTABLISHING A COMMUNITY-BASED MONITORING SYSTEM AND APPROPRIATING FUNDS THEREFOR

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 "Community-Based Monitoring System Act".

SEC. 2. Declaration of Policy. - It. is the policy of the" State to free the people from poverty through policies that provide adequate social services, deliver a rising standard of living, promote full employment, and make available an improved quality of life for all.

Pursuant to this policy, the State recognizes the need to adopt focused and specific measures that will ensure poverty-reduction wherein citizens have access to social protection and welfare programs that address their minimum basic needs. The State further recognizes that a system of public spending that warrants government allocation on areas and populace that are most wanting is necessary in lifting people out of poverty.

Towards this end, the State shall adopt a community-based monitoring system which generates updated and disaggregated data necessary in targeting beneficiaries, conducting more comprehensive poverty analysis and needs prioritization, designing appropriate policies and interventions, and monitoring impact over time.

This data collection system shall respect the fundamental human right of privacy, ensure data quality, and uphold data protection principles of legitimate purpose, transparency, and proportionality.

SEC. 3. Definition of Terms. - As used in this Act:

(a) Community-Based Monitoring System (CBMS) refers to an organized technology-based system of collecting, processing and validating necessary disaggregated data that may be used for planning, program implementation and impact monitoring at the local level while empowering communities to participate in the process. It involves the generation of data at the local level which serves as a basis in targeting households in the planning, budgeting and implementation of government programs geared towards poverty alleviation and economic development. This system merges the methodologies used in data collection activities of all national agencies, geo-tagging, and the CBMS implemented by local government units (LGUs). It entails a census of households undertaken by the LGUs with the participation of the community using accelerated poverty profiling system in the data collection, processing, mapping and analysis of data;

(b) Geo-tagging refers to the process of adding metadata about government projects to various media and of uploading to a web-based application. This enables the mapping of all areas in the Philippines and allows the government, the citizenry, and other stakeholders to check the progress of projects in real time;

(c) Data refers to the information to be generated by the CBMS which includes the compendium of localized facts, figures, and maps on the different dimensions of poverty such as health, nutrition, water, sanitation, shelter, education, income, employment, security, and participation;

(d) Repository refers to the agency tasked with receiving, storing, and managing socioeconomic data; and

(e) Respondent, refers to any citizen who participates as a data-source in the surveys conducted under the CBMS.

SEC. 4. Data Collection. - A CBMS is hereby established and instituted in every city and municipality as an economic and social tool towards the formulation and implementation of poverty alleviation and development programs which are specific, targeted and responsive to the basic needs of each sector of the community. The CBMS shall have the appropriate security measures for data protection.

Each city and municipality is the primary data collecting authority within its locality. For this purpose, each city and municipality shall have a statistician, whose primary function is data collection, preservation and safekeeping of the data retained at the city or municipal level. Further, the Philippine Statistics Authority (PSA) shall create additional positions for statisticians at the provincial level to monitor and manage enumeration activities of LGUs under their jurisdiction.

SEC. 5. Periodicity of Data Collection. - Regular and synchronized data collection shall be conducted by every city and municipality every three (3) years. In the conduct, of data collection, the LGU shall receive financial and technical assistance from the appropriate national government agencies.

Notwithstanding the preceding paragraph, all cities and municipalities are enjoined to collect data at shorter intervals and at their own expense for purposes peculiarly useful to them.

Further, the implementing rules and regulations as provided under Section 15 of this Act may provide for a separate period for data collection depending on the needs of national government agencies whose data-collecting functions have been consolidated with the CBMS.

SEC. 6. Lead Agency. - The Philippine Statistics Authority (PSA) shall serve as the lead agency in the implementation of the CBMS. It shall have the following functions:

(a) Set standards, develop and review data collection forms utilizing as base of existing CBMS forms used by LGUs;

(b) Capacitate the cities and municipalities in the collection of poverty data at the local level through the Philippine Statistical Research and Training Institute, in collaboration with state universities and colleges and in coordination with other government agencies;

(c) Conduct cross-posting as follow-up capacity building of the cities and municipalities;

(d) Monitor the data collection by cities and municipalities to ensure adherence to official concepts, definitions, and standards of poverty statistics;

(e) Act as the national repository of all poverty data collected by the cities and municipalities;

(f) Process the poverty data generated and submitted by the cities and municipalities;

(g) Generate poverty statistics at higher levels that will complement and supplement the local level data; and

(h) Perform such other functions as may be necessary or incidental to the proper implementation of this Act.

SEC. 7. Information Dissemination. - The Department of Information and Communications Technology (DICT) is tasked to develop institutional arrangements on data-sharing. The Department of the Interior and Local Government (DILG) is tasked to regularly disseminate information relating to activities of the CBMS. The National Statistician of the PSA is tasked to submit an annual accomplishment report to the President of the Senate and to the Speaker of the House of Representatives containing collective poverty statistics generated by the CBMS, where identities of respondents, cities and municipalities are kept confidential.

SEC. 8. Storage and Access of Data. — The cities and municipalities are allowed to maintain their own CBMS database for use in local level planning and program implementation. The PSA shall receive and store all aggregated data gathered by the cities and municipalities to create a national CBMS databank of collated information. It shall undertake measures to ensure the integrity and safety of the gathered information against unnecessary leakage and access by unauthorized persons.

Provinces shall have access to their respective local and territory-specific data.

SEC. 9. Prioritizing Social Protection Programs. - The appropriate national government agencies shall use the data generated by the CBMS in prioritizing timely, relevant and much-needed social, protection programs of government in areas identified to have the highest incidence of poverty.

SEC. 10. Confidentiality of Information. - The right to privacy of every respondent remains inviolable. The citizen participating in the data collection shall be fully informed of the nature and extent of processing intended for his or her personal data. Participation in all data collection activities is purely voluntary. Notwithstanding Section 4 of this Act, respondents may refuse to answer any question or reveal any information at any point, or terminate data collection activities with no further action needed. The person conducting the data collection shall ask the respondents whether they would like to make an explicit waiver to authorize the city and municipality to disclose their identity and other relevant information about their household to the government agency which provides social protection programs for them.

SEC. 11. Prioritization of Assistance. - The income class of cities and municipalities shall be considered in prioritizing the allocation of financial assistance to implement the provisions of this Act. Fourth, fifth and sixth class cities and municipalities shall be given assistance in the first three (8) years of implementation of this Act. Thereafter, other cities and municipalities shall progressively be given assistance to ensure the full implementation of this Act.

SEC. 12. Joint Congressional Oversight Committee. — Upon the effectivity of this Act. a Congressional Oversight Committee, hereafter referred to as the CBMS Oversight Committee, is hereby constituted. This Committee shall set the overall framework to review the implementation of this Act. It shall likewise determine inherent weaknesses in the law and recommend necessary remedial legislation or executive measures. The CBMS Oversight Committee shall be composed of fourteen (14) members with the Chairpersons of the Committee on Poverty Alleviation, of the House of Representatives, and the Committee on Social Justice, Welfare and Rural Development of the Senate as Co-chairpersons; and six (6) members from each House, to be designated by the Speaker of the House of Representatives and the Senate President, respectively. For purposes of determining remedial legislation, the CBMS Oversight Committee shall, within two (2) years after the effectivity of this Act, conduct a systematic evaluation of the impact of this Act. accomplishments of the system, and the performance of the cities and municipalities on data collection, and of the PSA on its functions as the lead agency.

SEC. 13. Appropriations. - The amount necessary to carry out the provisions of this Act shall be included in the annual General Appropriations Act.

SEC. 14. CBMS Council. - For purposes of achieving secure and efficient data sharing arrangements between and among concerned cities and municipalities and national government agencies to be used for their particular social protection and welfare programs and projects, there is hereby created a CBMS Council composed of the PSA, DILG and DICT. to be headed by the PSA. The implementing rules and regulations shall define other appropriate functions of the CBMS Council.

SEC. 15. Implementing Rules and Regulations. -Within ninety (90) days from the effectivity of this Act, the National Statistician of the PSA. in consultation with the DILG, Department of Agriculture, Department of Health, Department of Social Welfare and Development, Department of Education, Housing and Urban Development Coordinating Council, Department of Labor and Employment, Department of Environment and Natural Resources, National Anti-Poverty Commission, National Privacy Commission, DICT, Philippine Institute for Development Studies, Philippine Statistical Research and Training Institute, CBMS Network, League of Provinces of the Philippines, League of Cities of the Philippines and League of Municipalities of the Philippines, shall promulgate the rules and regulations necessary for the effective implementation of this Act. The PSA shall work in consultation with the appropriate government offices and other stakeholders from both the private and public sectors in the relevant fields to be covered by the data collection initiative.

SEC. 16. Transitory Provision. - The national government agencies which currently collect poverty data for purposes of targeting deserving beneficiaries to their respective social protection programs shall continue to perform their duties and responsibilities in a holdover capacity for a period of one (1) year from the effectivity of the implementing rules and regulations, or for such period as may be determined by the PSA to ensure compliance with the requirements of this Act.

SEC. 17. Separability Clause. - If any provision or part of this Act is held unconstitutional or invalid, the remaining parts or provisions not affected shall remain in full force and effect.

SEC. 18. Repealing Clause. - Any law, presidential decree, executive order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent with the provisions of this Act is hereby repealed, modified, or amended accordingly.

SEC. 19. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation.

April 17, 2019

AN ACT INSTITUTIONALIZING THE PANTAWID PAMILYANG PILIPINO PROGRAM (4Ps)

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 "Pantawid Pamilyang Pilipino Program (4Ps) Act".

SEC. 2. Declaration of Policies. — The State shall promote a just and dynamic social order thereby uplifting its citizens and marginalized sectors from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all.

The State recognizes the need to foster social justice as provided for in Article XIII of the 1987 Constitution, as follows:

(a) The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good;

(b) The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance;

Towards this end, the State shall establish programs that invest and harness our country's human capital and improvement of delivery of basic services to the poor, particularly education, health and nutrition, which is an intervention anticipated to break the intergenerational cycle of poverty.

(c) Break the intergenerational cycle of poverty through investment in human capital and improved delivery of basic services to the poor, particularly education, health, nutrition, and early childhood care and development;

(d) Promote gender equality and empowerment of women and children's rights;

(e) Achieve universal primary education;

(f) Reduce child mortality and malnutrition;

(g) Improve maternal health; and

(h) Ensure healthy lives and promote well-being for all.

SEC. 3. Definition of Terms. - As used in this Act, the following terms are defined, as follows:

(a) Authorized Government Depository Banks refer to banking institutions accredited and managed by government which is also categorized as government-owned and -controlled corporation (GOCC) or government financial institution;

(b) Case Management refers to a process used by the Department of Social Welfare and Development (DSWD) to enable the household-beneficiaries to improve their functioning by dealing with their difficulties specifically in complying with the terms of the program;

(c) Compliance Verification refers to the checking and monitoring undertaken to ensure that the qualified household-beneficiaries comply with conditions for entitlement set forth by the Pantawid Pamilyang Pilipino Program (4Ps);

(d) Conditional Cash Grant refers to the amount received by the qualified household-beneficiaries who comply with the conditions for entitlement;

(e) Grantee refers to the most responsible adult member of the qualified household-beneficiary authorized to receive the conditional cash transfer;

(f) Grievance Redress System refers to the mechanism of the DSWD which addresses and resolves issues and concerns related to the implementation of the Program;

(g) Health Facility refers to a barangay health station, rural health unit, barangay health center, infirmary or hospital;

(h) Institutionalization refers to making the Pantawid Pamilyang Pilipino Program (4Ps) an added function of the DSWD and a regular program funded from its annual appropriation;

(i) Poor refers to households whose income falls below the poverty threshold as defined by the National Economic and Development Authority (NEDA) and cannot afford in a sustained manner to provide their minimum basic needs of food, health, education, housing and other essential amenities of life;

(j) Preventive Health Check-up refers to health and nutrition services comprising of complete immunization, deworming, growth and development monitoring, management of childhood diseases; malnutrition, and services for pregnant, lactating and post-partum women;

(k) Qualified Household-Beneficiaries refer to households identified by the DSWD for entitlement to the monthly conditional cash grants as provided under Section 6 of this Act;

(1) Responsible Person refers to the parent or guardian in the qualified household-beneficiary;

(m) Standardized Targeting System refers to a system for identifying who and where the poor households are through the generation of socioeconomic database of poor households that is adopted by national government agencies and implemented by the DSWD; and

(n) Sustainable Livelihood Program refers to the livelihood and capability building program managed by the DSWD for the poor, vulnerable and marginalized families and individuals to help improve their socioeconomic conditions. The one-time livelihood assistance is in the form of microenterprise development (MD) and employment facilitation (EF). The MD track provides microenterprise interventions to the poor or savings generation while the EF track provides interventions that facilitate employment.

SEC. 4. The Pantawid Pamilyang Filipino Program (4Ps). - The Pantawid Pamilyang Pilipino Program (4Ps) is the national poverty reduction strategy and a human capital investment program that provides conditional cash transfer to poor households for a maximum period of seven (7) years, to improve the health, nutrition and education aspect of their lives. The National Advisory Council (NAC) may recommend a longer period under exceptional circumstances.

SEC. 5. Selection of Qualified Household-Beneficiaries. — On a nationwide basis, the DSWD shall select qualified household-beneficiaries of the 4Ps using a standardized targeting system. It shall conduct a regular revalidation of beneficiary targeting every three (3) years.

SEC. 6. Eligible Beneficiaries. — Farmers, fisherfolks, homeless families, indigenous peoples, those in the informal settler sector and those in geographically isolated and disadvantaged areas including those in areas without electricity shall be automatically included in the standardized targeting system to be conducted by the DSWD: Provided, That to be eligible for the cash grants, households or families must meet the following criteria:

(a) Classified as poor and near-poor based on the Standardized Targeting System and the poverty threshold issued by the Philippine Statistics Authority (PSA) at the time of selection;

(b) Have members who are aged zero (0) to eighteen (18) years old or have members who are pregnant at the time of registration; and

(c) Willing to comply with the conditions specified by this Act.

SEC. 7. Conditional Cash Transfer to Beneficiaries. - The Advisory Council shall determine the amount of conditional cash transfer to beneficiaries with the following schemes:

(a) Conditional cash transfer grant per child enrolled in day care and elementary programs shall not be lower than Three hundred pesos (P300.00) per month per child for a maximum of ten (10) months per year;

(b) Conditional cash transfer grant per child enrolled in junior high school shall not be lower than Five hundred pesos (P500.00) per month per child for a maximum of ten (10) months per year;

(c) Conditional cash transfer grant per child enrolled in senior high school shall not be lower than Seven hundred pesos (P700.00) per month per child for a maximum of ten (10) months per year; and

(d) Health and nutrition grant shall not be lower than Seven hundred fifty pesos (P750.00) per month for a maximum of twelve (12) months per year.

The health/nutrition grant component aims to promote healthy practices and family development, improve the health nutritional status of pregnant and post-partum mothers, infants and young children, and increase the use of health services

by the household-beneficiary. The health grant is a fixed amount and does not depend on the number of members in the household.

SEC. 8. Coverage in the National Health Insurance Program. (NHIP). - All beneficiaries of 4Ps as identified by the standardized targeting system to be qualified household-beneficiaries of the 4Ps shall automatically be covered in the NHIP. The necessary funding for their coverage shall be sourced from revenue generated pursuant to Republic Act No. 10351. otherwise known as the "Sin Tax Reform Act of 2012".

SEC. 9. Mode of Cash Transfer. - The DSWD shall provide beneficiaries with direct and secured access to cash grants through any number of Authorized Government Depository Banks (AGDBs). For localities not adequately served by an AGDB, the DSWD may, by itself or through an AGDB, contract the services of rural banks, thrift banks, cooperative banks, and institutions engaged in money remittances duly accredited by the Bangko Sentral ng Pilipinas (BSP).

SEC. 10. Periodic Assessment. - Every three (3) years after the effectivity of this Act, the Philippine Institute for Development Studies (PIDS) shall conduct an impact assessment to evaluate the effectiveness of the 4Ps, the veracity of the list of household-beneficiaries and the program implementation.

The amounts indicated in Section 7 of this Act shall be made available to the qualified household-beneficiaries during the first three (3) years of the implementation of this Act: Provided, That every six (6) years after the effectivity of this Act, the PIDS shall recommend to the NAC whether the cash grants shall be adjusted to its present value using the consumer price index, as published by the PSA: Provided, further, That the NAC shall ensure that the grant amounts are sufficient to make a positive impact on the health, nutrition, and education of the beneficiaries and are timely received and spent by the beneficiaries.

SEC. 11. Conditions for Entitlement. - All qualified household-beneficiaries shall comply with all of the following conditions as a requirement for continued program eligibility:

(a) Pregnant women must avail of pre-natal services, give birth in a health facility attended by a skilled health professional, and receive post-partum care and post-natal care for her newborn;

(b) Children zero (0) to five (5) years old must receive regular preventive health and nutrition services including check-ups and vaccinations;

(c) Children one (1) to fourteen (14) years old must avail of deworming pills at least twice a year;

(d) Children three (3) to four (4) years old must attend day care or pre-school classes at least eighty-five percent (85%) of their time;

(e) Children five (5) to eighteen (18) years old must attend elementary or secondary classes at least eighty-five percent (85%) of their time; and

(f) At least one (1) responsible person must attend family development sessions conducted by the DSWD, at least once a month.

Any or all of the conditions for entitlement may be suspended by the DSWD Secretary during times of calamities, war and armed conflicts.

SEC. 12. Noncompliance with Conditions. — The responsible person of a reported qualified household-beneficiary who fails to comply with conditions set forth in Section 11 of this Act shall at first be notified in writing and the payment of cash grants will immediately be terminated. After four (4) months of noncompliance, the household-beneficiary shall be subject to case management process of DSWD.

Should the qualified household-beneficiary so notified persist in not complying with the conditions within a period of one (1) year since the day of receipt of the written notification, the household-beneficiary shall be removed from the program.

SEC. 13. Livelihood Interventions. - Qualified household-beneficiaries shall be given priority in the availment of the modalities and interventions under DSWD's Sustainable Livelihood Program (SLP) or other appropriate or similar programs offered by other government agencies or accredited private institutions.

The household-beneficiary shall also be given priority in the availment of the employment facilitation services provided by the SLP or other employment programs of appropriate government agencies implementing the same.

SEC. 14. Lead Agency. - The DSWD shall serve as the central planning, coordinating, implementing and monitoring body of the Program.

In the implementation of this Act, the DSWD shall perform the following functions:

(a) Select and use an appropriate, effective and cost-efficient method to identify and select qualified household-beneficiaries;

(b) Identify and select the target household-beneficiaries on the basis of a uniform, objective and transparent selection process as indicated in Section 5 of this Act;

(c) Coordinate with different national and local government agencies, including organizations from the private sector to ensure full implementation of statutory commitments herein;

(d) Set up participatory monitoring and evaluation systems and methodologies on compliance of conditions, implementation of operations, and output and impact assessments. It shall also coordinate with the NAC and with the Independent Monitoring Committee at the national and local levels, to verify compliance on a monthly basis, using the monitoring and evaluation systems designed for the purpose;

(e) Recommend to the NAC measures and policies for the responsive delivery of the commitments under this Act;

(f) Identify the coverage of the 4Ps based on the Standardized Targeting System;

(g) Provide the seminar-workshops and training programs to educate qualified household-beneficiaries about the conditions and other actions pertinent to this Act;

(h) Organize a session on entrepreneurship and disaster preparedness and risk reduction or arrange a community development activity in the qualified household-beneficiaries' respective barangay or municipality or city whichever is available annually;

(i) Submit an annual report to Congress on all aspects of its operations, financial status and other relevant data;

(j) Formulate implementing rules and guidelines for the enforcement of this Act; and

(k) Perform such other functions as may be necessary or incidental to the proper implementation of the provisions of this Act.

SEC. 15. Advisory Council. — An Advisory Council shall be created at the regional and national levels to be headed by the DSWD.

The regional advisory councils and NAC shall have, as members, representatives from the DSWD, Department of Health (DOH), Department of Education (DepEd), Department of Agriculture (DA), Department of Labor and Employment (DOLE), Department of Trade and Industry (DTI), Department of Agrarian Reform (DAR), Department of Science and Technology (DOST), and Technical Education and Skills Development Authority (TESDA). The regional advisory councils and NAC shall also have, as additional members, two (2) representatives from accredited nongovernmental organizations working or monitoring social welfare service programs.

The Advisory Councils shall have the following functions:

(a) Meet regularly to promote coordination across agencies to enhance the implementation of the program and jointly address and resolve program implementation issues;

(b) Recommend to the President measures and policies for the responsive delivery of the commitments under this Act and integration with the general poverty reduction strategy of government;

(c) Ensure that the funding requirements for livelihood, training and employment facilitation programs shall be included in the annual budgets of the government agencies implementing the same;

(d) Promulgate a grievance redress system and accept complaints and grievances pertaining to the implementation of the 4Ps; and

(e) Review the monitoring and assessment reports of the Independent Monitoring Committee and submit necessary policy recommendations to Congress to improve and strengthen the program, if necessary.

SEC. 16. Independent Monitoring Committee. - An Independent Monitoring Committee shall be created at the regional, and national levels, composed of representatives from the private sector and civil society organizations (CSOs) to complement the monitoring activities of the DSWD and provide feedback for appropriate action. It shall submit a report on the results of its monitoring activities relative to the implementation of the program to the respective regional advisory councils and the NAC.

SEC. 17. Regular Monitoring. - The DSWD shall monitor the implementation of the program and report its status at least once every three (3) years in order to ensure the attainment of the goals enumerated in Section 2 of this Act to the House of Representatives and the Senate of the Philippines.

SEC. 18. Report of the Program. - The DSWD shall annually publish a full report of the 4Ps covering the implementation of the previous fiscal year. The said report shall include financial disclosures, number of households included in the 4Ps, and recommendations to the Advisory Council, the President and to both chambers of Congress on how to further enhance it. This report shall be submitted to Congress before the submission of the President's Budget Message.

SEC. 19. Convergence of Programs and Services. — Within the framework of a national poverty alleviation strategy and a holistic social protection program, the various agencies of government implementing multi-stakeholder programs and services for the poor shall guarantee that the same complement and converge seamlessly with the aim of ensuring that the targeted household-beneficiaries are alleviated from poverty and remain non-poor even after the prescribed maximum period for the conditional cash grant. Such convergence shall focus on the enhancement of operational efficiency and strengthening of inter-agency partnership. The government shall monitor the performance of these agencies to ensure the sustainability and positive impact of its pro-poor programs.

SEC. 20. Program Transparency. - The DSWD shall regularly and timely post and update on its website a report of financial disclosures and information about beneficiaries based on geographical area, social, economic and cultural circumstances.

SEC. 21. Joint Congressional Oversight Committee. — Upon the effectivity of this Act, a Congressional Oversight Committee, hereafter referred to as the 4Ps Oversight Committee is hereby constituted. This Committee shall set the overall framework to review the implementation of this Act. It shall likewise determine inherent weaknesses in the law and recommend necessary remedial legislation or executive measures.

The 4Ps Oversight Committee shall be composed of fourteen (14) members with the chairpersons of the Committee on Poverty Alleviation of the House of Representatives, and the Committee on Social Justice, Welfare and Rural Development of the Senate as Co-Chairpersons; and six (6) members from each House, to be designated by the Speaker of the House of Representatives, and the Senate President, respectively.

For purposes of determining remedial legislation, the 4Ps Oversight Committee shall, within three (3) years after the effectivity of this Act, conduct a sunset review which shall include a systematic evaluation of the impact of this Act, accomplishments of the program, and the performance of its implementing agencies.

SEC. 22. Appropriations. - The amount necessary to carry out the provisions of this Act shall be charged against those authorized in the current and subsequent General Appropriations Act.

SEC. 23. Implementing Rules and Regulations. - Within six (6) months from the effectivity of this Act, the Secretary of the DSWD shall, in coordination with appropriate government departments and agencies with the participation of the local government units, promulgate the necessary rules and regulations to carry out the provisions of this Act.

SEC. 24. Penalties. - Any person, whether or not acting in conspiracy with public officials, who, by act or omission, inserts or allows the insertion of data or false information, or who diverts from what ought to be contained in the registry, with the view of altering the fact, or aiding in the grant of the money to persons other than the qualified household-beneficiaries, shall be penalized with imprisonment of not less than one (1) month but not more than one (1) year, or a fine of not less than Ten thousand pesos (Pl0,000.00) but not more than One hundred thousand pesos (P100,000.00) or both imprisonment and fine, at the discretion of the court. A public official who commits any of the acts provided herein shall be penalized with temporary disqualification to hold public office. Administrative sanctions shall be imposed without prejudice to prosecution in the proper courts.

SEC. 25. Separability Clause. - Should any provision of this Act be found unconstitutional by a court of law, such provision shall be severed from the remainder of this Act, and such action shall not affect the enforceability of the remaining provisions of this Act.

SEC. 26. Repealing Clause. - All laws, decrees, letters of instruction, resolutions, orders or parts thereof which are inconsistent with the provisions of this Act are hereby repealed, modified or amended accordingly.

SEC. 27. Effectivity Clause. - This Act shall take effect fifteen (15) days following its publication in the Official Gazette or in two (2) newspapers of general circulation in the Philippines.

April 12, 2019

AN ACT PROVIDING FOR A MAGNA CARTA OF THE POOR

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

SECTION I. Title. - This Act shall be known as the "Magna Carta of the Poor''.

SEC. 2. Declaration of Policy. — It is the declared policy of the State to uplift the standard of living and quality of life of the poor and provide them with sustained opportunities for growth and development, it shall adopt an area-based, sectoral, and focused intervention to poverty alleviation where every poor Filipino must be empowered to meet the minimum basic needs through the partnership of the government and the basic sectors.

It is likewise vital that the State complies with its international obligations to end poverty in all its forms, ensure and promote the health and well-being of all.

To attain the foregoing policy:

(a) Investments in anti-poverty programs to enable the poor to fully participate in the country's growth and development shall be among the top priorities of the State;

(b) Full access to government services shall be provided to the poor by departments, agencies and instrumentalities of the government;

(c) Interventions to address the genuine concerns of the poor will be strengthened, and long-term strategies and solutions for the empowerment of the poor will be institutionalized; and

(d) Enhancement and promotion of capabilities and competencies of the basic sectors, the nongovernment organizations (NGOs). the people's organizations (POs), and other development partners for the effective delivery and implementation of a wide range of anti-poverty programs and basic services through government strategies and collaboration with development partners.

SEC. 3. Definition of Terms. - For purposes of this Act. the following terms are hereby defined;

(a) Basic Sectors shall refer to the disadvantaged sectors of Philippine society including farmer-peasants, fisherfolk, workers in the formal sector including migrant workers, workers in the informal sector, indigenous peoples and cultural communities, women, persons with disability, senior citizens, victims of calamities/natural and human-induced disasters, youth and students, children, urban poor and members of cooperatives;

(b) Development Partners shall refer to NGOs, POs and private organizations and corporations that are engaged in programs and activities aimed at alleviating the condition of the poor;

(c) Hazardous/Danger Zones shall refer to areas which, when occupied for residential or business purposes, pose a danger to the life and safety of the occupants or of the general public;

(d) Nongovernment Organizations (NGOs) shall refer to duly registered nonstock, nonprofit organizations focusing on the upliftment of the basic sectors of society by providing advocacy, training, community organizing, research, access to resources, protection of the environment and conservation of natural resources and other similar activities;

(e) People's Organizations (POs) shall refer to self-help groups belonging to the basic sectors composed of members having a common bond of interest, who voluntarily join together to achieve a lawful common social or economic end;

(f) Poor shall refer to individuals or families whose income falls below the poverty threshold as defined by the National Economic and Development Authority (NEDA) and/or who cannot, afford in a sustained manner to provide their minimum basic needs of food, health, education, housing. or other essential amenities of life, as defined under Republic Act No. 8425, otherwise known as the "Social Reform and Poverty Alleviation Act". In determining who constitute the poor, the Multidimensional Poverty Index determined by the Philippine Statistics Authority (PSA; shall be considered;

(g) National Poverty Reduction Plan shall refer to the aggregation and consolidation of sectoral and local plans through a bottom-Up approach, from the Local. Poverty Reduction Action Plan towards the formulation of the national plan; and

(h) Progressive Realization shall refer to a process of implementation which will he paced according to the availability of funds and which adjusts to the exigencies of the times.

SEC. 4. Scope of the Fundamental Rights of the Poor. - The government shall establish a system of progressive realization or implementation to provide the requirements, conditions and opportunities for the full enjoyment or realization of the following rights of the poor, which are essential requirements towards poverty alleviation;

(a) Right to Adequate Food is the right of individuals or families to have physical and economic access to adequate and healthy food, or the means to procure it. The Department of Social Welfare and Development (DSWD). the Department of Agriculture (DA), and other implementing agencies concerned shall:

(1) Undertake necessary actions to mitigate and alleviate hunger especially in times of calamities/natural and human-induced disasters;

(2) Fully implement and maintain supplementary feeding programs in day care centers and schools;

(3) Ensure the availability, accessibility and sustainability of food supplies in a quantity and quality sufficient to meet the dietary needs of poor individuals and families; and

(4) Proactively engage the poor in activities intended to promote their food self-sufficiency and strengthen their access to resources and means to ensure food security.

(b) Right to Decent Work is the right to the opportunity to obtain decent and productive employment, in conditions of freedom, equity, gender equality, security, and human dignity.

The Department of Labor and Employment (DOLE) and other implementing agendas concerned shall:

(1) Ensure that the poor shall have access to information regarding employment openings in private enterprises and in government programs and projects especially regarding available employment opportunities for families displaced by calamities/natural and human-induced disasters or relocated from hazardous/danger zones;

(2) Ensure the compliance of private contractors and subcontractors doing national and local public work projects, funded by either the national government or any local government unit (LGU), to fill in thirty percent (30%) of the skilled labor requirements by qualified workers who come from the poor sector and who are residents of the LGUs where these projects are undertaken: Provided, That where the number of available resources is less than the required percentage provided therein, said requirements shall be based on the maximum number of locally available labor resources and shall be certified by the municipal, city, provincial or district engineer as sufficient compliance with the labor requirements under this Act;

(3) Promote livelihood among the poor where implementing agencies shall provide technical and administrative support to help the poor establish their livelihood enterprise;

(4) Ensure compliance with core labor standards, address the job and skills mismatch, and enhance human capital through education and training; and

(5) Provide an environment for more inclusive tripartism to achieve more broad-based representation of interests and make decision-making highly participatory through social dialogue at the firm and industry levels.

(c) Right to Relevant and Quality Education is the right to attain the Ml development of the human person. The Department of Education (DepEd), the Commission on Higher Education (CHED) and the Technical Education and Skills Development Authority (TESDA), in coordination with development partners concerned, shall;

(1) Maintain a system of free public education in the kindergarten, elementary and high school levels;

(2) Make higher education accessible to all poor individuals and families. They shall expand the programs of providing free or socialized college education to the poor, including student loans or study-now-pay-later plans, in state/local universities and colleges, which may be made subject to reasonable academic requirements: and

(3) Ensure access to quality technical-vocational education and training through scholarships, subsidies and financial assistance to ensure access to decent and productive employment, subject, to compliance to qualification requirements.

(d) Right to Adequate Housing is the right to have a decent, affordable, safe and culturally appropriate place to live in, with dignity, security of tenure m accordance with Republic Act No. 7279, otherwise known, as the "Urban Development and Housing Act of 1992", in peace, with access to basic-services, facilities, and livelihood. The Housing and Urban Development Coordinating Council (HUDCC) and other implementing agencies concerned shall:

(1) Prioritize the implementation of the socialized housing program with identified appropriate subsidies;

(2) Immediately construct and provide housing facilities for families living in identified hazardous/danger zones, and on areas affected by disasters/calamities where the housing needs of the poor are urgent;

(3) Create an enabling environment that will assist the poor gain access to security of tenure with the least financial burden; and

(4) Provide a system consisting of simple requirements and procedures, and expeditious processing and approval especially for community-based socialized housing/people's proposals.

(e) Right to the Highest Attainable Standard of Health is the right to have equitable access to a variety of facilities, goods, services and conditions necessary for the realization of the highest attainable standard of health. The Department of Health (DOE!) and other implementing agencies concerned shall:

(1) Ensure equitable access to a system of good quality health care and protection that is also available, and accessible to the poor, in keeping with reasonable standards;

(2) Provide for comprehensive, universal, culture-sensitive, nondiscriminatory and gender-responsive health services and programs, which include:

(i) maternal and child health care and nutrition:

(ii) access to ethical, legal, medically safe and effective reproductive health services and supplies:

(iii) promotion of breastfeeding:

(iv) prevention and management of reproductive tract infections, sexually transmitted diseases, including Human Immunodeficiency Virus (HIV) and Acquired Immune Deficiency Syndrome (AIDS);

(v) provision of immunization against, major infectious diseases occurring in the community; and

(vi) prevention, treatment and control of epidemic and endemic diseases;

(3) Reduce the financial burden of health care and protection of the poor through a socialized health insurance program with the end view of totally eliminating out-of-pocket expenses; and

(4) Provide health-related education and information to the community.

SEC. 5. Non-Diminution of the Rights of the Poor. - All other rights of the poor provided under existing laws shall remain in full force and effect. Nothing herein shall be construed in a manner that will diminish the enjoyment of such rights by the poor who shall have the right to avail of greater rights offered by existing laws, including those granted under this Act.

SEC. 6. Social Protection. — The government shall implement a sustainable mechanism to build an effective social protection system to ensure the access of the poor to protection from any risk or contingency. The system shall include social insurance, safety nets, social services, and labor market interventions, which shall be made affordable and accessible. This social protection shall likewise be pursued in and during bilateral, and multilateral negotiations, including arrangements to be entered into with international financial institutions.

SEC. 7. System for Targeting of Beneficiaries. - The NEDA shall maintain and periodically review, in consultation with PSA. a single system of classification to be used for targeting beneficiaries of the government's poverty alleviation programs and projects to ensure that such programs reach the intended beneficiaries.

DSWD. in coordination with NEDA and the National Anti-Poverty Commission (NAPC). shall identify the target beneficiaries.

SEC. 8. The National Poverty Reduction Plan (NPRP) and Enhanced Coordination and Convergence among Government Agencies. - All government agencies shall formulate, within one hundred (100) days from the issuance of the rules and regulations to implement this Act, a comprehensive and convergent plan to set the thresholds to be achieved by the government for each of the recognized rights of the poor. This plan shall consider development, plans of provinces, cities, and municipalities. NAPC, with the technical assistance of NEDA. shall be tasked to compile and harmonize these plans. The Department of Budget and Management (DBM) shall likewise review the NPRP for inclusion in the budget of implementing agencies.

SEC. 9. Participation of the Basic Sectors and of the Local Government Units (LGUs). - NAPC shall ensure that the basic sectors and the LGUs are engaged in the formulation and implementation of the NPRP. The Department of the Interior and Local Government (DILG) shall monitor the compliance of the LGUs in aligning their respective development, investment, and poverty reduction plans with the NPRP, and in implementing the same.

SEC. 10. Funding Requirements. — The funding for the poverty alleviation programs and projects implemented under this Act shall be sourced from the existing appropriations as authorized under the General Appropriations Act- (GAA) of the different departments and agencies implementing these programs including those enumerated below:

(a) DSWD - Pantawid Pamilyang Pilipino Program (4Ps) and Sustainable livelihood Program (SUP), and Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services National Community Driven Development Program (KALAHI-CIDSS NCDDP);

(b) DOLE - Special Program for Employment of Students (SPES) and Tulong Panghanapbuhay sa Ating Disadvantaged Workers "TUPAD" Project;

(c) TESDA - Skills Training. Private Education Student Financial Assistance (PESFA) and the Training for Work Scholarship Program (TWSP);

(d) DepEd - Alternative Learning System (ALS) and Government Assistance to Students and Teachers in Private Education (GASTPE);

(e) CHED - Student Financial Assistance Program (STUFAP);

(f) National Housing Authority (NHA) - Socialized housing program;

(g) DOH - Basic health care services;

(h) Philippine Health Insurance Corporation (PhilHealth) - Expanded Primary Care Package for the Poor and Senior Citizens; and

(i) Social Housing Finance Corporation (SHFC) -Community Mortgage Program for qualified organized informal settlers.

Allocations for the implementation of these programs and projects shall be given preferential consideration in the funding allocation of the agency budget.

Any additional funds to the existing appropriations of the pro-poor programs in the different departments and agencies shall be included in the GAA.

SEC. 11. Private Sector Participation. - The private sector shall be highly encouraged to be an active partner in the financing and implementation of poverty alleviation programs and projects. The government agencies implementing these programs shall be authorized to accredit development partners, which may accept donations, aids or grants, in cash or in kind, from duly accredited sources, to meet the demands of and uphold the basic rights of the poor to adequate food, decent work, relevant and quality education, adequate housing, and the highest attainable standard of health. Acceptance and use of such donations, aids or grants shall be transparent and subject to applicable government regulations.

SEC. 12. Tax Exemptions. - Any donation, contribution and grant which may be made to the programs implemented under the NPRP shall be exempt from the donor's tax in accordance with the specific provisions of the National Internal Revenue Code of 1997. as amended by Republic Act No. 10963 or the "Tax Reform for Acceleration and Inclusion".

SEC. 13. Implementation, through a System of Progressive Realization. — The implementation of this Act is through the Principle of Progressive Realization: Provided, That the President and Congress have the prerogative to allocate funds to all poverty alleviation programs as they may deem necessary through the GAA. Nothing in this Act shall he construed in any manner as requiring the government to undertake the immediate implementation of all poverty alleviation programs.

SEC. 14. Compliance Report. - NAPC shall oversee and monitor compliance with this Act. Within six CO) months from the effectivity of this Act and every six (6) month.* thereafter, all implementing departments and agencies shall submit a report to the NAPO on their respective compliance with the provisions of this Act which, in turn, shall submit a compliance report to the House Committee on Poverty Alleviation and to the Senate Committee on Social Justice, Welfare and Rural Development.

SEC. 15. Implementing Rules and Regulations. — Within six (6) months from the effectivity of this Act, the NAPC shall, in coordination with the government departments and agencies, with the participation of the LGUs and the basic sectors, promulgate rules and regulations to carry out the provisions of this Act,

SEC. 16. Separability Clause. - If, for any reason, any section or provision of this Act is declared unconstitutional or invalid, the other sections or provisions which are not affected shall continue to be in full force and effect.

SEC. 17. Repealing Clause. - All laws, decrees, executive orders, proclamations, rules and regulations or parts thereof inconsistent herewith are repealed, amended, or modified accordingly.

SEC. 18. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation.

Provided, That for indirect contributors, premium subsidy shall be gradually adjusted and included annually in the General Appropriations Act (GAA): Provided, further, That the funds shall be released to PhilHealth: Provided, furthermore; That the DOH, in coordination with PhilHealth, may request Congress to appropriate supplemental funding to meet targeted milestones of this Act: Provided, finally, That for every increase in the rate of contribution of direct contributors and premium subsidy of indirect contributors, PhilHealth shall provide for a corresponding increase in benefits.

Section 11. Program Reserve Funds.— PhilHealth shall set aside a portion of its accumulated revenues not needed to meet the cost of the current year’s expenditures as reserve funds: Provided, That the total amount of reserves shall not exceed a ceiling equivalent to the amount actuarially estimated for two (2) years’ projected Program expenditures: Provided, further, That whenever actual reserves exceed the required ceiling at the end of the fiscal year, the excess of the PhilHealth reserve fund shall be used to increase the Program’s benefits and to decrease the amount of members’ contributions.

Any unused portion of the reserve fund that is not needed to meet the current expenditure obligations or support the abovementioned programs shall be placed in investments to earn an average annual income at prevailing rates of interest and shall be referred to as the Investment Reserve Fund. The Investment Reserve Fund shall be invested in any or all of the following:

(a) In interest-bearing bonds, securities or other evidences of indebtedness of the Government of the Philippines: Provided, That such investment shall be at least fifty percent (50%) of the reserve fund;

(b) In debt securities and corporate bonds of prime or solvent corporations created or existing under the laws of the Philippines: Provided, That the issuing or its predecessor entity shall not have defaulted in the payment of interest on any of its securities: Provided, further, That the securities are issued by companies with high growth opportunities and earnings potentials: Provided, finally, That such investment shall not exceed thirty percent (30%) of the reserve fund;

(c) In interest-bearing deposits and loans to or securities in any domestic bank doing business in the Philippines: Provided, That in the case of such deposits, this shall not exceed at any time the unimpaired capital and surplus or total private deposits of the depository bank, whichever is smaller: Provided, further, That the bank shall have been designated as a depository for this purpose by the Monetary Board of the Bangko Sentral ng Pilipinas;

(d) In preferred stocks of any solvent corporation or institution created or existing under the laws of the Philippines listed in the stock exchange with proven track record or profitability over the last three (3) years and payment of dividends for a period of at least three (3) years immediately preceding the date of investment in such preferred stocks;

(e) In common stocks of any solvent corporation or institution created or existing under the laws of the Philippines listed in the stock exchange with high growth opportunities and earnings potentials;

(f) In bonds, securities, promissory notes, or other evidences of indebtedness of accredited and financially sound medical institutions exclusively to finance the construction, improvement and maintenance of hospitals and other medical facilities: Provided, That such securities and instruments shall be guaranteed by the Republic of the Philippines or the issuing medical institution and the issued securities are both rated triple ‘A’ by authorized accredited domestic rating agencies: Provided, further, That said investments shall not exceed ten percent (10%) of the total reserve fund; and

(g) In debt instruments and other securities traded in the secondary markets with the same intrinsic quality as those enumerated in paragraphs (a) to (e) hereof, subject to the approval of the PhilHealth Board.

No portion of the reserve fund or income thereof shall accrue to the general fund of the National Government or to any of its agencies or instrumentalities, including government-owned or -controlled corporations.

As part of its investments operations, PhilHealth may hire institutions with valid trust licenses as its external local fund managers to manage the reserve fund, as it may deem appropriate, through public bidding. The fund manager shall submit an annual report on investment performance to PhilHealth.

The PhilHealth shall set up the following funds:

(1) A fund to secure benefit payouts to members prior to their becoming lifetime members;

(2) A fund to secure payouts to lifetime members; and

(3) A fund for optional supplemental benefits that are subject to additional contributions.

A portion of each of the above funds shall be identified as current and kept in liquid instruments. In no case shall said portion be considered part of invested assets.

The PhilHealth shall allocate a portion of all contributions to the fund for lifetime members based on an allocation to be determined by the PhilHealth actuary based on a predetermined percentage using the current average age of members and the current life expectancy and morbidity curve of Filipinos.

The PhilHealth shall manage the supplemental benefits and the lifetime members’ fund in an actuarially sound manner.

The PhilHealth shall manage the supplemental benefits fund to the minimum required to ensure that the supplemental benefit payments are secure.

Section 12. Administrative Expense. - No more than seven and one-half percent (7.5%) of the actual total premium collected from direct and indirect contributory members during the immediately preceding year shall be allotted for the administrative cost of implementing the Program.

Section 13. PhilHealth Board of Directors. -

(a) The PhilHealth Board of Directors, hereinafter referred to as the Board, is hereby reconstituted to have a maximum of thirteen (13) members, consisting of the following: (1) five (5) ex officio members, namely: the Secretary of Health, Secretary of Social Welfare and Development, Secretary of Budget and Management, Secretary of Finance, Secretary of Labor and Employment; (2) three (3) expert panel members with expertise in public health, management, finance, and health economics; and (3) five (5) sectoral panel members, representing the direct contributors, indirect contributors, employers group, health care providers to be endorsed by their national associations of health care institutions and health care professionals, and representative of the elected local chief executives to be endorsed by the League of Provinces of the Philippines, League of Cities of the Philippines and League of Municipalities of the Philippines: Provided, That at least one (1) of the expert panel members and at least two (2) of the sectoral panel members are women.

The sectoral and expert panel members must be Filipino citizens and of good moral character.

The expert panel members must: (i) be of recognized probity and independence and must have distinguished themselves professionally in public, civic or academic service; (ii) be in the active practice of their professions for at least seven (7) years; and (iii) not be appointed within one (1) year after losing in the immediately preceding elections, whether regular or special.

(b) The Secretary of Health shall be an ex officio nonvoting Chairperson of the Board.

(c) All appointive members of the Board shall be required to undergo training in health care financing, health systems, costing health services and HTA prior to the start of their term. Noncompliance shall be a ground for dismissal.

Within thirty (30) days following the effectivity of this Act, the Governance Commission for Government-Owned or -Controlled Corporations (GCG) shall, in accordance with the provisions of Republic Act No. 10149, promulgate the nomination and selection process for appointive members of the Board with a clear set of qualifications, credentials, and recommendation from the concerned sectors.

Section 14. President and Chief Executive Officer (CEO) of PhilHealth. - Upon the recommendation of the Board, the President of the Philippines shall appoint the President and CEO of PhilHealth from the Board’s non-ex officio members: Provided, That the Board cannot recommend a President and CEO of PhilHealth unless the member is a Filipino citizen and must have at least seven (7) years of experience in the field of public health, management, finance, and health economics or a combination of any of these expertise.

Section 15. PhilHealth Personnel as Public Health Workers. - All PhilHealth personnel shall be classified as public health workers in accordance with the pertinent provisions under Republic Act No. 7305, also known as the Magna Carta of Public Health Workers.

Section 16. Additional Powers and Functions of PhilHealth. -

(a) To fix the reasonable compensation, allowances and other benefits of all positions, including its President and CEO, based on a comprehensive job analysis and audit of actual duties and responsibilities, subject to the approval of the President of the Philippines. The compensation plan shall be comparable with government social security institutions and shall be subject to periodic review by the Board no more than once every four (4) years without prejudice to merit reviews or increases based on productivity and efficiency;

(b) To establish the organizational structure and staffing pattern of PhilHealth’s central and regional offices to cover as many provinces, cities and legislative districts, including foreign countries, whenever and wherever it may be expedient, necessary and feasible and to inspect or cause to be inspected periodically such offices, subject to the approval by the Board;

(c) To maintain a Provident Fund which consists of contributions made by both PhilHealth and its officials and employees and earnings thereon, for the payment of benefits to such officials and employees or their dependents or heirs under such terms and conditions as may be prescribed by the Board, subject to the approval of the President of the Philippines; and

(d) To adopt or approve the annual and supplemental budget of receipts and expenditures including salaries, allowances and early retirement of PhilHealth personnel and to authorize such capital and operating expenditures and disbursements as may be necessary and proper for the effective management and operation of PhilHealth: Provided, That this shall be subject to the budgetary limitations stated under Section 12 hereof: Provided, further, That the submission of the corporate budget to the Department of Budget and Management (DBM) shall be for information purposes only.

CHAPTER IV HEALTH SERVICES DELIVERY

Section 17. Population-based Health Services. - The DOH shall endeavor to contract province-wide and city-wide health systems for the delivery of population-based health services. Province-wide and city-wide health systems shall have the following minimum components:

(a) Primary care provider network with patient records accessible throughout the health system;

(b) Accurate, sensitive, and timely epidemiologic surveillance systems; and

(c) Proactive and effective health promotion programs or campaigns.

Section 18. Individual-based Health Services. -

(a) PhilHealth shall endeavor to contract public, private, or mixed health care provider networks for the delivery of individual-based health services: Provided, That member access to services shall not be compromised: Provided, further, That these networks agree to service quality, co-payment/co-insurance, and data submission standards: Provided, furthermore, That during the transition, PhilHealth and DOH shall incentivize health care providers that form networks: Provided, finally, That apex or end-referral hospitals, as determined by the DOH, may be contracted as stand-alone health care providers by PhilHealth.

(b) PhilHealth shall endeavor to shift to paying providers using performance-driven, close-end, prospective payments based on disease or diagnosis related groupings and validated costing methodologies and without differentiating facility and professional fees; develop differential payment schemes that give due consideration to service quality, efficiency and equity; and institute strong surveillance and audit mechanisms to ensure networks’ compliance to contractual obligations.

CHAPTER V ORGANIZATION OF LOCAL HEALTH SYSTEMS

Section 19. Integration of Local Health Systems into Province-wide and City-wide Health System. - The DOH, Department of the Interior and Local Government (DILG), PhilHealth and the LGUs shall endeavor to integrate health systems into province-wide and city-wide health systems. The Provincial and City Health Boards shall oversee and coordinate the integration of health services for province-wide and city-wide health systems, to be composed of municipal and component city health systems, and city-wide health systems in highly urbanized and independent component cities, respectively. The Provincial and City Health Boards shall manage the Special Health Fund referred to in Section 20 of this Act and shall exercise administrative and technical supervision over health facilities and health human resources within their respective territorial jurisdiction: Provided, That municipalities and cities included in the province-wide and city-wide health systems shall be entitled to a representative in the Provincial or City Health Board, as the case may be.

Section 20. Special Health Fund. - The province-wide or city-wide health system shall pool and manage, through a special health fund, all resources intended for health services to finance population-based and individual-based health services, health system operating costs, capital investments, and remuneration of additional health workers and incentives for all health workers: Provided, That the DOH, in consultation with the DBM and the LGUs, shall develop guidelines for the use of the Special Health Fund.

Section 21. Income Derived from PhilHealth Payments. - All income derived from PhilHealth payments shall accrue to the Special Health Fund to be allocated by the LGUs exclusively for the improvement of the LGU health system: Provided, That PhilHealth payments shall be credited to the annual regular income (ARI) of the LGU.

Section 22. Incentives for Improving Competitiveness of the Public Health Service Delivery System. - The National Government shall make available commensurate financial and non-financial matching grants, including capital outlay, human resources for health and health commodities, to improve the functionality of province-wide and city-wide health systems: Provided, That underserved and unserved areas shall be given priority in the allocation of grants: Provided, further, That the grants shall be in accordance with the approved province-wide and city-wide health investment plans, which shall account for complementation of public and private health care providers and public or private health sector investments.

CHAPTER VI HUMAN RESOURCES FOR HEALTH

Section 23. National Health Human Resource Master Plan. - The DOH, together with stakeholders, shall ensure the formulation and implementation of a National Health Human Resource Master Plan that will provide policies and strategies for the appropriate generation, recruitment, retraining, regulation, retention and reassessment of health workforce based on population health needs.

To ensure continuity in the provision of the health programs and services, all health professionals and health care workers shall be guaranteed permanent employment and competitive salaries.

Section 24. National Health Workforce Support System. - A national health workforce (NHW) support system shall be created to support local public health systems in addressing their human resource needs: Provided, That deployment to Geographically Isolated and Disadvantaged Areas (GIDAs) shall be prioritized.

Section 25. Scholarship and Training Program. -

(a) The Commission on Higher Education (CHED), Technical Education and Skills Development Authority (TESDA), Professional Regulation Commission (PRC) and the DOH shall develop and plan the expansion of existing and new allied and health-related degree and training programs including those for community-based health care workers and regulate the number of enrollees in each program based on the health needs of the population especially those in underserved areas.

(b) The CHED and the DOH shall expand scholarship grants for allied and health-related undergraduate and graduate programs: Provided, That scholarships shall be based on the needed cadre of national and local health managers and health professionals: Provided, further, That scholarships for bona fide residents of unserved or underserved areas or members of indigenous peoples shall be given priority.

(c) The PRC and the DOH, in coordination with duly-registered medical and allied health professional societies, shall set up a registry of medical and allied health professionals, indicating, among others, their current number of practitioners and location of practice.

(d) The CHED, PRC, and DOH, in coordination with duly-registered medical and allied professional societies, shall reorient medical and allied medical professional education, and health professional certification and regulation towards producing health workers with competencies in the provision of primary care services.

Section 26. Return Service Agreement. - All graduates of allied and health-related courses who are recipients of government-funded scholarship programs shall be required to serve in priority areas in the public sector for at least three (3) full years, with compensation, and under the supervision of the DOH: Provided, further, That those who will serve for additional two (2) years shall be provided with additional incentives as determined by the DOH: Provided, further, That graduates of allied and health-related courses from state universities and colleges and private schools shall be encouraged to serve in these areas.

The DOH shall coordinate with the CHED and PRC for the effective implementation of this section including the establishment of guidelines for noncompliance.

CHAPTER VII REGULATION

Section 27. Safety and Quality. -

(a) PhilHealth shall establish a rating system under an incentive scheme to acknowledge and reward health facilities that provide better service quality, efficiency and equity: Provided, That PhilHealth shall recognize third party accreditation mechanisms and may use these as basis for granting incentives.

(b) The DOH shall institute a licensing and regulatory system for stand-alone health facilities, including those providing ambulatory and primary care services, and other modes of health service provision.

(c) The DOH shall set standards for clinical care through the development, appraisal, and use of clinical practice guidelines in cooperation with professional societies and the academe.

Section 28. Affordability. -

(a) DOH-owned health care providers shall procure drugs and devices guided by price reference indices, following centrally negotiated prices, sell them following the prescribed maximum mark-ups, and submit to DOH a price list of all drugs and devices procured and sold by the health care provider.

(b) An independent price negotiation board, composed of representatives from the DOH, PhilHealth and the Department of Trade and Industry (DTI), among others, shall be constituted to negotiate prices on behalf of the DOH and PhilHealth, guided by certain parameters including new technology, innovator drugs, and sourced from a single supplier: Provided, That the negotiated price in the framework contract shall be applicable for all health care providers under DOH: Provided, further, That the price negotiation board shall adhere to the guidelines issued by the Government Procurement Policy Board.

(c) Health care providers and facilities shall be required to make readily accessible to the public and submit to DOH and PhilHealth, all pertinent, relevant, and up-to-date information regarding the prices of health services, and all goods and services being offered.

(d) Drug outlets shall be required at all times to carry the generic equivalent of all drugs in the Primary Care Formulary and shall be required to provide customers with a list of therapeutic equivalents and then corresponding prices when fulfilling prescriptions or in any transaction.

(e) The DOH, PhilHealth, HMOs, life and non-life private health insurance (PHIs) shall develop standard policies and plans that complement the Program’s benefit schedule: Provided, That a coordination mechanism between PhilHealth, PHIs and HMOs shall be set up to ensure that no benefits shall be unnecessarily dropped.

Section 29. Equity. -

(a) The DOH shall annually update its list of underserved areas, which shall be the basis for preferential licensing of health facilities and contracting of health services. The DOH shall develop the framework and guidelines to determine the appropriate bed capacity and number of health care professionals of public health facilities.

(b) The government shall guarantee that the distribution of health services and benefits provided for in this Act shall be equitable by prioritizing GIDAs in the provision of assistance and support.

(c) All government hospitals are required to operate not less than ninety percent (90%) of their bed capacity as basic or ward accommodation: Provided, That specialty hospitals are required to operate not less than seventy percent (70%) of then bed capacity as basic or ward accommodation: Provided, further, That private hospitals are required to operate not less than ten percent (10%) of then bed capacity as basic or ward accommodation: Provided, finally, That all government hospitals, specialty hospitals and private hospitals shall regularly submit a report on the allotment or percentage of their bed capacity to basic or ward accommodation to DOH, which shall issue the necessary guidelines for the immediate implementation of this provision.

CHAPTER VIII GOVERNANCE AND ACCOUNTABILITY

Section 30. Health Promotion. - The DOH, as the overall steward for health care, shall strengthen national efforts in providing a comprehensive and coordinated approach to health development with emphasis on scaling up health promotion and preventive care. The DOH shall transform its existing Healthy Promotion and Communication Service into a full-fledged Bureau, to be named as the Health Promotion Bureau, to improve health literacy and mainstream health promotion and protection.

The Health Promotion Bureau shall formulate a framework strategy for health promotion which shall serve as the basis for DOH programs in increasing health literacy with focus on reducing non-communicable diseases, implement population-wide health promotion programs and activities across social determinants of health, exercise policy coordination across government instrumentalities to ensure the attainment of the framework strategy and its programs, and promote and provide technical support to local research and development programs and projects: Provided, That within two (2) years from the effectivity of this Act, the cost of implementing health promotion programs shall be at least one percent (1%) of the DOH’s total budget appropriations.

The schools under the supervision of the Department of Education (DepEd) are hereby designated as healthy settings for the purpose of this Act, The DepEd, in coordination with DOH, shall formulate programs and modules on health literacy and rights to be integrated into the existing school curricula to intensify the fight against the spread of communicable diseases and increase in prevalence of non-communicable diseases through, among others, the effective promotion of healthy lifestyle, physical activity, proper nutrition, and prevention of smoking and alcohol consumption among students. The program shall likewise acquaint the students on their entitlements, privileges and responsibilities under this Act.

The DOH and DepEd shall submit annual reports on the health promotion and literacy programs they have respectively implemented, including an assessment of the impact thereof, to the President of the Philippines, the Senate President, and the Speaker of the House of Representatives.

Furthermore, the LGUs are also directed to enact stricter ordinances that strengthen and broaden existing health policies, the laws to the contrary notwithstanding, and implement effective programs that promote health literacy and healthy lifestyle among their constituencies to advance population health and individual wellbeing, reduce the prevalence of non-communicable diseases and their risk factors, particularly tobacco and alcohol use, lower the incidence of new infectious diseases, address mental health issues and improve health indicators. An annual report on the policies adopted and programs undertaken and an assessment of the impact thereof shall be submitted by the LGUs to the DILG.

Section 31. Evidence-Informed Sectoral Policy and Planning for UHC. -

(a) All public and private, national and local health-related entities shall be required to submit health and health-related data to PhilHealth including, among others, administrative, public health, medical, pharmaceutical and health financing data: Provided, That PhilHealth shall furnish the DOH a copy of the health data: Provided, further, That these shall be used for the purpose of generating information to guide research and policy-making: Provided, finally, That the DOH shall strengthen its research capability by supporting health systems development and reform initiatives through policy and systems research, and shall support the growth of research consortia in line with the vision of the Philippine National Health Research System.

(b) The DOH and Department of Science and Technology (DOST) shall develop a cadre of policy systems researchers, technical experts and managers by providing training grants in globally-benchmarked institutions: Provided, That grantees shall be required to serve for at least three (3) full years, under supervision and with compensation, in DOH, PhilHealth and other relevant government agencies: Provided, further, That those who will serve for additional two (2) years, shall be provided with additional incentives as determined by the agency concerned.

(c) All health, nutrition and demographic-related administrative and survey data generated using public funds shall be considered public records and be made accessible to the public unless otherwise prohibited by law: Provided, That any person who requests a copy of such public records may be required to pay the actual costs of reproduction and copying of the requested public records.

(d) Participatory action research on cost-effective, high-impact interventions for health promotion and social mobilization shall form part of the national health research agenda of the Philippine National Health Research System which shall also be mandated to provide adequate funding support for the conduct of these researches.

Section 32. Monitoring and Evaluation. -

(a) The Philippine Statistics Authority (PSA) shall conduct the relevant modules of household surveys annually during the first ten (10) years of the implementation, and thereafter follow its regular schedule.

(b) The DOH shall publish annual provincial burden of disease estimates using internationally validated estimation methods and biennially using actual public and private sector data from electronic records and disease registries, to support LGUs in tracking progress of health outcomes.

Section 33. Health Impact Assessment (HIA). - HIA shall be required for policies, programs, and projects that are crucial in attaining better health outcomes or those that may have an impact on the health sector.

Section 34. Health Technology Assessment (HTA). -

(a) The HTA process shall be institutionalized as a fair and transparent priority setting mechanism that shall be recommendatory to the DOH and PhilHealth for the development of policies and programs, regulation, and the determination of a range of entitlements such as drugs, medicines, pharmaceutical products, and other devices, procedures and services as provided for under this Act: Provided, That investments on any health technology or development of any benefit package by the DOH and PhilHealth shall be based on the positive recommendations of the HTA: Provided, farther, That despite having undergone the HTA process, all health technology, intervention or benefit package shall still be subjected to periodic review: Provided, furthermore, That a health technology assessment may be conducted as new evidence emerges which may have substantial impact on the initial coverage decision by the DOH or PhilHealth: Provided, finally, That the HTA process shall adhere to the principles of ethical soundness, inclusiveness and preferential regard for the underserved, evidence-based and scientific defensibility, transparency and accountability, efficiency, enforceability and availability of remedies, and due process.

(b) The following criteria must be observed in the conduct of HTA:

(1) Responsiveness to Magnitude, Severity, and Equity. - The health interventions must address the top medical conditions that place the heaviest burden on the population, including dimensions of magnitude or the number of people affected by a health problem, and severity or health loss by an individual as a result of disease, such as death, handicap, disability or pain, and conditions of the poorest and most vulnerable population;

(2) Safety and Effectiveness. - Each intervention must have undergone Phase IV clinical trial, and systematic review and meta-analysis must be readily available. The interventions must also not pose any harm to the users and health care providers;

(3) Household Financial Impact. - The interventions must reduce out-of-pocket expenses. Interventions must have economic studies and cost-of-illness studies to satisfy this criterion;

(4) Cost-effectiveness. - The interventions must provide overall health gain to the health system and outweigh the opportunity costs of funding drug and technology; and

(5) Affordability and Viability. - The interventions must be affordable and the cost thereof must be viable to the financing agents.

(c) The HTAC, to be composed of health experts, shall be created within the DOH and supported by a Secretariat and a Technical Unit for Policy, Planning and Evaluation with evidence generation and validation capacity. The HTAC shall: (1) facilitate provision of financing and/or coverage recommendations on health technologies to be financed by DOH and Philhealth; (2) oversee and coordinate the HTA process within DOH and PhilHealth; and (3) review and assess existing DOH and PhilHealth benefit packages. Within five (5) years after the establishment and effective operation of the HTAC, it shall transition into an independent entity separate from the DOH, attached to DOST.

(d) The HTAC shall conduct the HTA in accordance with the principles, criteria and procedures of this Act and ensure that its process is transparent, conducted with reasonable promptness, and the result of its deliberations is made public. The HTAC shall consist of a core committee and subcommittees.

The core committee, which shall elect from among themselves its Chairperson, shall be composed of nine (9) voting members, namely: a public health epidemiologist; a health economist; an ethicist; a citizen’s representative; a sociologist or anthropologist; a clinical trial or research methods expert; a clinical epidemiologist or evidence-based medicine expert; a medico-legal expert; and a public health expert.

The subcommittees to be constituted shall include, among others: Drugs, Vaccines, Clinical Equipment and Devices, Medical and Surgical Procedure, Preventive and Promotive Health Services, and Traditional Medicine. Each subcommittee shall have a minimum of one (1) and maximum of three (3) non-voting members for each subcommittee.

The HTAC may call upon technical resource persons from the PhilHealth, Food and Drug Administration (FDA), patient groups and clinical medicine experts as regular resource persons; and representatives from the private sector and health care providers as by-invitation resource persons.

(e) The HTAC’s core committee and subcommittee members shall be appointed by the Secretary of Health for a term of three (3) years except for the medico-legal expert, ethicist, and the sociologist or anthropologist who shall serve for a term of four (4) years: Provided, That no member shall serve for more than three (3) consecutive terms: Provided, further, That the members of the HTAC shall receive an honorarium in accordance with existing policies: Provided, furthermore, That the DOH shall promulgate the nomination process for all HTAC members with a clear set of qualifications, credentials and recommendations from the sectors concerned: Provided, finally, That the Secretary of the DOST shall appoint the members of the HTAC upon its transition into an attached agency under DOST.

Section 35. Ethics in Public Health Policy and Practice. - The implementation of UHC shall be strengthened by commitment of all stakeholders to abide by ethical principles in public health practice:

(a) Conflict of interest declaration and management shall be routine in all policy-determining activities, and applicable to all appointed decision-makers, policymakers and then staff.

(b) All manufacturers of drugs, medical devices, biological and medical supplies registered by the FDA shall collect and track all financial relationships with health care professionals and health care providers and report these to the DOH, which shall then make this list publicly available in accordance with existing laws.

(c) A public health ethics committee shall be constituted as an advisory body to the Secretary of Health to ensure compliance with the provision of this section.

Section 36. Health Information System. - All health service providers and insurers shall each maintain a health information system consisting of enterprise resource planning, human resource information, electronic health records, and an electronic prescription log consistent with DOH standards, which shall be electronically uploaded on a regular basis through interoperable systems: Provided, That the health information system shall be developed and funded by the DOH and PhilHealth: Provided, further, That patient privacy and confidentiality shall at all times be upheld, in accordance with the Data Privacy Act of 2012.

CHAPTER IX APPROPRIATIONS

Section 37. Appropriations. - The amount necessary to implement this Act shall be sourced from the following:

(a) Total incremental sin tax collections as provided for in Republic Act No. 10351, otherwise known as the "Sin Tax Reform Law": Provided, That the mandated earmarks as provided for in Republic Act Nos. 7171 and 8240 shall be retained;

(b) Fifty percent (50%) of the National Government share from the income of the Philippine Amusement Gaming Corporation (PAGCOR) as provided for in Presidential Decree No. 1869, as amended: Provided, That the funds raised for this purpose shall be transferred to PhilHealth at the end of each quarter subject to the usual budgeting, accounting and auditing rules and regulations: Provided, further, That the funds shall be used by PhilHealth to improve its benefit packages;

(c) Forty percent (40%) of the Charity Fund, net of Documentary Stamp Tax Payments, and mandatory contributions of the Philippine Charity Sweepstakes Office (PCSO) as provided for in Republic Act No. 1169, as amended: Provided, That the funds raised for this purpose shall be transferred to PhilHealth at the end of each quarter subject to the usual budgeting, accounting, and auditing rules and regulations: Provided, further, That the funds shall be used by PhilHealth to improve its benefit packages;

(d) Premium contributions of members;

(e) Annual appropriations of the DOH included in the GAA; and

(f) National Government subsidy to PhilHealth included in the GAA.

The amount necessary to implement the provisions of this Act shall be included in the GAA and shall be appropriated under the DOH and National Government subsidy to PhilHealth. In addition, the DOH, in coordination with PhilHealth, may request Congress to appropriate supplemental funding to meet targeted milestones of this Act.

CHAPTER X PENAL PROVISIONS

Section 38. Penal Provisions. - Any violation of the provisions of this Act, after due notice and hearing, shall suffer the corresponding penalties as herein provided:

(a) A health care provider of population-based health services who violates any of the provisions in its respective contract shall be subject to sanctions and penalties under its respective contracts without prejudice to the right of the government to institute any criminal or civil action before the proper judicial body.

(b) A health care provider contracted for the provision of individual-based health services who commits an unethical act, abuses the authority vested upon the health care provider, or performs a fraudulent act shall be punished by a fine of Two hundred thousand pesos (₱200,000.00) for each count, or suspension of contract up to three (3) months or the remaining period of its contract or accreditation whichever is shorter, or both, at the discretion of the PhilHealth, taking into consideration the gravity of the offense.

The same shall also constitute a criminal violation punishable by imprisonment for six (6) months and one (1) day up to six (6) years, upon discretion of the court without prejudice to criminal liability defined under the Revised Penal Code.

If the health care provider is a juridical person, its officers and employees or other representatives found to be responsible, who acted negligently or with intent, or have directly or indirectly caused the commission of the violation, shall be liable. Recidivists may no longer be contracted as participants of the Program.

(c) A member who commits any violation of this Act or knowingly and deliberately cooperates or agrees, whether explicitly or implicitly, to the commission of a violation by a contracted health care provider or employer as defined in this section, including the filing of a fraudulent claim for benefits or entitlement under this Act, shall be punished by a fine of Fifty thousand pesos (₱50,000.00) for each count or suspension from availment of the benefits of the Program for not less than three (3) months but not more than six (6) months, or both, at the discretion of PhilHealth.

(d) Any employer who:

(1) Deliberately or through inexcusable negligence, fails or refuses to register employees regardless of their employment status, accurately and timely deduct contributions from the employee’s compensation or to accurately and timely remit or submit the report of the same to PhilHealth shall be punished with a fine of Fifty thousand pesos (₱50,000.00) for every violation per affected employee, or imprisonment of not less than six (6) months but not more than one (1) year, or both such fine and imprisonment, at the discretion of the court.

Any employer or any officer authorized to collect contributions under this Act who, after collecting or deducting the monthly contributions from the employee’s compensation, fails or refuses for whatever reason to accurately and timely remit the contributions to PhilHealth within thirty (30) days from due date shall be presumed prima facie to have misappropriated the same and is obligated to hold the same in trust for and in behalf of the employees and PhilHealth, and is immediately obligated to return or remit the amount.

If the employer is a juridical person, its officers and employees or other representatives found to be responsible, whether they acted negligently or with intent, or have directly or indirectly caused the commission of the violation, shall be liable.

(2) Deducts, directly or indirectly, from the compensation of the covered employees or otherwise recover from them the employer’s own contribution on behalf of such employees shall be punished with a fine of Five thousand pesos (₱5,000.00) multiplied by the total number of affected employees or imprisonment of not less than six (6) months but not more than one (1) year, or both such fine and imprisonment, at the discretion of the court.

If the unlawful deduction is committed by an association, partnership, corporation or any other institution, its managing directors or partners or president or general manager, or other persons responsible for the commission of the act shall be liable for the penalties provided for in this Act.

(e) Any director, officer or employee of PhilHealth who:

(1) Without prior authority or contrary to the provisions of this Act or its IRR, wrongfully receives or keeps funds or property payable or deliverable to the PhilHealth, and who appropriates and applies such fund or property for personal use, or shall willingly or negligently consents either expressly or implicitly to the misappropriation of funds or property without objecting to the same and promptly reporting the. matter to proper authority, shall be liable for misappropriation of funds under this Act and shall be punished with a fine equivalent to triple the amount misappropriated per count and suspension for three (3) months without pay.

(2) Commits an unethical act, abuse of authority, or performs a fraudulent act shall be punished by a fine of Two hundred thousand pesos (₱200,000.00) or suspension for three

(3) months without pay, or both, at the discretion of PhilHealth, taking into consideration the gravity of the offense. The same shall also constitute a criminal violation punishable by imprisonment for six (6) months and one (1) day up to six (6) years, upon discretion of the court without prejudice to criminal liability defined under the Revised Penal Code.

Other violations of the provisions of this Act or of the rules and regulations promulgated by PhilHealth shall be punished with a fine of not less than Five thousand pesos (₱5,000.00) but not more than Twenty thousand pesos (₱20,000.00).

All other violations involving funds of PhilHealth shall be governed by the applicable provisions of the Revised Penal Code or other laws, taking into consideration the rules on collection, remittances, and investment of funds as may be promulgated by PhilHealth.

PhilHealth may enumerate circumstances that will mitigate or aggravate the liability of the offender or erring health care provider, member or employer.

Despite the cessation of operation by a health care provider or termination of practice of an independent health care professional while the complaint is being heard, the proceeding shall continue until the resolution of the case.

CHAPTER XI MISCELLANEOUS PROVISIONS

Section 39. Oversight Provision. - There is hereby created a Joint Congressional Oversight Committee on Universal Health Care to conduct a regular review, of the implementation of this Act which shall entail a systematic evaluation of the performance, impact or accomplishments of this Act and the performance of the various agencies involved in realizing universal health care, particularly with respect to their roles and functions.

The Joint Congressional Oversight Committee shall be jointly chaired by the Chairpersons of the Senate Committee on Health and Demography and the House of Representatives Committee on Health. It shall be composed of five (5) members from the Senate and five (5) members from the House of Representatives, to be appointed by the Senate President and the Speaker of the House of Representatives, respectively.

The National Economic and Development Authority, in coordination with the PSA, National Institutes of Health, and other academic institutions shall undertake studies to validate and evaluate the accomplishments of this Act. These validation studies and annual reports on the performance of the DOH and PhilHealth shall be submitted to the Joint Congressional Oversight Committee.

The DOH and PhilHealth shall allocate an adequate funding for the purpose of conducting these studies.

The Joint Congressional Oversight Committee shall commission an independent study to evaluate the implementation of this Act.

Section 40. Performance Monitoring Division. - The DOH shall establish a Performance Monitoring Division to monitor and evaluate the proper and effective implementation of the provisions of this Act. The office in charge of field implementation performance of the DOH shall comprise the core personnel of the office which shall be augmented by the DOH Secretary, as may be deemed necessary.

Section 41. Transitory Provision. -

(a) Within thirty (30) days from the effectivity of this Act, the President of the Philippines shall appoint the new members of the Board and the President of PhilHealth. The existing board of directors shall serve in a hold-over capacity until a full and permanent board of directors of PhilHealth is constituted and functioning.

(b) All officers and personnel of PhilHealth, except members of the Board who shall be governed by the first paragraph of this section, shall continue to perform their duties and responsibilities 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 PhilHealth: Provided, That qualified officers and personnel may voluntarily elect for retirement or separation from service and shall be entitled to the benefits under existing laws.

(c) All affected officers and personnel of the PCSO shall be absorbed by the agency without demotion in rank or diminution of salary, benefits and other privileges: Provided, That qualified officers and personnel of the agency may voluntarily elect for retirement or separation from service based on PCSO Board-approved Early Retirement Incentive Program (ERIP), utilizing internally-generated funds, or savings from its operating fund: Provided, finally, That the retirement benefit package shall be reasonable and within the bounds of existing laws.

(d) In the first six (6) years from the enactment of this Act, the National Government shall provide technical and financial support to selected LGUs that commit to province-wide integration, subject to further review after the lapse of six (6) years: Provided, That in the first three (3) years from the enactment of this Act, the province-wide and city-wide systems shall exhibit managerial integration: Provided, further, That within the next three (3) years thereafter, the province-wide and city-wide systems shall exhibit financial integration: Provided, finally, That upon positive recommendation by an independent study commissioned by the Joint Congressional Oversight Committee on Universal Health Care of the overall benefit of province-wide integration and the positive recommendation of the Secretary of Health, all local health systems shall be integrated as prescribed by Section 19 of this Act through the issuance of an Executive Order by the President.

(e) In the first ten (10) years from the enactment of this Act, PhilHealth may outsource certain functions to ensure operational efficiency and towards the fulfillment of this Act: Provided, That any outsourcing shall comply with the provisions of Republic Act No. 9184, otherwise known as the "Government Procurement Reform Act", and its IRR.

(f) In the first three (3) years from the enactment of this Act, PhilHealth and DOH shall provide reasonable financial and licensing incentives to contracted health care facilities to form health care provider networks. Thereafter, these incentives shall be withdrawn and providers shall be fully subject to the provisions of Section 19 of this Act.

(g) The HTAC under the DOH shall be established within one (1) year from the effectivity of this Act: Provided, That the existing health benefit package shall be rationalized within two (2) years from the establishment of the HTAC.

(h) Within three (3) years from the effectivity of this Act, all private insurance companies and HMOs, together with DOH and PhilHealth, shall have developed a system of co-payment that complements PhilHealth benefit packages.

(i) Within ten (10) years from the effectivity of this Act, only those who have been certified by the DOH and PRC to be capable of providing primary care will be eligible to be a primary care provider.

(j) For the first two (2) years from the effectivity of this Act, the PCSO shall transfer at least fifty percent (50%) of the forty percent (40%) of the charity fund per year, in accordance with Section 37(c) of this Act, to enable the PCSO to conclude and liquidate its Individual Medical Assistance Program At-Source-ang-Processing (IMAP-ASAP) obligations.

Section 42. Interpretation. - All doubts in the implementation and interpretation of this Act, including its IRR, shall be resolved in favor of upholding the rights and interests of every Filipino to quality, accessible and affordable health care.

Nothing in this Act shall be construed to eliminate or in any way diminish Program benefits being enjoyed at the time of promulgation of this Act.

Section 43. Implementing Rules and Regulations (IRR). - The DOH and the PhilHealth, in consultation and coordination with appropriate national government agencies, civil society organizations, non-government organizations, private sector representatives, and other stakeholders, shall promulgate the necessary rules and regulations for the effective implementation of this Act no later than one hundred eighty (180) days upon the effectivity of this Act.1avvphi1

Section 44. Separability Clause. - If any part or provision of this Act is held invalid or unconstitutional, the remaining parts or provisions not affected shall remain in full force and effect.

Section 45. Repealing Clause. - The pertinent provisions of the following laws are hereby amended accordingly:

(a) Sections 6, 7, 10, 12, 16(n), 18, 19, 25, 26, 27, 28, 44, 45, 46, 47, 48 and 54 of Republic Act No. 7875, otherwise known as the "National Health Insurance Act of 1995", as amended by Republic Act No. 9241 and Republic Act No. 10606;

(b) Section 8(c) of Republic Act No. 10351, otherwise known as the "Sin Tax Reform Law";

(c) Presidential Decree No. 1869, otherwise known as the PAGCOR Charter, as amended; and

(d) Republic Act No. 1169, otherwise known as the PCSO Charter, as amended, with respect to the provision of Section 37 of this Act.

All other laws, decrees, executive orders and rules and regulations contrary to or inconsistent with the provisions of this Act are hereby repealed or amended accordingly.

Section 46. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in any newspaper of general circulation.

Rules and Regulations Implementing the Magna Carta for Homeowners and Homeowners’ Associations

AN ACT PROVIDING FOR A MAGNA CARTA FOR HOMEOWNERS AND HOMEOWNERS’ ASSOCIATIONS, AND FOR OTHER PURPOSES

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

CHAPTER I TITLE AND DECLARATION OF POLICY

Section 1. Title. – This Act shall be known as the "Magna Carta for Homeowners and Homeowners’ Associations".

Section 2. Declaration of Policy. - In fulfillment of the constitutional principles directing the State to encourage, promote and respect non-governmental, community - based and people’s organizations in serving their legitimate collective interests in our participatory democracy, it is hereby declared the policy of the State to uphold the rights of the people to form unions, associations, or societies, and to recognize and promote the rights and the roles of homeowners as individuals and as members of the society and of homeowners' associations. To this end, the State shall endeavor to make available resources and assistance that will help them fulfill their roles In serving the needs and interests of their communities, in complementing the efforts of local government units (LGUs) in providing vital and basic services to our citizens, and in helping implement local and national government policies, programs, rules and ordinances for the development of the nation.

Section 3. Definition of Terms. - For purposes of this Act, the following terms shall mean:

(a) "Accounting period" refers to the fiscal or calendar year adopted by a homeowners’ association in the recording and reporting of its fiscal transactions.

(b) "Association" refers to the homeowners’ association which is a nonstick, nonprofit corporation registered with the Housing and Land Use Regulatory Board (HLURB), or one previously registered with the Home Insurance Guarantee Corporation (now Home Guaranty Corporation) or the Securities and Exchange Commission (SEC), organized by owners or purchasers of a lot in a subdivision/village or other residential real property located within the jurisdiction of the association; or awardees, usufructuaries, legal occupants and/or lessees of a housing unit and/or lot in a government socialized or economic housing or relocation project and other urban estates; or underprivileged and homeless citizens as defined under existing laws in the process of being accredited as usufructuaries or awardees of ownership rights under the Community Mortgage Program (CMP), Land Tenure Assistance Program (LTAP) and other similar programs in relation to a socialized housing project actually being Implemented by the national government or the LGU.

(c) "Association member" refers to a homeowner who is a member of the association where his/her housing unit or lot is situated and those defined in the articles of incorporation and bylaws of the association.

(d) "Basic community services and facilities" refer to services and facilities that redound to the benefit of all homeowners and from which, by reason of practicality, no homeowner may be excluded such as, but not limited to: security; street and vicinity lights; maintenance, repairs and cleaning of streets; garbage collection and disposal; and other similar services and facilities.

(e) "Board" refers to the board of directors or trustees of the association which has primary authority to manage the affairs of the association.

(f) "Common areas" refer to property owned or otherwise maintained, repaired or administered in whole or in part by the association including, but not limited to, roads, parks, playgrounds and open spaces as provided in Presidential Decree No. 1216.

(g) "Common expense" refers to costs incurred by the association to exercise any of the powers provided for in this Act.

(h) "Economic housing" refers to a type of housing project with lower interest rates and longer amortization periods provided to moderately low - income families, as defined under existing laws, rules and regulations.

(i) "Governing document" refers to the articles of incorporation, bylaws, conditions, rules and regulations of the association, or other written instrument by which the association has the authority to exercise any of the powers provided for in this Act.

(j) "Homeowner" refers to any of the following;

(1) An owner or purchaser of a lot in a subdivision/village;

(2) An awardee, usufructuary, or legal occupant of a unit, house and/or lot in a government socialized or economic housing or relocation project and other urban estates; or

(3) An informal settler in the process of being accredited as beneficiary or awardee of ownership rights under the CMP, LTAP, and other similar programs.

(k) "Residential real property" refers to any real property, the use of which is limited by law to primarily residential purposes.

(l) "Simple majority" refers to fifty percent (50%) plus one (1) of the total number of association members.

(m) "Socialized housing" refers to housing programs and projects covering houses and lots or home lots only undertaken by the government or the private sector for the underprivileged and homeless citizens which shall include sites and services development, long - term financing, liberalized terms on interest payments, and other benefits in accordance with the provisions of Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992 (UDHA).

(n) "Subdivision/Village" refers to a tract or parcel of land partitioned into individual lots, with or without improvements thereon, primarily for residential purposes.

Section 4. Registration with the HLURB. - Every association of homeowners shall be required to register with the HLURB. This registration shall serve to grant juridical personality to all such associations that have not previously acquired the same by operation of the General Corporation Law or by any other general law.

The procedure for registration shall be specifically provided for in the implementing rules and regulations to be promulgated by the HLURB pursuant to Section 28 of this Act. Such procedure shall provide for an adjudicatory mechanism that will be observed in the event there is a dispute involving two (2) or more associations established within the same subdivision/village), community/area, or housing project seeking registration. In resolving this type of dispute, the HLURB shall take into account the date each association was legally established, the date of submission of its application for registration, the number of members, and other similar factors.

The existence of associations previously registered with the Home Insurance Guarantee Corporation or the SEC shall be respected, and the said associations shall not be charged a penalty when they register with the HLURB after this Act takes effect.

CHAPTER II HOMEOWNERS

Section 5. Rights and Duties of Every Homeowner. - Every homeowner has the right to enjoy the basic community services and facilities: Provided, That he/she pays the necessary fees and other pertinent charges.

Section 6. Qualification of a Member. - A homeowner as defined under this Act shall be qualified to be a member of an association: Provided, however, That a lessee, usufructuary, or legal occupant shall have the right of a homeowner as set forth under this Act upon procurement of a written consent or authorization from the owner of the lot or housing unit.

Until such consent or authorization is revoked in writing, the owner of the lot or housing unit is deemed to have waived his/her rights enumerated under Section 7 of this Act, except subsection (b) of the same section which can be simultaneously enjoyed by both the owner and the lessee.

For purposes of this Act, the lessee authorized in accordance with this section shall qualify as a member with all the rights enumerated in this Act, including the duties and obligations enumerated under Sections 7, 8 and 9 hereof: Provided, further, That lessees in government socialized housing projects or urban estates and those in communities of underprivileged and homeless citizens covered under the term under Section 3 of this Act will be considered as homeowners for the purpose of qualifying as a member of a homeowners' association without need of such written consent or authorization.

Section 7. Rights of a Member. - An association member has full rights:

(a) to avail of and enjoy all basic community services and the use of common areas and facilities;

(b) to inspect association books and records during office hours and to be provided upon request with annual reports, including financial statements;

(c) to participate, vote and be eligible for any elective or appointive office of the association subject to the qualifications as provided for in the bylaws;

(d) to demand and promptly receive deposits required by the association as soon as the condition for the deposit has been complied with or the period has expired;

(e) to participate in association meetings, elections and referenda, as long as his/her bona fide membership subsists; and

(f) to enjoy all other rights as may be provided for in the association bylaws.

Section 8. Duties of a Member. - A member shall have the following duties:

(a) to pay membership fees, dues and special assessments;

(b) to attend meetings of the association; and

(c) to support and participate In projects and activities of the association.

Section 9. Delinquent Member. - The bylaws shall provide for guidelines and procedures in determining who is a delinquent member, or a member not in good standing, and to prescribe the administrative sanctions to be imposed on such member. The right to due process shall be observed in cases where administrative sanctions are imposed on a delinquent member.

CHAPTER III HOMEOWNERS’ ASSOCIATION

Section 10. Rights and Powers of the Association. - An association shall have the following rights and shall exercise the following powers:

(a) Subject to consultation and with the approval of a simple majority of the members, adopt and amend the articles of incorporation and bylaws, rules and regulations, pursuant to existing laws and regulations;

(b) In behalf of its members, institute, defend, or intervene in litigation and/or administrative proceedings affecting the welfare of the association and the subdivision/village as a whole, excluding, however, disputes that are not the responsibility of the association;

(c) Regulate the use, maintenance, repair, replacement and modification of common areas and cause additional improvements to be made part of the common areas: Provided, That the aforementioned do not contradict the provisions of the approved subdivision plan;

(d) Regulate access to, or passage through the subdivision/village roads for purposes of preserving privacy, tranquility, internal security, and safety and traffic order: Provided, That: (1) public consultations are held; (2) existing laws and regulations are met; (3) the authority of the concerned government agencies or units are obtained; and (4) the appropriate and necessary memoranda of agreement are executed among the concerned parties;

(e) Hire, discharge or contract managing agents and other employees, agents and independent contractors to ensure the full functioning and operation of the association;

(I) Subject to consultation with and the approval of a simple majority of the association members, acquire, hold, encumber and convey in its own name any right, title to or interest in real or personal property: Provided, That such approval of a simple majority of the association members shall not be required for the acquisition, holding, encumbrance and conveyance of personal properties in amounts not exceeding ten percent (10%) of the association’s cash holdings for its use in the course of its normal operations;

(g) Ensure the availability of quality water services at a reasonable price and at its option, administer and manage the waterworks system of the subdivision;

(h) Upon consultation, grant easements, leases, concessions and authority to use common areas and petition for or consent to the vacation of streets and alleys: Provided, That the said grant of easements, leases, concessions and authority shall not be applicable to access roads, main interconnecting roads, alleys and sidewalks within the subdivision;

(i) Impose or collect reasonable fees for the use of open spaces, facilities, and services of the association to defray necessary operational expenses, subject to the limitations and conditions imposed under the law, the regulations of the board and the association’s bylaws;

(j) Cause compliance with regard to height regulations, easements, use of homes, buildings, edifices, or structures that may be built within the subdivision, in accordance with the National Building Code, zoning laws, HLURB rules and regulations, existing local ordinances, and existing deeds of restriction;

(k) Subject to consultation and with the approval of a simple majority of the association members, allow the establishment of certain institutions such as, but not limited to, schools, hospitals, markets, grocery stores and other similar establishments that will necessarily affect the character of the subdivision/village in terms of traffic generation, and/or opening the area to outsiders which may result in the loss of privacy, security, safety, and tranquility to its residents, in accordance with the National Building Code, zoning laws, existing local ordinances, HLURB rules and regulations, and existing jurisprudence: Provided, That such prior approval shall not be necessary for the establishment of sari - sari stores, home industries and similar small - scale business enterprises within the subdivision/village classified as socialized housing;

(l) Suspend privileges of and services to and/or impose sanctions upon its members for violations and/or noncompliance with the association's bylaws, and rules and regulations;

(m) Petition for the creation of a separate barangay, independently or together with neighboring subdivisions: Provided, That all the requirements of the Local Government Code of 1991 are met; and

(n) Exercise any other powers conferred by the bylaws and the HLURB necessary for the governance and operation of the association.

Section 11. Board of Directors or Trustees. - The bylaws of the association shall provide for the qualifications and number of the directors or trustees that will comprise the board.

Section 12. Duties and Responsibilities of the Board. In addition to the duties and responsibilities stated in the bylaws of the association, the board shall have the following duties and responsibilities:

(a) Regularly maintain an accounting system using generally accepted accounting principles, and keep books of accounts, which shall be open for inspection to any homeowner and duly authorized representatives of government agencies upon request, during reasonable hours, on business days;

(b) Collect the fees, dues and assessments that may be provided for in the bylaws and approved by a majority of the members;

(c) Collect reasonable charges for assessments, and after due notice and hearing by the board in accordance with the procedures as provided in the bylaws, and rules and regulations adopted by the board, charge reasonable fines for late payments and for violation of the bylaws, rules, and regulations of the association, in accordance with a previously established schedule adopted by the board and furnished to the homeowners;

(d) Propose measures to raise funds and the utilization of such funds and submit the same for consideration of the members of the association;

(e) Undergo a free orientation by the HLURB or any other competent agency deputized by it on how to conduct meetings, preparation of minutes, handling of accounts, laws and pertinent rules and regulations within thirty (30) days after election or appointment;

(f) Discharge the duties and responsibilities provided for in the association’s bylaws; and

(g) Exercise such other powers as may be necessary and proper in accordance with this Act and for the accomplishment of the purposes for which the association was organized.

The board shall act in all instances on behalf of the association, except to amend the articles of incorporation, to dissolve the association, to elect members of the board or to determine the qualifications, powers and duties, or terms of office of the board, and other instances that require the vote or approval of the members themselves. In the performance of their duties, the officers and members of the board shall exercise the degree of care and loyalty required by such position.

Section 13. Removal of a Director or Trustee. - Through a signed petition of a simple majority of the association members in good standing, subject to a verification and validation by the HLURB, a director/trustee may be removed for causes provided in the bylaws of the association: Provided, That if a majority of the members of the board is removed, it shall be considered a dissolution of the entire board, in which case, Section 14 hereof shall govern.

Within sixty (60) days after the removal of a director or trustee, an election shall be called by the remainder of the board for the purpose of determining who shall hold office for the unexpired term of the removed director/trustee.

Section 14. Dissolution of the Board. - Through a signed petition of two - thirds (2/3) of the association members subject to a verification and validation by the HLURB, the board of the association may be dissolved for causes provided in the bylaws of the association.

Within sixty (60) days from the above dissolution, an election for a new board shall be called and conducted by the HLURB for the purpose of determining who shall hold office for the unexpired term of the dissolved board.

Until the new board members shall have been elected and qualified, the HLURB shall designate an interim board: Provided, That such board shall be composed of association members in good standing: Provided, further, That such interim board members shall not be eligible to run in the election called for the purpose of replacing the members of the dissolved board.

Section 15. Association Bylaws. - The bylaws of the association shall be adopted by a simple majority of the members of the association. Consistent with the provisions of this Act, it shall provide for:

(a) The rights, duties and obligations of members;

(b) The circumstances under which membership is acquired, maintained, and lost;

(c) The schedule, venue, and manner of conducting the regular, special, and emergency meetings of the general membership, the required quorum, and allowable proxies in such meetings;

(d) The number, qualifications, powers and duties, terms of office, manner of electing and removing the board and the filling of vacancies in the board: Provided, That the term of office of the members of the board shall not exceed two (2) years;

(e) The qualifications, positions, duties, election or appointment, and compensation of other officers and employees of the association: Provided, That the term of office of the other officers shall not exceed two (2) years: Provided, further, That no officer of the association holding a rank of director or trustee shall likewise be entitled to any compensation;

(f) The schedule, venue, and manner of conducting the regular, special, and emergency meetings of the board, the required quorum, and allowable proxies in such meetings;

(g) Such powers that the board may delegate to a managing agent, if any, or to other persons;

(h) Which of its officers may prepare, execute, certify and record amendments to the governing documents on behalf of the association;

(i) The grounds and procedure for removal of director or trustee, and the manner of filling up vacancies in the board, consistent with Section 13 of this Act;

(j) The grounds and procedure for dissolution of the board, and the manner of reconstituting the board, consistent with Sections 13 and 14 of this Act;

(k) The actions for limiting, broadening or denying the right to vote, and the extent thereof;

(I) The designation of the presiding officer at meetings of directors or trustees and members;

(m) The time for holding the regular election of directors or trustees and the mode or manner of giving notice thereof;

(n) The creation of election, grievance and audit committees, and such other committees which the association may deem necessary; as well as a conciliation or mediation mechanism for the amicable settlement of disputes among members, directors or trustees, officers and committee members of the association;

(o) The dues, fees, and special assessments to be imposed on a regular basis, and the manner in which the same may be imposed and/or increased;

(p) The method of adopting, amending, repealing and abrogating the bylaws;

(q) The list of acts constituting a violation by its officers and the corresponding penalties therefor;

(r) The penalties for violation of the bylaws; and

(s) Such other matters necessary for the proper or convenient transaction of its corporate business and affairs.

Section 16. Proxies. - Association members may vote in person or by proxy in all meetings of members. Proxies shall be in writing, signed by the member and filed before the scheduled meeting with the association secretary. Unless otherwise provided in the proxy, it shall be valid only for the meeting for which it is intended, No proxy shall be valid and effective for a period longer than three (3) years at anyone time unless earlier revoked by the member.

Section 17. Financial and Other Records. - The homeowners’ association is enjoined to observe the following, with regard to its funds, financial and other records:

(a) The association or its managing agent shall keep financial and other records sufficiently detailed to enable the association to fully declare to each member the true statement of its financial status. All financial and other records of the association including, but not limited to, checks, bank records and invoices, in whatever form these are kept, are the property of the association. Each association’s managing agent shall turn over all original books and records to the association immediately upon termination of the management relationship with the association, or upon such other demand as is made by the board. An association’s managing agent is entitled to keep association records. All records which the managing agent has turned over to the association shall be made reasonably available for the examination and copying by the managing agent;

(b) All records involving the affairs of the association shall be available for examination by all owners, holders of mortgages on the lots, and their respective authorized agents upon reasonable advance notice, during normal working hours at the office of the association: Provided, That holders of mortgages on lots may have access to the information about the property held in mortgage with the written consent of the registered owner;

(c) A financial statement of the association shall be prepared annually by an auditor, the treasurer and/or an independent certified public accountant within ninety (90) days from the end of the accounting period to be posted in the association office, bulletin boards, or other conspicuous places within the subdivision/village, and to be submitted to the HLURB; and

(d) The funds of the association shall be kept in accounts in the name of the association and shall not be joined with the funds of any other association, or any person responsible for the custody of such funds.

Section 18. Relationship with LGUs. - Homeowners' associations shall complement, support and strengthen LGUs in providing vital services to their members and help implement local government policies, programs, ordinances, and rules.

Associations are encouraged to actively cooperate with LGUs in furtherance of their common goals and activities for the benefit of the residents of the subdivisions/villages and their environs.

Where the LGUs lack resources to provide for basic services, the associations shall endeavor to tap the means to provide for the same. In recognition of the associations’ efforts to assist the LGUs III providing such basic services, association dues and income derived from rentals of their facilities shall be tax - exempt: Provided, That such income and dues shall be used for the cleanliness, safety, security and other basic services needed by the members, including the maintenance of the facilities of their respective subdivisions or villages.

LGUs shall, upon due notice, hold public consultations with the members of the affected associations, especially their officers and directors, where proposed rules, zoning and other ordinances, projects and/or programs affecting their jurisdiction and surrounding vicinity are to be implemented prior to the effectivity or implementation of such rules, zoning, ordinances, projects or programs: Provided, That in cases of zonal reclassification, the approval of a simple majority of homeowners shall be required.

Such public consultations shall conform to the manner as specified in Rule XI, Article 54 of the implementing rules and regulations of Republic Act No. 7160, otherwise known as the Local Government Code of 1991.

Section 19. Relationship with National Government Agencies. - The associations shall complement, support and strengthen the efforts of the national government agencies in providing vital services to their members and help implement the national government policies and programs.

Associations are encouraged to actively cooperate with national government agencies in the furtherance of their common goals and activities for the benefit of the residents of the subdivisions and its environs. National government agencies shall consult the associations where proposed rules, projects and/or programs may affect their welfare.

CHAPTER IV DUTIES AND RESPONSIBILITIES OF THE HLURB

Section 20. Duties and Responsibilities of the HLURB. - In addition to the powers, authorities and responsibilities vested in it by Republic Act No. 8763, Presidential Decree No. 902 - A, Batas Pambansa Big. 68 and Executive Order No. 535, Series of 1981, as amended, the HLURB shall:

(a) Regularly conduct free orientation for officers of homeowners’ associations or deputize another competent agency to conduct the orientation;

(b) Formulate and publish a Code of Ethics and Ethical Standards for board members detailing prohibited conflicts of interest;

(c) Register all associations, federations, confederations or umbrella organizations of the associations;

(d) Hear and decide inter - association and/or inter - association controversies and/or conflicts, without prejudice to filing civil and criminal cases by the parties concerned before the regular courts: Provided, That all decisions of the HLURB are appealable directly to the Court of Appeals;

(e) Formulate the rules or manner of verification and validation of petitions for the removal of director(s) or trustee(s) of the association or dissolution of the board pursuant to Sections 13 and 14 of this Act;

(f) Exercise the same powers over federations, confederations or umbrella organizations of the associations;

(g) Formulate, in consultation with the representatives of associations, federations, confederations or umbrella organizations of the associations, standard nomenclatures to be used for the associations' books of accounts, and a standard articles of incorporation and bylaws for homeowners' association for reference purposes;

(h) Formulate, in consultation with the representatives of associations, federations, confederations or umbrella organizations of the associations, the guidelines in regulating the kinds of contributions and fees that may be charged and/or collected by associations; and

(i) Call upon the Philippine National Police, other law enforcement agencies, and other instrumentalities of the government, if necessary, for the enforcement of its functions.

Section 21. Additional Positions and Personnel for the HLURB. - For purposes of this Act, the HLURB shall, upon its discretion, create positions and enlist additional personnel to carry out its mandate.

CHAPTER V FINAL PROVISIONS

Section 22. Prohibited Acts. - It shall be prohibited for any person:

(a) To compel a homeowner to join the association, without prejudice to the provisions of the deed of restrictions, its extensions or renewals as approved by the majority vote of the members or as annotated on the title of the property; the contract for the purchase of a lot in the subdivision project; or an award under a CMP project or a similar tenurial arrangement;

(b) To deprive any homeowner of his/her right to avail of or enjoy basic community services and facilities where he/she has paid the dues, charges, and other fees for such services;

(c) To prevent any homeowner who has paid the required fees and charges from reasonably exercising his/her right to inspect association books and records;

(d) To prevent any member in good standing from participating in association meetings, elections and referenda;

(e) To deny any member due process in the imposition of administrative sanctions;

(f) To exercise rights and powers as stated m Section 10 in violation of the required consultation and approval of the required number of homeowners or members;

(g) To unreasonably fail to provide basic community services and facilities and maintain, repair, replace, or modify such facilities;

(h) To unreasonably fail to comply with Section 17 of this Act; or

(i) To violate any other provision of this Act.

Section 23. Penalties and Sanctions. - Any person who, intentionally or by gross negligence, violates any provision of this Act, fails to perform his/her functions under this Act and/or violates the rights of the members, shall be punished with a fine of not less than Five thousand pesos (Php5, 000.00) but not more than Fifty thousand pesos

(Php50, 000.00) and permanent disqualification from being elected or appointed as member of the board, officer or employee of the association, without prejudice to being charged before a regular court for violations of the provisions of the Revised Penal Code, Civil Code and other pertinent laws.

If the violation is committed by the association, the members, officers, directors or trustees of the association who have actually participated in, authorized, or ratified the prohibited act shall be held liable.

If the violation is committed by the employees and agents who acted in gross violation of the provisions of this Act, the officers, directors or trustees, or incorporators of the association shall be jointly and severally liable with the offending employees, agents, and the association.

Section 24. Review of Association's Bylaws. - In order to comply with the provisions of this Act, the homeowners' association shall, within six (6) months from the effectivity of this Act, conduct a review of its bylaws, draft its own rules of procedure to be incorporated in the bylaws and conduct a plebiscite for the approval of the members of the association. A simple majority shall be used to determine the approval of the bylaws.

Section 25. Appropriations. - The amounts necessary for the implementation of this Act and for carrying out the additional functions and responsibilities of the HLURB shall be included in the annual General Appropriations Act.

Section 26. Separability Clause. - If any provision of this Act is declared invalid or unconstitutional, the remainder of the Act shall remain valid and subsisting.

Section 27. Repealing Clause. - All other issuances, laws, decrees, orders, rules and regulations, or parts thereof inconsistent with this Act are hereby repealed or modified accordingly.

Section 28. Implementing Rules and Regulations. - The HLURB shall formulate and promulgate, in consultation with concerned sectors, rules and regulations necessary to implement the provisions of this Act within SIX (6) months of its effectivity.

No rule or regulation shall be issued which tends to undermine the organizational and territorial integrity of any association.

Section 29. Effectivity. - This Act shall take effect fifteen (15) days following Its publication in the Official Gazette or in at least two (2) national newspapers of general circulation.

Rules and Regulations Implementing the Magna Carta of Women

August 14, 2009

AN ACT PROVIDING FOR THE MAGNA CARTA OF WOMEN

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 Magna Carta of Women".

Section 2. Declaration of Policy. - Recognizing that the economic, political, and sociocultural realities affect women's current condition, the State affirms the role of women in nation building and ensures the substantive equality of women and men. It shall promote empowerment of women and pursue equal opportunities for women and men and ensure equal access to resources and to development results and outcome. Further, the State realizes that equality of men and women entails the abolition of the unequal structures and practices that perpetuate discrimination and inequality. To realize this, the State shall endeavor to develop plans, policies, programs, measures, and mechanisms to address discrimination and inequality in the economic, political, social, and cultural life of women and men.

The State condemns discrimination against women in all its forms and pursues by all appropriate means and without delay the policy of eliminating discrimination against women in keeping with the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) and other international instruments consistent with Philippine law. The State shall accord women the rights, protection, and opportunities available to every member of society.

The State affirms women's rights as human rights and shall intensify its efforts to fulfill its duties under international and domestic law to recognize, respect, protect, fulfill, and promote all human rights and fundamental freedoms of women, especially marginalized women, in the economic, social, political, cultural, and other fields without distinction or discrimination on account of class, age, sex, gender, language, ethnicity, religion, ideology, disability, education, and status. The State shall provide the necessary mechanisms to enforce women's rights and adopt and undertake all legal measures necessary to foster and promote the equal opportunity for women to participate in and contribute to the development of the political, economic, social, and cultural realms.

The State, in ensuring the full integration of women's concerns in the mainstream of development, shall provide ample opportunities to enhance and develop their skills, acquire productive employment and contribute to their families and communities to the fullest of their capabilities.

In pursuance of this policy, the State reaffirms the right of women in all sectors to participate in policy formulation. planning, organization, implementation, management, monitoring, and evaluation of all programs, projects, and services. It shall support policies, researches, technology, and training programs and other support services such as financing, production, and marketing to encourage active participation of women in national development.

Section 3. Principles of Human Rights of Women. - Human rights are universal and inalienable. All people in the world are entitled to them. The universality of human rights is encompassed in the words of Article 1 of the Universal Declaration of Human Rights, which states that all human beings are free and equal in dignity and rights.

Human rights are indivisible. Human rights are inherent to the dignity of every human being whether they relate to civil, cultural, economic, political, or social issues.

Human rights are interdependent and interrelated. The fulfillment of one right often depends, wholly or in part, upon the fulfillment of others.

All individuals are equal as human beings by virtue of the inherent dignity of each human person. No one, therefore, should suffer discrimination on the basis of ethnicity, gender, age, language, sexual orientation, race, color, religion, political, or other opinion, national, social, or geographical origin, disability, property, birth, or other status as established by human rights standards.

All people have the right to participate in and access information relating to the decision- making processes that affect their lives and well-being. Rights-based approaches require a high degree of participation by communities, civil society, minorities, women, young people, indigenous peoples, and other identified groups.

States and other duty-bearers are answerable for the observance of human rights. They have to comply with the legal norms and standards enshrined in international human rights instruments in accordance with the Philippine Constitution. Where they fail to do so, aggrieved rights-holders are entitled to institute proceedings for appropriate redress before a competent court or other adjudicator in accordance with the rules and procedures provided by law.

CHAPTER II DEFINITION OF TERMS

Section 4. Definitions. - For purposes of this Act, the following terms shall mean:

(a) "Women Empowerment" refers to the provision, availability, and accessibility of opportunities, services, and observance of human rights which enable women to actively participate and contribute to the political, economic, social, and cultural development of the nation as well as those which shall provide them equal access to ownership, management, and control of production, and of material and informational resources and benefits in the family, community, and society.

(b) "Discrimination Against Women" refers to any gender-based distinction, exclusion, or restriction which has the effect or purpose of impairing or nullifying the recognition, enjoyment, or exercise by women, irrespective of their marital status, on a basis of equality of men and women, of human rights and fundamental freedoms in the political, economic, social, cultural, civil, or any other field.

It includes any act or omission, including by law; policy, administrative measure, or practice, that directly or indirectly excludes or restricts women in the recognition and promotion of their rights and their access to and enjoyment of opportunities, benefits, or privileges.

A measure or practice of general application is discrimination against women if it fails to provide for mechanisms to offset or address sex or gender-based disadvantages or limitations of women, as a result of which women are denied or restricted in the recognition and protection of their rights and in their access to and enjoyment of opportunities, benefits, or privileges; or women, more than men, are shown to have suffered the greater adverse effects of those measures or practices.

Provided, finally, That discrimination compounded by or intersecting with other grounds, status, or condition, such as ethnicity, age, poverty, or religion shall be considered discrimination against women under this Act.

(c) "Marginalization" refers to a condition where a whole category of people is excluded from useful and meaningful participation in political, economic, social, and cultural life.

(d) "Marginalized" refers to the basic, disadvantaged, or vulnerable persons or groups who are mostly living in poverty and have little or no access to land and other resources, basic social and economic services such as health care, education, water and sanitation, employment and livelihood opportunities, housing, social security, physical infrastructure; and the justice system.

These include, but are not limited to, women in the following sectors and groups:

(1) "Small Farmers and Rural Workers" refers to those who are engaged directly or indirectly in small farms and forest areas, workers in commercial farms and plantations, whether paid or unpaid, regular or season-bound. These shall include. but are not limited to, (a) small farmers who own or are still amortizing for lands that is not more than three (3) hectares, tenants, leaseholders, and stewards; and (b) rural workers who are either wage earners, self-employed, unpaid family workers directly and personally engaged in agriculture, small-scale mining, handicrafts, and other related farm and off-farm activities;

(2) "Fisherfolk" refers to those directly or indirectly engaged in taking, culturing, or processing fishery or aquatic resources. These include, but are not to be limited to, women engaged in fishing in municipal waters, coastal and marine areas, women workers in commercial fishing and aquaculture, vendors and processors of fish and coastal products, and subsistence producers such as shell-gatherers, managers, and producers of mangrove resources, and other related producers:

(3) "Urban Poor" refers to those residing in urban and urbanizable slum or blighted areas, with or without the benefit of security of abode, where the income of the head of the family cannot afford in a sustained manner to provide for the family's basic needs of food, health, education, housing, and other essentials in life;

(4) "Workers in the Formal Economy" refers to those who are employed by any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches, subdivisions, and instrumentalities, all government- owned and -controlled corporations and institutions, as well as nonprofit private institutions or organizations;

(5) "Workers in the Informal Economy" refers to self-employed, occasionally or personally hired, subcontracted, paid and unpaid family workers in household incorporated and unincorporated enterprises, including home workers, micro-entrepreneurs and producers, and operators of sari-sari stores and all other categories who suffer from violation of workers' rights:

(6) "Migrant Workers" refers to Filipinos who are to be engaged, are engaged, or have been engaged in a remunerated activity in a State of which they are not legal residents, whether documented or undocumented;

(7) "Indigenous Peoples" refers to a group of people or homogenous societies identified by self-ascription and ascription by other, who have continuously lived as organized community on communally bounded and defined territory, and who have, under claims of ownership since time immemorial, occupied; possessed customs, tradition, and other distinctive cultural traits, or who have, through resistance to political, social, and cultural inroads of colonization, non- indigenous religions and culture, became historically differentiated from the majority of Filipinos. They shall likewise include peoples who are regarded as indigenous on account of their descent from the populations which inhabited the country, at the dime of conquest or colonization, or at the time of inroads of non-indigenous religions and cultures, or the establishment of present state boundaries, who retain some or all of their own social, economic, cultural, and political institutions, but who may have been displaced from their traditional domains or who may have resettled outside their ancestral domains as defined under Section 3(h), Chapter II of Republic Act No. 8371, otherwise known as "The Indigenous Peoples Rights Act of 1997" (IPRA of 1997);

(8) "Moro" refers to native peoples who have historically inhabited Mindanao, Palawan, and Sulu, and who are largely of the Islamic faith;

(9) "Children" refers to those who are below eighteen (18) years of age or over but are unable to fully take care of themselves or protect themselves from abuse, neglect, cruelty, exploitation, or discrimination because of a physical or mental disability or condition;

(10) "Senior Citizens" refers to those sixty (60) years of age and above;

(11) "Persons with Disabilities" refers to those who are suffering from restriction or different abilities, as a result of a mental, physical, or sensory impairment to perform an activity in the manner or within the range considered normal for a human being; and

(12) "Solo Parents" refers to those who fall under the category of a solo parent defined under Republic Act No. 8972, otherwise known as the "Solo Parents Welfare Act of 2000".

(e) "Substantive Equality" refers to the full and equal enjoyment of rights and freedoms contemplated under this Act. It encompasses de jure and de facto equality and also equality in outcomes.

(f) "Gender Equality" refers to the principle asserting the equality of men and women and their right to enjoy equal conditions realizing their full human potentials to contribute to and benefit from the results of development, and with the State recognizing that all human beings are free and equal in dignity and rights.

(g) "Gender Equity" refers to the policies, instruments, programs, services, and actions that address the disadvantaged position of women in society by providing preferential treatment and affirmative action. Such temporary special measures aimed at accelerating de facto equality between men and women shall not be considered discriminatory but shall in no way entail as a consequence the maintenance of unequal or separate standards. These measures shall be discontinued when the objectives of equality of opportunity and treatment have been achieved.

(h) "Gender and Development (GAD)" refers to the development perspective and process that are participatory and empowering, equitable, sustainable, free from violence, respectful of human rights, supportive of self-determination and actualization of human potentials. It seeks to achieve gender equality as a fundamental value that should be reflected in development choices; seeks to transform society's social, economic, and political structures and questions the validity of the gender roles they ascribed to women and men; contends that women are active agents of development and not just passive recipients of development assistance; and stresses the need of women to organize themselves and participate in political processes to strengthen their legal rights.

(i) "Gender Mainstreaming" refers to the strategy for making women's as well as men's concerns and experiences an integral dimension of the design, implementation, monitoring, and evaluation of policies and programs in all political, economic, and societal spheres so that women and men benefit equally and inequality is not perpetuated. It is the process of assessing the implications for women and men of any planned action, including legislation, policies, or programs in all areas and at all levels.

(j) "Temporary Special Measures" refers to a variety of legislative, executive, administrative, and regulatory instruments, policies, and practices aimed at accelerating this de facto equality of women in specific areas. These measures shall not be considered discriminatory but shall in no way entail as a consequence the maintenance of unequal or separate standards. They shall be discontinued when their objectives have been achieved.

(k) "Violence Against Women" refers to any act of gender-based violence that results in, or is likely to result in, physical, sexual, or psychological harm or suffering to women, including threats of such acts, coercion, or arbitrary deprivation of liberty, whether occurring in public or in private life. It shall be understood to encompass, but not limited to, the following:

(1) Physical, sexual, psychological, and economic violence occurring in the family, including battering, sexual abuse of female children in the household, dowry-related violence, marital rape, and other traditional practices harmful to women, non-spousal violence, and violence related to exploitation;

(2) Physical, sexual, and psychological violence occurring within the general community, including rape, sexual abuse, sexual harassment, and intimidation at work, in educational institutions and elsewhere, trafficking in women, and prostitution; and

(3) Physical, sexual, and psychological violence perpetrated or condoned by the State, wherever it occurs.

It also includes acts of violence against women as defused in Republic Acts No. 9208 and 9262.

(l) "Women in the Military" refers to women employed in the military, both in the major and technical services, who are performing combat and/or noncombat functions, providing security to the State, and protecting the people from various forms of threat. It also includes women trainees in all military training institutions.

(m) "Social Protection" refers to policies and programs that seek to reduce poverty and vulnerability to risks and enhance the social status and rights of all women, especially the marginalized by promoting and protecting livelihood and employment, protecting against hazards and sudden loss of income, and improving people's capacity to manage risk. Its components are labor market programs, social insurance, social welfare, and social safety nets.

CHAPTER III DUTIES RELATED TO THE HUMAN RIGHTS OF WOMEN

The State, private sector, society in general, and all individuals shall contribute to the recognition, respect, and promotion of the rights of women defined and guaranteed under this Act.

Section 5. The State as the Primary Duty-Bearer. - The State, as the primary duty-bearer, shall:

(a) Refrain from discriminating against women and violating their rights;

(b) Protect women against discrimination and from violation of their rights by private corporations, entities, and individuals; and

(c) Promote and fulfill the rights of women in all spheres, including their rights to substantive equality and non-discrimination.

The State shall fulfill these duties through law, policy, regulatory instruments, administrative guidelines, and other appropriate measures, including temporary special measures.

Recognizing the interrelation of the human rights of women, the State shall take measures and establish mechanisms to promote the coherent and integrated implementation, and enforcement of this Act and related laws, policies, or other measures to effectively stop discrimination against and advance the rights of women.

The State shall keep abreast with and be guided by progressive developments in human rights of women under international law and design of policies, laws, and other measures to promote the objectives of this Act.

Section 6. Duties of the State Agencies and Instrumentalities. - These duties of the State shall extend to all state agencies, offices, and instrumentalities at all levels and government-owned and -controlled corporations, subject to the Constitution and pertinent laws, policies, or administrative guidelines that define specific duties of state agencies and entities concerned.

Section 7. Suppletory Effect. - This chapter shall be deemed integrated into and be suppletory to other provisions of this Act, particularly those that guarantee specific rights to women and define specific roles and require specific conduct of state organs.

CHAPTER IV RIGHTS AND EMPOWERMENT

Section 8. Human Rights of Women. - All rights in the Constitution and those rights recognized under international instruments duly signed and ratified by the Philippines, in consonance with Philippine law, shall be rights of women under this Act to be enjoyed without discrimination.

Section 9. Protection from Violence. - The State shall ensure that all women shall be protected from all forms of violence as provided for in existing laws. Agencies of government shall give priority to the defense and protection of women against gender-based offenses and help women attain justice and healing.

Towards this end, measures to prosecute and reform offenders shall likewise be pursued.

(a) Within the next five (5) years, there shall be an incremental increase in the recruitment and training of women in the police force, forensics and medico-legal, legal services, and social work services availed of by women who are victims of gender-related offenses until fifty percent (50%) of the personnel thereof shall be women.

(b) Women shall have the right to protection and security in situations of armed conflict and militarization. Towards this end, they shall be protected from all forms of gender-based violence, particularly rape and other forms of sexual abuse, and all forms of violence in situations of armed conflict. The State shall observe international standards for the protection of civilian population in circumstances of emergency and armed conflict. It shall not force women, especially indigenous peoples, to abandon their lands, territories, and means of subsistence, or relocate them in special centers for military purposes under any discriminatory condition.

(c) All government personnel involved in the protection and defense of women against gender-based violence shall undergo a mandatory training on human rights and gender sensitivity pursuant to this Act.

(d) All local government units shall establish a Violence Against Women's Desk in every barangay to ensure that violence against women cases are fully addressed in a gender-responsive manner.

Section 10. Women Affected by Disasters, Calamities, and Other Crisis Situations. - Women have the right to protection and security in times of disasters, calamities, and other crisis situations especially in all phases of relief, recovery, rehabilitation, and construction efforts. The State shall provide for immediate humanitarian assistance, allocation of resources, and early resettlement, if necessary. It shall also address the particular needs of women from a gender perspective to ensure their full protection from sexual exploitation and other sexual and gender- based violence committed against them. Responses to disaster situations shall include the provision of services, such as psychosocial support, livelihood support, education, psychological health, and comprehensive health services, including protection during pregnancy.

Section 11. Participation and Representation. - The State shall undertake temporary special measures to accelerate the participation and equitable representation of women in all spheres of society particularly in the decision-making and policy-making processes in government and private entities to fully realize their role as agents and beneficiaries of development.

The State shall institute the following affirmative action mechanisms so that women can participate meaningfully in the formulation, implementation, and evaluation of policies, plans, and programs for national, regional, and local development:

(a) Empowerment within the Civil Service. - Within the next five (5) years, the number of women in third (3rd) level positions in government shall be incrementally increased to achieve a fifty-fifty (50-50) gender balance;

(b) Development Councils and Planning Bodies. - To ensure the participation of women in all levels of development planning and program implementation, at least forty percent (40%) of membership of all development councils from the regional, provincial, city, municipal and barangay levels shall be composed of women;

(c) Other Policy and Decision-Making Bodies. - Women's groups shall also be represented in international, national, and local special and decision-making bodies;

(d) International Bodies. - The State shall take all appropriate measures to ensure the opportunity of women, on equal terms with men and without any discrimination, to represent their governments at the international level and to participate in the work of international organizations;

(e) Integration of Women in Political Parties. - The State shall provide incentives to political parties with women's agenda. It shall likewise encourage the integration of women in their leadership hierarchy, internal policy-making structures, appointive, and electoral nominating processes; and

(f) Private Sector. - The State shall take measures to encourage women leadership in the private sector in the form of incentives.

Section 12. Equal Treatment Before the Law. - The State shall take steps to review and, when necessary, amend and/or repeal existing laws that are discriminatory to women within three (3) years from the effectivity of this Act.

Section 13. Equal Access and Elimination of Discrimination in Education, Scholarships, and Training. - (a) The State shall ensure that gender stereotypes and images in educational materials and curricula are adequately and appropriately revised. Gender-sensitive language shall be used at all times. Capacity-building on gender and development (GAD), peace and human rights, education for teachers, and all those involved in the education sector shall be pursued toward this end. Partnerships between and among players of the education sector, including the private sector, churches, and faith groups shall be encouraged.

(b) Enrollment of women in nontraditional skills training in vocational and tertiary levels shall be encouraged.

(c) Expulsion and non-readmission of women faculty due to pregnant;- outside of marriage shall be outlawed. No school shall turn out or refuse admission to a female student solely on the account of her having contracted pregnancy outside of marriage during her term in school.

Section 14. Women in Sports. - The State shall develop, establish, and strengthen programs for the participation of women and girl-children in competitive and noncompetitive sports as a means to achieve excellence, promote physical and social well-being, eliminate gender-role stereotyping, and provide equal access to the full benefits of development for all persons regardless of sex, gender identity, and other similar factors.

For this purpose, all sports-related organizations shall create guidelines that will establish and integrate affirmative action as a strategy and gender equality as a framework in planning and implementing their policies, budgets, programs, and activities relating to the participation of women and girls in sports.

The State will also provide material and nonmaterial incentives to local government units, media organizations, and the private sector for promoting, training, and preparing women and girls for participation in competitive and noncompetitive sports, especially in local and international events, including, but not limited to, the Palarong Pambansa, Southeast Asian Games, Asian Games, and the Olympics.

No sports event or tournament will offer or award a different sports prize, with respect to its amount or value, to women and men winners in the same sports category: Provided, That the said tournament, contest, race, match, event, or game is open to both sexes: Provided, further, That the sports event or tournament is divided into male or female divisions.

The State shall also ensure the safety and well-being of all women and girls participating in sports, especially, but not limited to, trainees, reserve members, members, coaches, and mentors of national sports teams, whether in studying, training, or performance phases, by providing them comprehensive health and medical insurance coverage, as well as integrated medical, nutritional, and healthcare services.

Schools, colleges, universities, or any other learning institution shall take into account its total women student population in granting athletic scholarship. There shall be a pro rata representation of women in the athletic scholarship program based on the percentage of women in the whole student population.

Section 15. Women in the Military. - The State shall pursue appropriate measures to eliminate discrimination of women in the military, police, and other similar services, including revising or abolishing policies and practices that restrict women from availing of both combat and noncombat training that are open to men, or from taking on functions other than administrative tasks, such as engaging in combat, security-related, or field operations. Women in the military shall be accorded the same promotional privileges and opportunities as men, including pay increases, additional remunerations and benefits, and awards based on their competency and quality of performance. Towards this end, the State shall ensure that the personal dignity of women shall always be respected.

Women in the military, police, and other similar services shall be provided with the same right to employment as men on equal conditions. Equally, they shall be accorded the same capacity as men to act in and enter into contracts, including marriage.

Further, women in the military, police; and other similar services shall be entitled to leave benefits such as maternity leave, as provided for by existing laws.

Section 16. Nondiscriminatory and Nonderogatory Portrayal of Women in Media and Film. - The State shall formulate policies and programs for the advancement of women in collaboration with government and nongovernment media-related organizations. It shall likewise endeavor to raise the consciousness of the general public in recognizing the dignity of women and the role and contribution of women in the family; community, and the society through the strategic use of mass media.

For this purpose, the State shall ensure allocation of space; airtime, and resources, strengthen programming, production, and image-making that appropriately present women's needs, issues, and concerns in all forms of media, communication, information dissemination, and advertising.

The State, in cooperation with all schools of journalism, information, and communication, as well as the national media federations and associations, shall require all media organizations and corporations to integrate into their human resource development components regular training on gender equality and gender-based discrimination, create and use gender equality guidelines in all aspects of management, training, production, information, dissemination, communication, and programming; and convene a gender equality committee that will promote gender mainstreaming as a framework and affirmative action as a strategy, and monitor and evaluate the implementation of gender equality guidelines.

Section 17. Women's Right to Health. - (a) Comprehensive Health Services. - The State shall, at all times, provide for a comprehensive, culture-sensitive, and gender-responsive health services and programs covering all stages of a woman's life cycle and which addresses the major causes of women's mortality and morbidity: Provided, That in the provision for comprehensive health services, due respect shall be accorded to women's religious convictions, the rights of the spouses to found a family in accordance with their religious convictions, and the demands of responsible parenthood, and the right of women to protection from hazardous drugs, devices, interventions, and substances.

Access to the following services shall be ensured:

(1) Maternal care to include pre- and post-natal services to address pregnancy and infant health and nutrition;

(2) Promotion of breastfeeding;

(3) Responsible, ethical, legal, safe, and effective methods of family planning;

(4) Family and State collaboration in youth sexuality education and health services without prejudice to the primary right and duty of parents to educate their children;

(5) Prevention and management of reproductive tract infections, including sexually transmitted diseases, HIV, and AIDS;

(6) Prevention and management of reproductive tract cancers like breast and cervical cancers, and other gynecological conditions and disorders;

(7) Prevention of abortion and management of pregnancy-related complications;

(8) In cases of violence against women and children, women and children victims and survivors shall be provided with comprehensive health services that include psychosocial, therapeutic, medical, and legal interventions and assistance towards healing, recovery, and empowerment;

(9) Prevention and management of infertility and sexual dysfunction pursuant to ethical norms and medical standards;

(10) Care of the elderly women beyond their child-bearing years; and

(11) Management, treatment, and intervention of mental health problems of women and girls. In addition, healthy lifestyle activities are encouraged and promoted through programs and projects as strategies in the prevention of diseases.

(b) Comprehensive Health Information and Education. - The State shall provide women in all sectors with appropriate, timely, complete, and accurate information and education on all the above-stated aspects of women's health in government education and training programs, with due regard to the following:

(1) The natural and primary right and duty of parents in the rearing of the youth and the development of moral character and the right of children to be brought up in an atmosphere of morality and rectitude for the enrichment and strengthening of character;

(2) The formation of a person's sexuality that affirms human dignity; and

(3) Ethical, legal, safe, and effective family planning methods including fertility awareness.

Section 18. Special Leave Benefits for Women. - A woman employee having rendered continuous aggregate employment service of at least six (6) months for the last twelve (12) months shall be entitled to a special leave benefit of two (2) months with full pay based on her gross monthly compensation following surgery caused by gynecological disorders.

Section 19. Equal Rights in All Matters Relating to Marriage and Family Relations. - The State shall take all appropriate measures to eliminate discrimination against women in all matters relating to marriage and family relations and shall ensure:

(a) the same rights to enter into and leave marriages or common law relationships referred to under the Family Code without prejudice to personal or religious beliefs;

(b) the same rights to choose freely a spouse and to enter into marriage only with their free and full consent. The betrothal and the marriage of a child shall have no legal effect;

(c) the joint decision on the number and spacing of their children and to have access to the information, education and means to enable them to exercise these rights;

(d) the same personal rights between spouses or common law spouses including the right to choose freely a profession and an occupation;

(e) the same rights for both spouses or common law spouses in respect of the ownership, acquisition, management, administration, enjoyment, and disposition of property;

(f) the same rights to properties and resources, whether titled or not, and inheritance, whether formal or customary; and

(g) women shall have equal rights with men to acquire, change, or retain their nationality. The State shall ensure in particular that neither marriage to an alien nor change of nationality by the husband during marriage shall automatically change the nationality of the wife, render her stateless or force upon her the nationality of the husband. Various statutes of other countries concerning dual citizenship that may be enjoyed equally by women and men shall likewise be considered.

Customary laws shall be respected: Provided, however, That they do not discriminate against women.

CHAPTER V RIGHTS AND EMPOWERMENT OF MARGINALIZED SECTORS

Women in marginalized sectors are hereby guaranteed all civil, political, social, and economic rights recognized, promoted, and protected under existing laws including, but not limited to, the Indigenous Peoples Rights Act, the Urban Development and Housing Act, the Comprehensive Agrarian Reform Law, the Fisheries Code, the Labor Code, the Migrant Workers Act, the Solo Parents Welfare Act, and the Social Reform and Poverty Alleviation Act.

Section 20. Food Security and Productive Resources. - The State recognizes the contribution of women to food production and shall ensure its sustainability and sufficiency with the active participation of women. Towards this end, the State shall guarantee, at all times, the availability in the market of safe and health-giving food to satisfy the dietary needs of the population, giving particular attention to the specific needs of poor girl-children and marginalized women, especially pregnant and lactating mothers and their young children. To further address this, the State shall ensure:

(a) Right to Food. - The State shall guarantee the availability of food in quantity and quality sufficient to satisfy the dietary needs of individuals, the physical and economic accessibility for everyone to adequate food that is culturally acceptable and free from unsafe substances and culturally accepted, and the accurate and substantial information to the availability of food, including the right to full, accurate, and truthful information about safe and health-giving foods and how to produce and have regular and easy access to them;

(b) Right to Resources for Food Production. - The State shall guarantee women a vital role in food production by giving priority to their rights to land, credit, and infrastructure support, technical training, and technological and marketing assistance. The State shall promote women-friendly technology as a high priority activity in agriculture and shall promote the right to adequate food by proactively engaging in activities intended to strengthen access to, utilization of, and receipt of accurate and substantial information on resources and means to ensure women's livelihood, including food security:

(1) Equal status shall be given to women and men, whether married or not, in the titling of the land and issuance of stewardship contracts and patents;

(2) Equal treatment shall be given to women and men beneficiaries of the agrarian reform program, wherein the vested right of a woman agrarian reform beneficiary is defined by a woman's relationship to tillage, i.e., her direct and indirect contribution to the development of the land;

(3) Customary rights of women to the land, including access to and control of the fruits and benefits, shall be recognized in circumstances where private ownership is not possible, such as ancestral domain claims:

(4) Information and assistance in claiming rights to the land shall be made available to women at all times;

(5) Equal rights to women to the enjoyment, use, and management of land, water, and other natural resources within their communities or ancestral domains;

(6) Equal access to the use and management of fisheries and aquatic resources, and all the rights and benefits accruing to stakeholders in the fishing industry;

(7) Equal status shall be given to women and men in the issuance of stewardship or lease agreements and other fishery rights that may be granted for the use and management of coastal and aquatic resources. In the same manner, women's organizations shall be given equal treatment as with other marginalized fishers organizations in the issuance of stewardship or lease agreements or other fishery rights for the use and management of such coastal and aquatic resources which may include providing support to women-engaged coastal resources;

(8) There shall be no discrimination against women in the deputization of fish wardens;

(9) Women-friendly and sustainable agriculture technology shall be designed based on accessibility and viability in consultation with women's organizations;

(10) Access to small farmer-based and controlled seeds production and distribution shall be ensured and protected;

(11) Indigenous practices of women in seed storage and cultivation shall be recognized, encouraged, and protected;

(12) Equal rights shall be given to women to be members of farmers' organizations to ensure wider access to and control of the means of production;

(13) Provide opportunities for empowering women fishers to be involved in the control and management, not only of the catch and production of aquamarine resources but also, to engage in entrepreneurial activities which will add value to production and marketing ventures; and

(14) Provide economic opportunities for the indigenous women. particularly access to market for their produce.

In the enforcement of the foregoing, the requirements of law shall be observed at all times.

Section 21. Right to Housing. - The State shall develop housing programs for women that are localized, simple, accessible, with potable water, and electricity, secure, with viable employment opportunities and affordable amortization. In this regard, the State shall consult women and involve them in community planning and development, especially in matters pertaining to land use, zoning, and relocation.

Section 22. Right to Decent Work. - The State shall progressively realize and ensure decent work standards for women that involve the creation of jobs of acceptable quality in conditions of freedom, equity, security, and human dignity.

(a) Decent work involves opportunities for work that are productive and fairly remunerative as family living wage, security in the workplace, and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns organize, participate in the decisions that affect their lives, and equality of opportunity and treatment for all women and men.

(b) The State shall further ensure:

(1) Support services and gears to protect them from occupational and health hazards taking into account women's maternal functions;

(2) Support services that will enable women to balance their family obligations and work responsibilities including, but not limited to, the establishment of day care centers and breast-feeding stations at the workplace, and providing maternity leave pursuant to the Labor Code and other pertinent laws;

(3) Membership in unions regardless of status of employment and place of employment; and

(4) Respect for the observance of indigenous peoples' cultural practices even in the workplace.

(c) In recognition of the temporary nature of overseas work, the State shall exert all efforts to address the causes of out-migration by developing local employment and other economic opportunities for women and by introducing measures to curb violence and forced and involuntary displacement of local women. The State shall ensure the protection and promotion of the rights and welfare of migrant women regardless of their work status, and protect them against discrimination in wages, conditions of work, and employment opportunities in host countries.

Section 23. Right to Livelihood, Credit, Capital, and Technology. - The State shall ensure that women are provided with the following:

(a) Equal access to formal sources of credit and capital;

(b) Equal share to the produce of farms and aquatic resources; and

(c) Employment opportunities for returning women migrant workers taking into account their skills and qualifications. Corollarily, the State shall also promote skills and entrepreneurship development of returning women migrant workers.

Section 24. Right to Education and Training. - The State shall ensure the following:

(a) Women migrant workers have the opportunity to undergo skills training, if they so desire, before taking on a foreign job, and possible retraining upon return to the country:

(b) Gender-sensitive training and seminars; and

(c) Equal opportunities in scholarships based on merit and fitness, especially to those interested in research and development aimed towards women-friendly farm technology.

Section 25. Right to Representation and Participation. - The State shall ensure women's participation in policy-making or decision-making bodies in the regional, national, and international levels. It shall also ensure the participation of grassroots women leaders in decision and policy-making bodies in their respective sectors including, but not limited to, the Presidential Agrarian Reform Council (PARC) and its local counterparts; community-based resource management bodies or mechanisms on forest management and stewardship; the National Fisheries and Aquatic Resources Management Council (NFARMC) and its local counterparts; the National Commission on Indigenous Peoples; the Presidential Commission for the Urban Poor; the National Anti-Poverty Commission; and, where applicable, the local housing boards.

Section 26. Right to Information. - Access to information regarding policies on women, including programs, projects, and funding outlays that affect them, shall be ensured.

Section 27. Social Protection. -

(a) The Social Security System (SSS) and the Philippine Health Insurance Corporation (PhilHealth) shall support indigenous and community-based social protection schemes.

(b) The State shall institute policies and programs that seek to reduce the poverty and vulnerability to risks and enhance the social status and rights of the marginalized women by promoting and protecting livelihood and employment, protecting against hazards and sudden; loss of income, and improving people's capacity to manage risks.

(c) The State shall endeavor to reduce and eventually eliminate transfer costs of remittances from abroad through appropriate bilateral and multilateral agreements. It shall likewise provide access to investment opportunities for remittances in line with national development efforts.

(d) The State shall establish a health insurance program for senior citizens and indigents.

(e) The State shall support women with disabilities on a community-based social protection scheme.

Section 28. Recognition and Preservation of Cultural Identity and Integrity. - The State shall recognize and respect the rights of Moro and indigenous women to practice, promote, protect, and preserve their own culture, traditions, and institutions and to consider these rights in the formulation and implementation of national policies and programs. To this end, the State shall adopt measures in consultation with the sectors concerned to protect their rights to their indigenous knowledge systems and practices, traditional livelihood, and other manifestations of their cultures and ways of life: Provided, That these cultural systems and practices are not discriminatory to women.

Section 29. Peace and Development. - The peace process shall be pursued with the following considerations:

(a) Increase the number of women participating in discussions and decision-making in the peace process, including membership in peace panels recognizing women's role in conflict- prevention and peace-making and in indigenous system of conflict resolution;

(b) Ensure the development and inclusion of women's welfare and concerns in the peace agenda in the overall peace strategy and women's participation in the planning, implementation, monitoring, and evaluation of rehabilitation and rebuilding of conflict-affected areas;

(c) The institution of measures to ensure the protection of civilians in conflict-affected communities with special consideration for the specific needs of women and girls:

(d) Include the peace perspective in the education curriculum and other educational undertakings; and

(e) The recognition and support for women's role in conflict-prevention, management, resolution and peacemaking, and in indigenous systems of conflict resolution.

Section 30. Women in Especially Difficult Circumstances. - For purposes of this Act, "Women in Especially Difficult Circumstances" (WEDC) shall refer to victims and survivors of sexual and physical abuse, illegal recruitment, prostitution, trafficking, armed conflict, women in detention, victims and survivors of rape and incest, and such other related circumstances which have incapacitated them functionally. Local government units are therefore mandated to deliver the necessary services and interventions to WEDC under their respective jurisdictions.

Section 31. Services and Interventions. - WEDC shall be provided with services and interventions as necessary such as, but not limited to, the following:

(a) Temporary and protective custody;

(b) Medical and dental services;

(c) Psychological evaluation;

(d) Counseling;

(e) Psychiatric evaluation;

(f) Legal services;

(g) Productivity skills capability building;

(h) Livelihood assistance;

(i) Job placement;

(j) Financial assistance: and

(k) Transportation assistance.

Section 32. Protection of Girl-Children. - (a) The State shall pursue measures to eliminate all forms of discrimination against girl-children in education, health and nutrition, and skills development.

(b) Girl-children shall be protected from all forms of abuse and exploitation.

(c) Equal access of Moro and indigenous girl-children in the Madaris, schools of living culture and traditions, and the regular schools shall be ensured.

(d) Gender-sensitive curriculum, including legal literacy, books, and curriculum in the Madaris and schools of living culture and traditions shall be developed.

(e) Sensitivity of regular schools to particular Moro and indigenous practices, such as fasting in the month of Ramadan, choice of clothing (including the wearing of hijab), and availability of halal food shall be ensured.

Section 33. Protection of Senior Citizens. - The State shall protect women senior citizens from neglect, abandonment, domestic violence, abuse, exploitation, and discrimination. Towards this end, the State shall ensure special protective mechanisms and support services against violence, sexual abuse, exploitation, and discrimination of older women.

Section 34. Women are entitled to the recognition and protection of their rights defined and guaranteed under this Act including their right to nondiscrimination.

Section 35. Discrimination Against Women is Prohibited. - Public and private entities and individuals found to have committed discrimination against women shall be subject to the sanctions provided in Section 41 hereof. Violations of other rights of women shall be subject to sanctions under pertinent laws and regulations.

CHAPTER VI INSTITUTIONAL MECHANISMS

Section 36. Gender Mainstreaming as a Strategy for Implementing the Magna Carta of Women. - Within a period prescribed in the implementing rules and regulations, the National Commission on the Role of Filipino Women (NCRFW) shall assess its gender mainstreaming program for consistency with the standards under this Act. It shall modify the program accordingly to ensure that it will be an effective strategy for implementing this Act and attaining its objectives.

All departments, including their attached agencies, offices, bureaus, state universities and colleges, government-owned and -controlled corporations, local government units, and other government instrumentalities shall adopt gender mainstreaming as a strategy to promote women's human rights and eliminate gender discrimination in their systems, structures, policies, programs, processes, and procedures which shall include, but not limited to, the following:

(a) Planning, budgeting, monitoring and evaluation for GAD. GAD programs addressing gender issues and concerns shall be designed and implemented based on the mandate of government agencies and local government units, Republic Act No. 7192, gender equality agenda of the government and other GAD-related legislation, policies, and commitments. The development of GAD programs shall proceed from the conduct of a gender audit of the agency or the local government unit and a gender analysis of its policies, programs, services and the situation of its clientele; the generation and review of sex-disaggregated data; and consultation with gender/women's rights advocates and agency/women clientele. The cost of implementing GAD programs shall be the agency's or the local government unit's GAD budget which shall be at least five percent (5%) of the agency's or the local government unit's total budget appropriations.

Pursuant to Republic Act No. 7192, otherwise known as the Women in Development and Nation Building Act, which allocates five percent (5%) to thirty percent (30%) of overseas development assistance to GAD, government agencies receiving official development assistance should ensure the allocation and proper utilization of such funds to gender-responsive programs that complement the government GAD funds and annually report accomplishments thereof to the National Economic and Development Authority (NEDA) and the Philippine Commission on Women (PCW).

The utilization and outcome of the GAD budget shall be annually monitored and evaluated in terms of its success in influencing the gender-responsive implementation of agency programs funded by the remaining ninety-five percent (95%) budget.

The Commission on Audit (COA) shall conduct an annual audit on the use of the GAD budget for the purpose of determining its judicious use and the efficiency, and effectiveness of interventions in addressing gender issues towards the realization of the objectives of the country's commitments, plans, and policies on women empowerment, gender equality, and GAD.

Local government units are also encouraged to develop and pass a GAD Code based on the gender issues and concerns in their respective localities based on consultation with their women constituents and the women's empowerment and gender equality agenda of the government. The GAD Code shall also serve as basis for identifying programs, activities, and projects on GAD.

Where needed, temporary gender equity measures shall be provided for in the plans of all departments, including their attached agencies, offices, bureaus, state universities and colleges, government-owned and -controlled corporations, local government units, and other government instrumentalities.

To move towards a more sustainable, gender-responsive, and performance-based planning and budgeting, gender issues and concerns shall be integrated in, among others, the following plans:

(1) Macro socioeconomic plans such as the Medium-Term Philippine Development Plan and Medium-Term Philippine Investment Plan;

(2) Annual plans of all departments, including their attached agencies, offices, bureaus, state universities and colleges, and government-owned and -controlled corporations; and

(3) Local plans and agenda such as executive-legislative agenda, comprehensive development plan (CDP), comprehensive land use plan (CLUP), provincial development and physical framework plan (PDPFP), and annual investment plan.

(b) Creation and/or Strengthening of the GAD Focal Points (GFP). All departments, including their attached agencies, offices, bureaus, state universities and colleges, government- owned and -controlled corporations, local government units, and other government instrumentalities shall establish or strengthen their GAD Focal Point System or similar GAD mechanism to catalyze and accelerate gender mainstreaming within the agency or local government unit.

The GAD Focal Point System shall be composed of the agency head or local chief executive, an executive committee with an Undersecretary (or its equivalent), local government unit official, or office in a strategic decision-making position as Chair; and a technical working group or secretariat which is composed of representatives from various divisions or offices within the agency or local government unit.

The tasks and functions of the members of the GFP shall form part of their regular key result areas and shall be given due consideration in their performance evaluation.

(c) Generation and Maintenance of GAD Database. All departments, including their attached agencies, offices, bureaus, state universities and colleges, government-owned and - controlled corporations, local government units, and other government instrumentalities shall develop and maintain a GAD database containing gender statistics and sexdisaggregated data that have been systematically gathered, regularly updated; and subjected to; gender analysis for planning, programming, and policy formulation.

Section 37. Gender Focal Point Officer in Philippine Embassies and Consulates. - An officer duly trained on GAD shall be designated as the gender focal point in the consular section of Philippine embassies or consulates. Said officer shall be primarily responsible in handling gender concerns of women migrant workers. Attached agencies shall cooperate in strengthening the Philippine foreign posts' programs for the delivery of services to women migrant workers.

Section 38. National Commission on the Role of Filipino Women (NCRFW). - The National Commission on the Role of Filipino Women (NCRFW) shall be renamed as the Philippine Commission on Women (PCW), the primary policymaking and coordinating body of the women and gender equality concerns under the Office of the President. The PCW shall be the overall monitoring body and oversight to ensure the implementation of this Act. In doing so, the PCW may direct any government agency and instrumentality, as may be necessary, to report on the implementation of this Act and for them to immediately respond to the problems brought to their attention in relation to this Act. The PCW shall also lead in ensuring that government agencies are capacitated on the effective implementation of this Act. The chairperson shall likewise report to the President in Cabinet meetings on the implementation of this Act.

To the extent possible, the PCW shall influence the systems, processes, and procedures of the executive, legislative, and judicial branches of government vis-a-vis GAD to ensure the implementation of this Act.

To effectively and efficiently undertake and accomplish its functions, the PCW shall revise its structure and staffing pattern with the assistance of the Department of Budget and Management.

Section 39. Commission on Human Rights (CHR). - The Commission, acting as the Gender and Development Ombud, consistent with its mandate, shall undertake measures such as the following:

(a) Monitor with the PCW and other state agencies, among others, in developing indicators and guidelines to comply with their duties related to the human rights of women, including their right to nondiscrimination guaranteed under this Act;

(b) Designate one (1) commissioner and/or its Women's Human Rights Center to be primarily responsible for formulating and implementing programs and activities related to the promotion and protection of the human rights of women, including the investigations and complaints of discrimination and violations of their rights brought under this Act and related laws and regulations;

(c) Establish guidelines and mechanisms, among others, that will facilitate access of women to legal remedies under this Act and related laws, and enhance the protection and promotion of the rights of women, especially marginalized women;

(d) Assist in the filing of cases against individuals, agencies, institutions, or establishments that violate the provisions of this Act; and

(e) Recommend to the President of the Philippines or the Civil Service Commission any possible administrative action based on noncompliance or failure to implement the provisions of this Act.

Section 40. Monitoring Progress and Implementation and Impact of this Act. - The PCW, in coordination with other state agencies and the CHR, shall submit to Congress regular reports on the progress of the implementation of this Act highlighting the impact thereof on the status and human rights of women: Provided, That the second report shall include an assessment of the effectiveness of this Act and recommend amendments to improve its provisions: Provided, finally, That these reports shall be submitted to Congress every three (3) years or as determined in the implementing rules and regulations.

Section 41. Penalties. - Upon finding of the CHR that a department, agency, or instrumentality of government, government-owned and -controlled corporation, or local government unit has violated any provision of this Act and its implementing rules and regulations, the sanctions under administrative law, civil service, or other appropriate laws shall be recommended to the Civil Service Commission and/or the Department of the Interior and Local Government. The person directly responsible for the violation as well as the head of the agency or local chief executive shall be held liable under this Act.

If the violation is committed by a private entity or individual, the person directly responsible for the violation shall be liable to pay damages.

Filing a complaint under this Act shall not preclude the offended party from pursuing other remedies available under the law and to invoke any of the provisions of existing laws especially those recently enacted laws protecting women and children, including the Women in Development and Nation Building Act (Republic Act No. 7192), the Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act (Republic Act No. 7610), the Anti-Sexual Harassment Act of 1995 (Republic Act No. 7877), the Anti-Rape Law of 1997 (Republic Act No. 8353), the Rape Victim Assistance and Protection Act of 1998 (Republic Act No. 8505), the Anti-Trafficking in Persons Act of 2003 (Republic Act No. 9208) and the Anti- Violence Against Women and Their Children Act of 2004 (Republic Act No. 9262). If violence has been proven to be perpetrated by agents of the State including, but not limited to, extrajudicial killings, enforced disappearances, torture, and internal displacements, such shall be considered aggravating offenses with corresponding penalties depending on the severity of the offenses.

Section 42. Incentives and Awards. - There shall be established an incentives and awards system which shall be administered by a board under such rules and regulations as may be promulgated by the PCW to deserving entities, government agencies, and local government units for their outstanding performance in upholding the rights of women and effective implementation of gender-responsive programs.

Section 43. Funding. - The initial funding requirements for the implementation of this Act shall be charged against the current appropriations of the agencies concerned. Thereafter, such sums as may be necessary for the implementation of this Act shall be included in the agencies' yearly budgets under the General Appropriations Act.

The State shall prioritize allocation of all available resources to effectively fulfill its obligations specified under this Act. The State agencies' GAD budgets, which shall be at least five percent (5%) of their total budgetary allocation, shall also be utilized for the programs and activities to implement this Act.

Section 44. Implementing Rules and Regulations. - As the lead agency, the PCW shall, in coordination with the Commission on Human Rights and all concerned government departments and agencies including, as observers, both Houses of Congress through the Committee on Youth, Women and Family Relations (Senate) and the Committee on Women and Gender Equality (House of Representatives) and with the participation of representatives from nongovernment organizations (NGOs) and civil society groups with proven track record of involvement and promotion of the rights and welfare of Filipino women and girls identified by the PCW, formulate the implementing rules and regulations (IRR) of this Act within one hundred eighty (180) days after its effectivity.

Section 45. Separability Clause. - If any provision or part hereof is held invalid or unconstitutional, the remainder of the law or the provisions not otherwise affected shall remain valid and subsisting.

Section 46. Repealing Clause. - Any law, presidential decree or issuance, executive order, letter of instruction, administrative order, rule, or regulation contrary to, or inconsistent with, the provisions of this Act is hereby repealed, modified, or amended accordingly.

Section 47. Effectivity Clause. - This Act shall take effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation.

February 17, 2009

AN ACT AMENDING THE COOPERATIVE CODE OF THE PHILIPPINES TO BE KNOWN AS THE PHILIPPINE COOPERATIVE CODE OF 2008

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

CHAPTER I GENERAL CONCEPTS AND PRINCIPLES

ARTICLE 1. Title. - This Act shall be known as the “Philippine Cooperative Code of 2008”.

ARTICLE 2. Declaration of Policy.- It is the declared policy of the State to foster the creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social justice. The State shall encourage the private sector to undertake the actual formation and organization of cooperatives and shall create an atmosphere that is conducive to the growth and development of these cooperatives.

Toward this end, the Government and all its branches, subdivisions, instrumentalities and agencies shall ensure the provision of technical guidance, financial assistance and other services to enable said cooperatives to develop into viable and responsive economic enterprises and thereby bring about a strong cooperative movement that is free from any conditions that might infringe upon the autonomy or organizational integrity of cooperatives.

Further, the State recognizes the principle of subsidiarity under which the cooperative sector will initiate and regulate within its own ranks the promotion and organization, training and research, audit and support services relative to cooperatives with government assistance where necessary.

ARTICLE 3. General Concepts. - A cooperative is an autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles.

ARTICLE 4. Cooperative Principles. - Every cooperative shall conduct its affairs in accordance with Filipino culture, good values and experience and the universally accepted principles of cooperation which include, but are not limited to, the following:

(1) Voluntary and Open Membership - Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, cultural, political or religious discrimination.

(2) Democrative Member Control - Cooperatives are democratic organizations that are controlled by their members who actively participate in setting their policies and making decisions. Men and women serving as elected representatives, directors or officers are accountable to the membership. In primary cooperatives, members have equal voting rights of one-member, one-vote. Cooperatives at other levels are organized in the same democratic manner.

(3) Member Economic Participation - Members contribute equitably to, and democratically control, the capital of their cooperatives. At least part of that capital is the common property of the cooperative. They shall receive limited compensation or limited interest, if any, on capital subscribed and paid as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative by setting up reserves, part of which should at least be indivisible; benefitting members in proportion to their patronage of the cooperative's business; and, supporting other activities approved by the membership.

(4) Autonomy and Independence - Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including government, or raise capital from external sources, they shall do so on terms that ensure democratic control of their members and maintain their cooperative autonomy.

(5) Education, Training and Information - Cooperatives shall provide education and training for their members, elected and appointed representatives, managers, and employees, so that they can contribute effectively and efficiently to the development of their cooperatives.

(6) Cooperation Among Cooperatives - Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

(7) Concern for Community - Cooperatives work for the sustainable development of their communities through policies approved by their members.

ARTICLE 5. Definition of Terms. – The following terms shall mean:

(1) Member includes a person either natural or juridical who adhering to the principles set forth in this Code and in the Articles of Cooperative, has been admitted by the cooperative as member;

(2) General Assembly shall mean the full membership of the cooperative duly assembled for the purpose of exercising all the rights and performing all the obligations pertaining to cooperatives, as provided by this Code, its articles of cooperation and bylaws: Provided, That for cooperatives with numerous and dispersed membership, the general assembly may be composed of delegates elected by each sector, chapter or district of the cooperative in accordance with the rules and regulations of the Cooperative Development Authority;

(3) Board of Directors shall mean that body entrusted with the management of the affairs of the cooperative under its articles of cooperation and bylaws;

(4) Committee shall refer to any body entrusted with specific functions and responsibilities under the bylaws or resolution of the general assembly or the board of directors;

(5) Articles of Cooperation means the articles of cooperation registered under this Code and includes a registered amendment thereof;

(6) Bylaws means the bylaws registered under this Code and includes any registered amendment thereof;

(7) Registration means the operative act granting juridical personality to a proposed cooperative and is evidenced by a certificate of registration;

(8) Cooperative Development Authority refers to the government agency in charge of the registration and regulation of cooperatives as such hereinafter referred to s the Authority;

(9) Universally Accepted Principles means that body of cooperative principles adhered to worldwide by cooperatives;

(10) Representative Assembly means the full membership of a body of representatives elected by each of the sectors, chapter or district o the cooperative duly assembled for the purpose of exercising such powers lawfully delegated unto them by the general assembly in accordance with its bylaws;

(11) Officers of the Cooperative shall include the members of the board of directors, members of the different committee created by the general assembly, general manager or chief executive officer, secretary, treasurer and members holding other positions as may be provided for in their bylaws;

(12) Social Audit is a procedure wherein the cooperative assesses its social impact and ethical performance vis-à-vis its stated mission, vision, goals and code of social responsibility for cooperatives to be established by the Authority in consultation with the cooperative sector. It enables the cooperative to develop a process whereby it can account for its social performance and evaluate its impact in the community and be accountable for its decisions and actions to its regular members;

(13) Performance Audit shall refer to an audit on the efficiency and effectiveness of the cooperative as a whole; its management and officers; and its various responsibility centers as basis for improving individual team or overall performance and for objectively informing the general membership on such performance;

(14) A Single-Line or Single-Purpose Cooperative shall include cooperative undertaking activities which are related to its main line of business or purpose;

(15) Service Cooperatives are those which provide any type of service to its members, including but not limited to, transport, information and communication, insurance, housing, electric, health services, education, banking, and savings and credit;

(16) Subsidiary Cooperative refers to three or more primary cooperatives, doing the same line of business, organized at the municipal, provincial, city, special metropolitan political subdivision, or economic zones created by law, registered with the Authority to undertake business activities in support of its member-cooperatives.

CHAPTER II ORGANIZATION AND REGISTRATION

ARTICLE 6. Purposes of Cooperatives. – A cooperative may be organized and registered for any or all of the following purposes:

(1) To encourage thrift and savings mobilization among the members;

(2) To generate funds and extend credit to the members for productive and provident purposes;

(3) To encourage among members systematic production and marketing;

(4) To provide goods and services and other requirements to the members;

(5) To develop expertise and skills among its members;

(6) To acquire lands and provide housing benefits for the members;

(7) To insure against losses of the members;

(8) To promote and advance the economic, social and educational status of the members;

(9) To establish, own, lease or operate cooperative banks, cooperative wholesale and retail complexes, insurance and agricultural/industrial processing enterprises, and public markets;

(10) To coordinate and facilitate the activities of cooperatives;

(11) To advocate for the cause of the cooperative movements;

(12) To ensure the viability of cooperatives through the utilization of new technologies;

(13) To encourage and promote self-help or self-employment as an engine for economic growth and poverty alleviation; and

(14) To undertake any and all other activities for the effective and efficient implementation of the provisions of this Code.

ARTICLE 7. Objectives and Goals of a Cooperative. – The primary objective of every cooperative is to help improve the quality of life of its members. Towards this end, the cooperative shall aim to:

(a) Provide goods and services to its members to enable them to attain increased income, savings, investments, productivity, and purchasing power, and promote among themselves equitable distribution of net surplus through maximum utilization of economies of scale, cost-sharing and risk-sharing;

(b) Provide optimum social and economic benefits to its members;

(c) Teach them efficient ways of doing things in a cooperative manner;

(d) Propagate cooperative practices and new ideas in business and management;

(e) Allow the lower income and less privileged groups to increase their ownership in the wealth of the nation; and

(f) Cooperate with the government, other cooperatives and people-oriented organizations to further the attainment of any of the foregoing objectives.

ARTICLE 8. Cooperatives Not in Restraint of Trade. – No cooperative or method or act thereof which complies with this Code shall be deemed a conspiracy or combination in restraint of trade or an illegal monopoly, or an attempt to lessen competition or fix prices arbitrarily in violation of any laws of the Philippines.

ARTICLE 9. Cooperative Powers and Capacities. – A cooperative registered under this Code shall have the following powers, rights and capacities:

(1) To the exclusive use of its registered name, to sue and be sued;

(2) Of succession;

(3) To amend its articles of cooperation in accordance with the provisions of this Code;

(4) To adopt bylaws not contrary to law, morals or public policy, and to amend and repeal the same in accordance with this Code;

(5) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and otherwise deal with such real and personal property as the transaction of the lawful affairs of the cooperative may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution;

(6) To enter into division, merger or consolidation, as provided in this Code;

(7) To form subsidiary cooperatives and join federations or unions, as provided in this Code;

(8) To avail of loans, be entitled to credit and to accept and receive grants, donations and assistance from foreign and domestic sources, subject to the conditions of said loans, credits, grants, donations or assistance that will not undermine the autonomy of the cooperative. The Authority, upon written request, shall provide necessary assistance in the documentary requirements for the loans, credit, grants, donations and other financial support;

(9) To avail of preferential rights granted to cooperatives under Republic Act No. 7160, otherwise known as the Local Government Code, and other laws, particularly those in the grant of franchises to establish, construct, operate and maintain ferries, wharves, markets or slaughterhouses and to lease public utilities, including access to extension and on-site research services and facilities related to agriculture and fishery activities;

(10) To organize and operate schools in accordance with Republic Act No. 9155, Governance of Basic Education Act of 2001 and other pertinent laws; and

(11) To exercise such other powers granted by this Code or necessary to carry out its purpose or purposes as stated in its Articles of cooperation.

ARTICLE 10. Organizing a Primary Cooperative. – Fifteen (15) or more natural persons who are Filipino citizens, of legal age, having a common bond of interest and are actually residing or working in the intended area of operation, may organize a primary cooperative under this Code: Provided, That a prospective member of a primary cooperative must have completed a Pre-Membership Education Seminar (PMES).

Any newly organized primary cooperative may be registered as multipurpose cooperative only after compliance with the minimum requirements for multipurpose cooperatives to be set by the Authority. A single-purpose cooperative may transform into a multipurpose or may create subsidiaries only after at least two (2) years of operations.

ARTICLE 11. Economic Survey. - Every group of individuals or cooperatives intending to form a cooperative under this Code shall submit to the Authority a general statement describing, among others the structure and purposes of the proposed cooperative: Provided, That the structure and actual staffing pattern of the cooperative shall include a bookkeeper; Provided, further, That they shall not be allowed to operate without the necessary personnel and shall also submit an economic survey, indicating therein the area of operation, the size of membership, and other pertinent data in a format provided by the Authority.

ARTICLE 12. Liability. – A cooperative duly registered under this Code shall have limited liability.

ARTICLE 13. Term. – A cooperative shall exist for a period not exceeding fifty (50) years from the date of registration unless sooner dissolve or unless said period is extended. The cooperative term, as originally stated in the articles of cooperation, may be extended for periods not exceeding fifty (50) years in any single instance by an amendment of the articles of cooperation, in accordance with this Code: Provided, That no extension can be made earlier than five (5) years prior to the original or subsequent expiry date/dates unless there are justifiable reasons for an earlier extension as may be determined by the Authority.

ARTICLE 14. Articles of Cooperation. – (1) All cooperatives applying for registration shall file with the Authority the articles of cooperation which shall be signed by each of the organizers and acknowledged by them if natural persons, and by the chairpersons or secretaries, if juridical persons, before a notary public.

(2) The articles of cooperation shall set forth:

(a) The name of the cooperative which shall include the word cooperative;

(b) The purpose or purposes and scope of business for which the cooperative is to be registered;

(c) The term of existence of the cooperative;

(d) The area of operation and the postal addresses of its principal office;

(e) The names, nationality, and the postal addresses of the registrants;

(f) The common bond of membership;

(g) The list of names of the directors who shall manage the cooperative; and

(h) The amount of its share capital, the names and residences of its contributors and a statement of whether the cooperative is primary, secondary or tertiary in accordance with Article 23 hereof.

(3) The articles of cooperation may also contain any other provisions not inconsistent with this Code or any related law.

(4) Four (4) copies each of the proposed articles of cooperation, bylaws, and the general statement required under Article 11 of this Code shall be submitted to the Authority.

(5) No cooperative, other than a cooperative union as described under Article 25 hereof, shall be registered unless the articles of cooperation is accompanied with the bonds of the accountable officers and a sworn statements of the treasurer elected by the subscribers showing that at least twenty-five per centum (25%) of the authorized share capital has been subscribed and at least twenty-five per centum (25%) of the total subscription has been paid: Provided, That in no case shall the paid-up share capital be less than Fifteen thousand pesos (P15,000.00).

The Authority shall periodically assess the required paid-up share capital and may increase it every five (5) years when necessary upon consultation with the cooperative sector and the National Economic and Development Authority (NEDA).

ARTICLE 15. Bylaws. – (1) Each cooperative to be registered under this Code shall adopt bylaws not inconsistent with the provisions of this Code. The bylaws shall be filed at the same time as the articles of cooperation.

(2) The bylaws of each cooperative shall provide:

(a) The qualifications for admission to membership and the payment to be made or interest to be acquired as a conditions for the exercise of the right of membership;

(b) The rights and liabilities of membership;

(c) The circumstances under which membership is acquired, maintained and lost;

(d) The procedure to be followed in cases of termination of membership;

(e) The conditions under which the transfer of a share or interest of the members shall be permitted;

(f) The rules and procedures on the agenda, time, place and manner of calling, convening, conducting meetings, quorum requirements, voting systems, and other matters relative to the business affairs of the general assembly, board of directors, and committees;

(g) The general conduct of the affairs of the cooperative, including the powers and duties of the general assembly, the board of directors, committees and the officers, and their qualifications and disqualifications;

(h) The manner in which the capital, may be raised and the purposes for which it can be utilized;

(i) The mode of custody and of investment of net surplus;

(j) The accounting and auditing systems;

(k) The manner of loaning and borrowing including the limitations thereof;

(l) The method of distribution of net surplus;

(m) The manner of adopting, amending, repealing, and abrogating bylaws;

(n) A conciliation or mediation mechanism for the amicable settlement of disputes among members, directors, officers and committee members of the cooperative; and

(o) Other matters incident to the purposes and activities of the cooperative.

ARTICLE 16. Registration. ­– A cooperative formed and organized under this Code acquires juridical personality from the date the Authority issues a certificate of registration under its official seal. All applications for registration shall be finally disposed of by the Authority within a period of sixty (60) days from the filing thereof, otherwise the application is deemed approved, unless the cause of the delay is attributable to the applicant: Provided, That in case of a denial of the application for registration, an appeal shall lie with the Office of the President within ninety (90) days from receipt of notice of such denial: Provided, further, That failure of the Office of the President to act on the appeal within ninety (90) days from the filing thereof shall mean approval of said application.

ARTICLE 17. Certificate of Registration. – A certificate of registration issued by the Authority under its official seal shall be conclusive evidence that the cooperative therein mentioned is duly registered unless it is proved that the registration thereof has been cancelled.

ARTICLE 18. Amendment of Articles of Cooperation and Bylaws. – Unless otherwise prescribed by this Code and for legitimate purposes, any provision or matter stated in the articles of cooperation and by laws may be amended by two-thirds (2/3) vote of all the members with voting rights, without prejudice to the right of the dissenting members to exercise their right to withdraw their membership under Article 30.

Both the original and amended articles and/or bylaws shall contain all provisions required by law to be set out in the articles of cooperation and by laws. Amendments shall be indicated by underscoring or otherwise appropriately indicating the change or changes made and a copy of the amended articles or amended bylaws duly certified under oath by the cooperative secretary and a majority of the directors stating the fact that said amendment or amendments to the articles of cooperation and/or bylaws have been duly approved by the required vote of the members. All amendments to the article of cooperation and/or bylaws shall be submitted to the Authority. The amendments shall take effect upon its approval by the authority or within thirty (30) days from the date of filing thereof if not acted upon by the Authority for a cause not attributable to the cooperative.

ARTICLE 19. Contracts Executed Prior to Registration and Effects Thereof. – Contracts executed between private persons and cooperatives prior to the registration of the cooperative shall remain valid and binding between the parties and upon registration of the cooperative. A formal written contract shall be adopted and made in the cooperative’s name or on its behalf prior to its registration.

ARTICLE 20. Division of Cooperatives. – Any registered cooperative may, by a resolution approved by a vote of three-fourths (3/4) of all the members with voting rights, present and constituting a quorum, resolve to divide itself into the two (2) or more cooperatives. The procedure for such division shall be prescribed in the regulations of the Authority: Provided, That all the requirements set forth in this Code have been complied with by the new cooperatives: Provided, further, That no division of a cooperative in fraud of creditors shall be valid.

ARTICLE 21. Merger and Consolidation of Cooperatives. – (1) Two (2) or more cooperatives may merge into a single cooperative which shall either be one of the constituent cooperatives or the consolidated cooperative.

(2) No merger or consolidation shall be valid unless approved by a three-fourths (3/4) vote of all the members with voting rights, present and constituting a quorum of each of the constituent cooperatives at separate general assembly meetings. The dissenting members shall have the right to exercise their right to withdraw their membership pursuant to Article 30.

(3) The Authority shall issue the guidelines governing the procedure of merger or consolidation of cooperatives. In any case, the merger or consolidation of cooperatives. In any case, the merger or consolidation shall be effective upon the issuance of the certificate of merger or consolidation by the Authority.

ARTICLE 22. Effects of Merger and Consolidation. – The merger or consolidation of cooperatives shall have the following effects:

(1) The constituent cooperatives shall become a single cooperative which, in case of merger, shall be the surviving cooperative, and, in case of consolidation, shall be the consolidated cooperative;

(2) The separate existence of the constituent cooperatives shall cease, except that of the surviving or the consolidated cooperative;

(3) The surviving or the consolidated cooperative shall possess al the assets, rights, privileges, immunities and franchises of each of the constituent cooperatives;

(4) The surviving or the consolidated cooperative shall possess all the assets, rights, privileges, immunities and franchises of each of the constituent cooperatives; and

(5) The surviving or the consolidated cooperative shall be responsible for all the liabilities and obligation of each of the constituent cooperatives in the same manner as if such surviving or consolidated cooperative had itself incurred such liabilities or obligations. Any claim, action or proceeding pending by or against any such constituent cooperatives may be prosecuted by or against the surviving or consolidated cooperative, as the case may be. Neither the rights of creditors nor any lien upon the property of any such constituent cooperatives shall be impaired by such merger or consolidation.

ARTICLE 23. Type and Categories of Cooperatives. – (1) Types of Cooperatives – Cooperatives may fall under any of the following types:

(a) Credit Cooperative is one that promotes and undertakes savings and lending services among its members. It generates a common pool of funds in order to provide financial assistance to its members for productive and provident purposes;

(b) Consumers Cooperative is one of the primary purpose of which is to procure and distribute commodities to members and non-members;

(c) Producers Cooperative is one that undertakes joint production whether agricultural or industrial. It is formed and operated by its members to undertake the production and processing of raw materials or goods produced by its members into finished or processed products for sale by the cooperative to its members and non-members. Any end product or its derivative arising from the raw materials produced by its members, sold in the name and for the account of the cooperative, shall be deemed a product of the cooperative and its members;

(d) Marketing Cooperative is one which engages in the supply of production inputs to members and markets their products;

(e) Service Cooperative is one which engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication, professional and other services;

(f) Multipurpose Cooperative is one which combines two (2) or more of the business activities of these different types of cooperatives;

(g) Advocacy Cooperative is a primary cooperative which promotes and advocates cooperativism among its members and the public through socially-oriented projects, education and training, research and communication, and other similar activities to reach out to its intended beneficiaries;

(h) Agrarian Reform Cooperative is one organized by marginal farmers majority of which are agrarian reform beneficiaries for the purpose of developing an appropriate system of land tenure, land development, land consolidation or land management in areas covered by agrarian reform;

(i) Cooperative Bank is one organized for the primary purpose of providing a wide range of financial services to cooperatives and their members;

(j) Dairy Cooperative is one whose members are engaged in the production of fresh milk which may be processed and/or marketed as dairy products;

(k) Education Cooperative is one organized for the primary purpose of owning and operating licensed educational institutions notwithstanding the provisions of Republic Act No. 9155, otherwise known as the Governance of Basic Education Act of 2001;

(l) Electric Cooperative is one organized for the primary purpose of undertaking power generations, utilizing renewable energy sources, including hybrid systems, acquisition and operation of subtransmission or distribution to its household members;

(m) Financial Service Cooperative is one organized for the primary purpose of engaging in savings and credit services and other financial services;

(n) Fishermen Cooperative is one organized by marginalized fishermen in localities whose products are marketed either as fresh or processed products;

(o) Health Services Cooperative is one organized for the primary purpose of providing medical, dental and other health services;

(p) Housing Cooperative is one organized to assist or provide access to housing for the benefit of its regular members who actively participate in the savings program for housing. It is co-owned and controlled by its members;

(q) Insurance Cooperative is one engaged in the business of insuring life and poverty of cooperatives and their members;

(r) Transport Cooperative is one which includes land and sea transportation, limited to small vessels, as defined or classified under the Philippine maritime laws, organized under the provisions of this Code;

(s) Water Service Cooperative is one organized to own, operate and manage waters systems for the provision and distribution of potable water for its members and their households;

(t) Workers Cooperative is one organized by workers, including the self-employed, who are at same time the members and owners of the enterprise. Its principal purpose is to provide employment and business opportunities to its members and manage it in accordance with cooperative principles; and

(u) Other types of cooperative as may be determined by the Authority.

(2) Categories of Cooperative – Cooperatives shall be categorized according to membership and territorial considerations as follows:

(a) In terms of membership, cooperative shall be categorized into:

(i) Primary – The members of which are natural persons;

(ii) Secondary – The members of which are primaries; and

(iii) Tertiary – The members of which are secondary cooperatives; and

(b) In terms of territory, cooperatives shall be categorized according to areas of operations which may or may not coincide with the political subdivisions of the country.

ARTICLE 24. Functions of a Federation of Cooperatives. – A federation of cooperatives shall undertake the following functions:

(a) To carry on any cooperative enterprise authorized under Article 6 that complements augments, or supplements but does not conflict, complete with, nor supplant the business or economic activities of its members;

(b) To carry on, encourage, and assist educational and advisory work relating to its member cooperatives;

(c) To render services designed to encourage simplicity, efficiency, and economy in the conduct of the business of its member cooperatives and to facilitate the implementation of their bookkeeping, accounting, and other systems and procedures;

(d) To print, publish, and circulate any newspaper or other publication in the interest of its member cooperatives and enterprises;

(e) To coordinate and facilitate the activities of its member cooperatives;

(f) To enter into joint ventures with national or international cooperatives of other countries in the manufacture and sale of products and/or services in the Philippines and abroad; and

(g) To perform such other functions as may be necessary to attain its objectives.

A federation of cooperatives may be registered by carrying out the formalities for registration of a cooperative.

Registered cooperatives may organize a federation according to the type of business activity engaged in by the cooperatives.

ARTICLE 25. Cooperative Unions. – Registered cooperatives and federations at the appropriate levels may organize or join cooperative unions to represent the interest and welfare of all types of cooperatives at the provincial, city, regional, and national levels. Cooperative unions may have the following purposes:

(a) To represent its member organizations;

(b) To acquire, analyze, and disseminate, economic, statistical, and other information relating to its members and to all types of cooperatives within its area of operation;

(c) To sponsor studies in the economic, legal, financial, social and other phases of cooperation, and publish the results thereof;

(d) To promote the knowledge of cooperative principles and practices;

(e) To develop the cooperative movement in their respective jurisdictions;

(f) To advise the appropriate authorities on all questions relating to cooperatives;

(g) To raise funds through membership fees, dues and contributions, donations, and subsidies from local and foreign sources whether private or government; and

(h) To do and perform such other non-business activities as may be necessary to attain the foregoing objectives.

Cooperative unions may assist the national and local governments in the latter’s development activities in their respective jurisdictions.

CHAPTER III MEMBERSHIP

ARTICLE 26. Kinds of Membership. – A cooperative may have two (2) kinds of members, to wit: (1) regular members and (2) associate members.

A regular member is one who has complied with all the membership requirements and entitled to all the rights and privileges of membership. An associate member is one who has no right to vote nor be voted upon and shall be entitled only to such rights and privileges as the bylaws may provide: Provided, That an associate who meets the minimum requirements of regular membership, continues to patronize the cooperative for two (2) years, and signifies his/her intention to remain a member shall be considered a regular member.

A cooperative organized by minors shall be considered a laboratory cooperative and must be affiliated with a registered cooperative. A laboratory cooperative shall be governed by special guidelines to be promulgated by the Authority.

ARTICLE 27. Government Officers and Employees. – (1) Any officer or employee of the Authority shall be disqualified to be elected or appointed to any position in a cooperative: Provided, That the disqualification does not extend to a cooperative organized by the officers or employees of the Authority.

(2) All elective officials of the Government shall be ineligible to become officers and directors of cooperatives: Provided, That the disqualification does not extend to a party list representative being an officer of a cooperative he or she represents; and

(3) Any government employee or official may, in the discharge of is duties as a member in the cooperative, be allowed by the end of office concerned to use official time for attendance at the general assembly, board and committee meetings of cooperatives as well as cooperative seminars, conferences, workshops, technical meetings, and training courses locally or abroad: Provided, That the operations of the office concerned are not adversely affected.

ARTICLE 28. Application. – An applicant for membership shall be deemed a member after approval of his membership by the board of directors and shall exercise the rights of member after having made such payments to the cooperative in respect to membership or acquired interest in the cooperative as may be prescribed in the bylaws. In case membership is refused or denied by the board of directors, an appeal may be made to the general assembly and the latter’s decision shall be final. For this purpose, the general assembly may opt to create an appeal and grievance committee, the members of which shall serve for a period of one (1) year and shall decide appeals on membership application within thirty (30) days upon receipt thereof. If the committee fails to decide within the prescribed period, the appeal is deemed approved in favor of the applicant.

ARTICLE 29. Liability of Members. – A member shall be liable for the debts of the cooperative to the extent of his contribution to the share capital of the cooperative.

ARTICLE 30. Termination of Membership. – (1) A member of a cooperative may, for any valid reason, withdraw his membership from the cooperative by giving a sixty (60) day notice to the board of directors. Subject to the bylaws of the cooperative, the withdrawing member shall be entitled to a refund of his share capital contribution and all other interests in the cooperative: Provided, That such fund shall not be made if upon such payment the value of the assets of the cooperative would be less than the aggregate amount of its debts and liabilities exclusive of his share capital contribution.

(2) The death or insanity of a member in a primary cooperative, and the insolvency or dissolution of a member in a secondary or tertiary cooperative may be considered valid grounds for termination of membership: Provided, That in case of death or insanity of an agrarian reform beneficiary-member of a cooperative, the next-of-kin may assume the duties and responsibilities of the original member

(3) Membership in the cooperative may be terminated by a vote of the majority of all the members of the board of directors for any of the following causes:

(a) When a member has not patronized any of the services of the cooperative for an unreasonable period of time as may be previously determined by the board of directors;

(b) When a member has continuously failed to comply with his obligations;

(c) When a member has acted in violation of the bylaws and the rules of the cooperative; and

(d) For any act or omission injurious or prejudicial to the interest or the welfare of the cooperative.

A member whose membership the board of directors may wish to terminate shall be informed of such intended action in writing and shall be given an opportunity to be heard before the said board makes its decision. The decision of the board shall be in writing and shall be communicated in person or by registered mail to said member and shall be appealable within thirty (30) days from receipt thereof to the general assembly whose decision shall be final. The general assembly may create an appeal and grievance committee whose members shall serve for a period of one (1) year and shall decide appeals on membership termination. The committee is given thirty (30) days from receipt thereof to decide on the appeal. Failure to decide within the prescribed period, the appeal is deemed approved in favor of the member. Pending a decision by the general assembly, the membership remains in force.

ARTICLE 31. Refund of Interests. – All sums computed in accordance with the bylaws to be due from a cooperative to a former member shall be paid to him either by the cooperative or by the approved transferee, as the case may be, in accordance with this Code.

CHAPTER IV ADMINISTRATION

ARTICLE 32. Composition of the General Assembly. – The general assembly shall be composed of such members who are entitled to vote under the articles of cooperation and bylaws of the cooperative.

ARTICLE 33. Powers of the General Assembly. – The general assembly shall be the highest policy-making body of the cooperative and shall exercise such powers as are stated in this Code, in the articles of cooperation and in the bylaws of the cooperative. The general assembly shall have the following exclusive powers which cannot be delegate:

(1) To determine and approve amendments to the articles of cooperation and bylaws;

(2) To elect or appoint the members of the board of directors, and to remove them for cause. However, in the case of the electric cooperatives registered under this Code, election of the members of the board shall be held in accordance with its bylaws or election guideline of such electric cooperative; and

(3) To approve developmental plans of the cooperative.

Subject to such other provisions of this Code and only for purposes of prompt and intelligent decision-making, the general assembly may be a three-fourths (3/4) vote of all its members with voting rights, present and constituting a quorum, delegate some of its powers to a smaller body of the cooperative. These powers shall be enumerated under the bylaws of the cooperative.

ARTICLE 34. Meetings. – (1) A regular meeting shall be held annually by the general assembly on a date fixed in the bylaws, or if not so fixed, on any dated within ninety (90) days after the close of each fiscal year: Provided, That notice of regular meetings shall be sent in writing, by posting or publication, or through other electronic means to all members of record.

(2) Whenever necessary, a special meeting of the general assembly may be called at any time by a majority vote of the board of directors or as provided for in the bylaws: Provided, That a notice in writing shall be sent one (1) week prior to the meeting to all members who are entitled to vote. However, a special meeting shall be called by the board of directors after compliance with the required notice within from at least ten per centum (10%) of the total members who re entitled to vote to transact specific business covered by the call.

If the board fails to call a regular or a special meeting within the given period, the Authority, upon petition of ten per centum (10%) of all the members of the cooperative who are entitled to vote, and for good cause shown, shall issue an order to the petitioners directing them to call a meeting of the general assembly by giving proper notice as required in this Code or in the bylaws;

(3) In the case of a newly approved cooperative, a special general assembly shall be called, as far as practicable, within ninety (90) days from such approval;

(4) The Authority may call a special meeting of the cooperative for the purpose of reporting to the members the result of any examination or other investigation of the cooperative affairs; and

(5) Notice of any meeting may be waived, expressly or impliedly, by any member.

ARTICLE 35. Quorum. – A quorum shall consist of at least twenty-five per centum (25%) of all the members entitled to vote. In the case of cooperative banks, the quorum shall be as provided in Article 99 of this Code. In the case of electric cooperatives registered under this Code, a quorum, unless otherwise provided in the bylaws, shall consist of five per centum (5%) of all the members entitled to vote.

ARTICLE 36. Voting System. – Each member of a primary cooperative shall have only one (1) vote. In the case of members of secondary or tertiary cooperatives, they shall have one (1) basic vote and as many incentive votes as provided for in the bylaws but not exceed five (5) votes. The votes cast by the delegates shall be deemed as votes cast by the members thereof.

However, the bylaws of a cooperative other than a primary may provide for voting by proxy. Voting by proxy means allowing a delegate of a cooperative to represent or vote in behalf of another delegate of the same cooperative.

ARTICLE 37. Composition and Term of the Board of Directors. – Unless otherwise provided in the bylaws, the direction and management of the affairs of a cooperative shall be vested in a board of directors which shall be composed of not less that five (5) nor more than fifteen (15) members elected by the general assembly for a term of two (2) years and shall hold office until their successors are duly elected and qualified, or until duly removed for caused.

ARTICLE 38. Powers of the Board of Directors. – The board of directors shall be responsible for the strategic planning, direction-setting and policy-formulation activities of the cooperatives.

ARTICLE 39. Directors. – (1) Any member of a cooperative who under the bylaws of the cooperative, has the right to vote and who possesses all the qualifications and none of the disqualifications provided in the laws or bylaws shall be eligible for election as director.

(2) The cooperative may, by resolution of its board of directors, admit as directors, or committee member one appointed by any financing institution from which the cooperative received financial assistance solely to provide technical knowledge not available within its membership. Such director or committee member not be a member of the cooperative and shall have no powers, rights, nor responsibilities except to provided technical assistance as required by the cooperative.

(3) The members of the board of directors shall not hold any other position directly involved in the day to day operation and management of the cooperative.

(4) Any person engaged in a business similar to that of the cooperative or who in any way has a conflict of interest with it, is disqualified from election as a director of said cooperative.

ARTICLE 40. Meeting of the Board and Quorum Requirement. – (1) In the case of primary cooperatives, regular meetings of the board of directors shall be held at least once a month.

(2) Special meetings of the board of directors may be held at any time upon the call of the chairperson or a majority of the members of the board: Provided, That written notices of the meeting specifying the agenda of the special meeting shall be given to all members of the board at least one (1) week before the said meeting.

(3) A majority of the members of the Board shall constitute a quorum or the conduct of business, unless the bylaws proved otherwise.

(4) Directors cannot attend or vote by proxy at board meetings.

ARTICLE 41. Vacancy in the Board of Directors. – Any vacancy in the board of directors, other than by expiration of term, may be filled by the vote of at least a majority of the remaining directors, if still constituting a quorum; otherwise, the vacancy must be filled by the general assembly in a regular or special meeting called for the purpose. A director so elected to fill a vacancy shall serve only the unexpired term of his predecessor in office.

ARTICLE 42. Officers of the Cooperative. – The board of directors shall elect from among themselves the chairperson and vice-chairperson, and elect or appoint other officers of the cooperative from outside of the board in accordance with their bylaws. All officers shall serve during good behavior and shall not be removed except for cause after due hearing. Loss of confidence shall not be a valid ground for removal unless evidenced by acts or omission causing loss of confidence in the honesty and integrity of such officer. No two (2) or more persons with relationships up to the third civil degree of consanguinity or affinity nor shall any person engaged in a business similar to that of the cooperative nor who in any other manner has interests in conflict with the cooperative shall serve as an appointive officer.

ARTICLE 43. Committees of Cooperatives. – (1) The bylaws may create an executive committee to be appointed by the board of directors with such powers and duties as may be delegated to it in the bylaws or by a majority vote of all the members of the board of directors.

(2) The bylaws shall provide for the creation of an audit, election, mediation and conciliation, ethics, and such other committees as may be necessary for the conduct of the affairs of the cooperative. The members of both the audit and election committee shall be elected by the general assembly and the rest shall be appointed by the board. The audit committee shall be directly accountable and responsible to the general assembly. It shall have the power and duty to continuously monitor the adequacy and effectiveness of the cooperative’s management control system and audit the performance of the cooperative and its various responsibility centers.

Unless otherwise provided in the bylaws, the board, in case of a vacancy in the committees, may call an election to fill the vacancy or appoint a person to fill the same subject to the provision that the person elected or appointed shall serve only for the unexpired portion of the term.

ARTICLE 44. Functions, Responsibilities and Training Requirements of Directors, Officers and Committee Members. – the functions and responsibilities of directors, officers and committee members, as well as their training requirements, shall be in accordance with the rules and regulations issued by the Authority.

ARTICLE 45. Liability of Directors, Officers and Committee Members. – Directors, officers and committee members, who are willfully and knowingly vote for or assent to patently unlawful acts or who are guilty of gross negligence or bad faith in directing the affairs of the cooperative or acquire any personal or pecuniary interest in conflict with their duty as such directors, officers or committee members shall be liable jointly and severally for all damages or profits resulting therefrom to the cooperative, members, and other persons.

When a director, officer or committee member attempts to acquire or acquires, in violation of his duty, any interest or equity adverse to the cooperative in respect to any matter which has been reposed in him in confidence, he shall, as a trustee for the cooperative, be liable for damages and shall be accountable for double the profits which otherwise would have accrued to the cooperative.

ARTICLE 46. Compensation. – (1) In the absence of any provisions in the bylaws fixing their compensation, the directors shall not receive any compensation except for reasonable per diems: Provided however, That the directors and officers shall not be entitled to any per diem when, in the preceding calendar year, the cooperative reported a net loss or had a dividend rate less than the official inflation rate for the same year. Any compensation other than per diems may be granted to directors by a majority vote of the members with voting rights at a regular or special general assembly meeting specifically called for the purpose: Provided, That no additional compensation other than per diems shall be paid during the first year of existence of any cooperative.

(2) The compensation of officers of the cooperative as well as the members of the committee as well as the members of the committees created pursuant to this Code or its bylaws may be fixed in the bylaws.

(3) Unless already fixed in the bylaws, the compensation of all other employee shall be determined by the board of directors.

ARTICLE 47. Dealings of Directors, Officers, or Committee Members. – A contract entered into by the cooperative with one (1) or more of its directors, officers, and committee members is voidable, at the option of the cooperative, unless all the following conditions are present.

(1) That the presence of such director in the board meeting wherein contract was approved was not necessary to constitute a quorum for such meeting;

(2) That the vote of such director was not necessary for the approval of the contract;

(3) That the contract is fair and reasonable under the circumstances; and

(4) That in the case of an officer or committee member, the contract with the officer or committee member has been previously authorized by the general assembly or by the board of directors.

Where any of the first two conditions set forth in the preceding paragraph is absent, in the case of a contract with a director, such contract may be ratified by a three-fourths (3/4) vote of all the members with voting rights, present and constituting a quorum in a meeting called for the purpose: Provided, That full disclosure of the adverse interest of the directors involved is made at such meeting, and that the contract is fair and reasonable under the circumstances.

ARTICLE 48. Disloyalty of a Director. – A director who, by virtue of his office, acquires for himself an opportunity which should belong to the cooperative shall be liable for damages and must account for double the profits that otherwise would have accrued to the cooperative by refunding the same, unless his act has been ratified by a three-fourths (3/4) vote of all the members with voting rights, present and constituting a quorum. This provision shall be applicable, notwithstanding the fact that the director used his own funds in the venture.

ARTICLE 49. Illegal Use of Confidential Information. – (1) A director or officer, or an associate of a director or officer, who, for his benefit or advantage or that of an associate, makes use of confidential information that, if generally known, might reasonably be expected to adversely affect the operation and viability of the cooperative, shall be held:

(a) Liable to compensate the cooperative for the direct losses suffered by the cooperative as a result of the illegal use of information; and

(b) Accountable to the cooperative for any direct benefit or advantage received or yet to be received by him or his associate, as a result of the transaction.

(2) The cooperative shall take the necessary steps to enforce the liabilities described in subsection (a)

ARTICLE 50. Removal. – All complaints for the removal of any elected officer shall be filed with the board of directors. Such officer shall be given the opportunity to be heard. Majority of the board of directors may place the officer concerned under preventive suspension pending the resolution of the investigation. Upon finding of a prima facie evidence of guilt, the board shall present its recommendation for removal to the general assembly.

An elective officer may be removed by three fourths (3/4) votes of the regular members present and constituting a quorum, in a regular or special general assembly meeting called for the purpose. The officer concerned shall be given an opportunity to be heard at said assembly.

CHAPTER V RESPONSIBILITIES, RIGHTS AND PRIVILEGES OF COOPERATIVE

ARTICLE 51. Address. – Every cooperative shall have an official postal address to which all notices and communications shall be sent. Such address and every change thereof shall be registered with the Authority.

ARTICLE 52. Books to be Kept Open. – (1) Every cooperative shall have the following documents ready and accessible to its members and representatives of the Authority for inspection during reasonable office hours at its official address:

(a) A copy of this Code and all other laws pertaining to cooperatives;

(b) A copy of the regulations of the Authority;

(c) A copy of the articles of cooperation and bylaws of the cooperative;

(d) A register of members;

(e) The books of the minutes of the meetings of the general assembly, board of directors and committee;

(f) Share books, where applicable;

(g) Financial statement; and

(h) Such other documents as may be prescribed by laws or the bylaws.

(2) The accountant or the bookkeeper of the cooperative shall be responsible for the maintenance of the cooperative in accordance with generally accepted accounting practices. He shall also be responsible for the production of the same at the time of audit or inspection.

The audit committee shall be responsible for the continuous and periodic review of the books and records of account to ensure that these are in accordance with generally accepted accounting practices. He shall also be responsible for the production of the same at the time of audit or inspection.

(3) Each cooperative shall maintain records of accounts such that the true and correct condition and the results of the operation of the cooperative may be ascertained therefrom at any time. The financial statements, audited according to generally accepted auditing standards, principles and practices, shall be published annually and shall be kept posted in a conspicuous place in the principal office of the cooperative.

(4) Subject to the pertinent provisions of the National Internal Revenue Code and other laws, a cooperative may dispose by way of burning or other method of complete destruction any document, record or book pertaining to its financial and nonfinancial operations which are already more than five (5) years old except those relating to transactions which are the subject of civil, criminal and administrative proceedings. An inventory of the audited documents, records and books to be disposed of shall be drawn up and certified to by the board secretary and the chairman of the audit committee and presented to the board of directors which may thereupon approve the disposition of said records.

ARTICLE 53. Reports. – (1) Every cooperative shall draw up regular reports of its program of activities, including those in pursuance of their socio-civic undertakings, showing their progress and achievements at the end of every fiscal year. The reports shall be made accessible to its members, and copies thereof shall be furnished to all its members or record. These reports shall be filed with the Authority within one hundred twenty (120) days from the end of the calendar year. The form and contents of the reports shall be as prescribed by the rules of the Authority. Failure to file the required reports shall subject the accountable officer/s to fines and penalties as may be prescribed by the Authority, and shall be a ground for the revocation of authority of the cooperative to operate as such. The fiscal year of every cooperative shall be the calendar year except as may be otherwise provided in the bylaws.

(2) If a cooperative fails to make, publish and file the reports required herein, or fails to include therein any matter required by the Code, the Authority shall, within fifteen (15) days from the expiration of the prescribed period, send such cooperative a written notice, stating its non-compliance and the commensurate fines and penalties that will be imposed until such time that the cooperative has complied with the requirements.

ARTICLE 54. Register of Members as Prima Facie Evidence. – Any register or list of members shares kept by any registered cooperative shall be prima facie evidence of the following particulars entered therein:

(1) The date on which the name of any person was entered in such register or list of member; and

(2) The date on which any such person ceased to be a member.

ARTICLE 55. Probative Value of Certified Copies of Entries. – (1) A copy of any entry in any book, register or list regularly kept in the course of business in the possession of a cooperative shall, if duly certified in accordance with the rules of evidence, be admissible as evidence of the existence of entry and prima facie evidence of the matters and transactions therein recorded.

(2) No person or a cooperative is possession of the books of such cooperative shall, in any legal proceedings to which the cooperative is not a party, be compelled to produce any of the books of the cooperative, the contents of which can be proved and the matters, transactions and accounts therein recorded, unless by order of a competent court.

ARTICLE 56. Bonding of Accountable Officers. – Every director, officer, and employee handling funds, securities or property on behalf of any cooperative shall be covered by a surety bond to be issued for a duly registered insurance or bonding company for the faithful performance of their respective duties and obligations. The board of directors shall determine the adequacy of such bonds.

Upon the filing of the application for registration of a cooperative, the bonds of the accountable officers shall be required by the Authority. Such bonds shall be renewed manually and the Authority shall accordingly be informed of such renewal.

ARTICLE 57. Preference of Claims. – (1) Notwithstanding the provisions of existing laws, rules and regulations to the contrary, but subject to the prior claim of the Authority, any debt due to the cooperative from the member shall constitute a first lien upon any raw materials, production, inputs, and products produced; or any land, building, facilities, equipment, goods or services acquired and held, by such member through the proceeds of the loan or credit granted by the cooperative to him for as long as the same is not fully paid.

(2) No property or interest on property which is subject to a lien under paragraph (1) shall be sold nor conveyed to third parties without the prior permission of the cooperative. The lien upon the property or interest shall continue to exit even after the sale or conveyance thereof until such lien has been duly extinguished.

(3) Notwithstanding the provisions of any law to the contrary, any sale or conveyance made in contravention of paragraph (2) hereof shall be void.

ARTICLE 58. Instrument for Salary or Wage Deduction. – (1) A member of a cooperative may, notwithstanding the provisions of existing laws to the contrary, execute an instrument in favor of the cooperative authorizing his employer to deduct from his/her salary or wages, commutation of leave credits and any other monetary benefits payable to him by the employer and remit such amount as maybe specified in satisfaction of a debt or other demand due from the member to the cooperative.

(2) Upon the execution of such instrument and as may be required by the cooperative contained in a written request, the employer shall make the deduction in accordance with the agreement and deduction in accordance with the agreement and remit forthwith the amount so deducted within ten (10) days after the end of the payroll month to the cooperative. The employer shall make the deduction for as long as such debt or other demand remains unpaid by the employee.

(3) The term employer as used in this article shall include all private firms and the national and local governments and government-owned or controlled corporations who have under their employer a member of a cooperative and have agreed to carry out the terms of the instrument mentioned in paragraphs (1) and (2) of this article.

(4) The provisions of this article shall apply to all similar agreements referred to in paragraph (1) and were enforced prior to the approval of this Code.

(5) Notwithstanding the provisions of existing laws to the contrary, the responsibilities of the employer as stated in paragraphs (1) and (2) of this articles shall be mandatory: Provided, That in the case of private employer, the actual and reasonable cost deducting and remitting maybe collected.

ARTICLE 59. Primary Lien. - Notwithstanding the provision of any law with the contrary, a cooperative shall have primary lien upon the capital, deposits or interest of a member for any debt due to the cooperative from such a member.

ARTICLE 60. Tax Treatment of Cooperative. - Duly registered cooperatives under this Code which do not transact any business with non-members or the general public shall not be subject to any taxes and fees imposed under the internal revenue laws and other tax laws. Cooperatives not falling under this article shall be governed by the succeeding section.

ARTICLE 61. Tax and Other Exemptions. Cooperatives transacting business with both members and non-members shall not be subjected to tax on their transactions with members. In relation to this, the transactions of members with the cooperative shall not be subject to any taxes and fees, including not limited to final taxes on members’ deposits and documentary tax. Notwithstanding the provisions of any law or regulation to the contrary, such cooperatives dealing with nonmembers shall enjoy the following tax exemptions:

(1) Cooperatives with accumulated reserves and undivided net savings of not more than Ten million pesos (P10,000,000.00) shall be exempt from all national, city, provincial, municipal or barangay taxes of whatever name and nature. Such cooperatives shall be exempt from customs duties, advance sales or compensating taxes on their importation of machineries, equipment and spare parts used by them and which are not available locally a certified by the department of trade and industry (DTI). All tax free importations shall not be sold nor the beneficial ownership thereof be transferred to any person until after five (5) years, otherwise, the cooperative and the transferee or assignee shall be solidarily liable to pay twice the amount of the imposed tax and / or duties.

(2) Cooperatives with accumulated reserves and divided net savings of more than Ten million pesos (P10,000,000.00) shall fee the following taxes at the full rate:

(a) Income Tax - On the amount allocated for interest on capitals: Provided, That the same tax is not consequently imposed on interest individually received by members: Provided, further, That cooperatives regardless of classification, are exempt income tax from the date of registration with the Authority;

(b) Value-Added Tax – On transactions with non-members: Provided, however, That cooperatives duly registered with the Authority; are exempt from the payment of value-added tax; subject to Section 109, sub-sections L, M and N of Republic Act No. 9337, the National Internal Revenue Code, as amended: Provided, That the exempt transaction under Section 109 (L) shall include sales made by cooperatives duly registered with the Authority organized and operated by its member to undertake the production and processing of raw materials or of goods produced by its members into finished or process products for sale by the cooperative to its members and non-members: Provided, further, That any processed product or its derivative arising from the raw materials produced by its members, sold in then name and for the account of the cooperative: Provided , finally, That at least twenty-five per centum (25%) of the net income of the cooperatives is returned to the members in the form of interest and/or patronage refunds;

(c) All other taxes unless otherwise provided herein; and

(d) Donations to charitable, research and educational institutions and reinvestment to socioeconomic projects within the area of operation of the cooperative may be tax deductible.

(3) All cooperatives, regardless of the amount of accumulated reserves and undivided net savings shall be exempt from payment of local taxes and taxes on transactions with banks and insurance companies: Provided, That all sales or services rendered for non-members shall be subject to the applicable percentage taxes sales made by producers, marketing or service cooperatives: Provided further, That nothing in this article shall preclude the examination of the books of accounts or other accounting records of the cooperative by duly authorized internal revenue officers for internal revenue tax purposes only, after previous authorization by the Authority.

(4) In areas where there are no available notaries public, the judge, exercising his ex officio capacity as notary public, shall render service, free of charge, to any person or group of persons requiring the administration of oath or the acknowledgment of articles of cooperation and instruments of loan from cooperatives not exceeding Five Hundred Thousand Pesos (P500,000.00).

(5) Any register of deeds shall accept for registration, free of charge, any instrument relative to a loan made under this Code which does not exceed Two Hundred Fifty Thousand Pesos (P250,000.00) or the deeds of title of any property acquired by the cooperative or any paper or document drawn in connection with any action brought by the cooperative or with any court judgment rendered in its favor or any instrument relative to a bond of any accountable officer of a cooperative for the faithful performance of his duties and obligations.

(6) Cooperatives shall be exempt from the payment of all court and sheriff’s fees payable to the Philippine Government for and in connection with all actions brought under this Code, or where such actions is brought by the Authority before the court, to enforce the payment of obligations contracted in favor of the cooperative.

(7) All cooperatives shall be exempt from putting up a bond for bringing an appeal against the decision of an inferior court or for seeking to set aside any third party claim: Provided, That a certification of the Authority showing that the net assets of the cooperative are in excess of the amount of the bond required by the court in similar cases shall be accepted by the court as a sufficient bond.

(8) Any security issued by cooperatives shall be exempt from the provisions of the Securities Act provided such security shall not be speculative.

ARTICLE 62. Privileges of Cooperatives. – Cooperatives registered under this Code, notwithstanding the provisions of any law to the contrary, be also accorded the following privileges:

(1) Cooperatives shall enjoy the privilege of depositing their sealed cash boxes or containers, documents or any valuable papers in the safes of the municipal or city treasurers and other government offices free of charge, and the custodian of such articles shall issue a receipt acknowledging the articles received duly witnessed by another person;

(2) Cooperatives organized among government employees, notwithstanding any law or regulation to the contrary, shall enjoy the free use of any available space in their agency, whether owned or rented by the Government;

(3) Cooperatives rendering special types of services and facilities such as cold storage, ice plant, electricity, transportation, and similar services and facilities shall secure a franchise therefore, and such cooperatives shall open their membership to all persons qualified in their areas of operation;

(4) In areas where appropriate cooperatives exist, the preferential right to supply government institutions and agencies rice, corn and other grains, fish and other marine products, meat, eggs, milk, vegetables, tobacco and other agricultural commodities produced by their members shall be granted to the cooperatives concerned;

(5) Preferential treatment in the allocation of fertilizers, including seeds and other agricultural inputs and implements, and in rice distribution shall be granted to cooperatives by the appropriate government agencies;

(6) Preferential and equitable treatment in the allocation or control of bottomries of commercial shipping vessels in connection with the shipment of goods and products of cooperatives;

(7) Cooperatives and their federations, such as farm and fishery producers and suppliers, market vendors and such other cooperatives, which have for their primary purpose the production and/or the marketing of products from agriculture, fisheries and small entrepreneurial industries and federations thereof, shall have preferential rights in the management of public markets and/or lease of public market facilities, stalls or spaces: Provided, That these rights shall only be utilized exclusively by cooperatives: Provided, further, That no cooperative forming a joint venture, partnership or any other similar arrangement with a non-cooperative entity can utilize these rights;

(8) Cooperatives engaged in credit services and/or federations shall be entitled to loans credit lines, rediscounting of their loan notes, and other eligible papers with the Development Bank of the Philippines, the Land Bank of the Philippines and other financial institutions except the Bangko Sentral ng Pilipinas (BSP);

The Philippine Deposit Insurance Corporation (PDIC) and other government agencies, government-owned and controlled corporations and government financial institutions shall provide technical assistance to registered national federations and unions of cooperatives which have significant engagement in savings and credit operations in order for these federations and unions to establish and/or strengthen their own autonomous cooperative deposit insurance systems;

(9) A public transport service cooperative may be entitled to financing support for the acquisition and/or maintenance of land and sea transport equipment, facilities and parts through the program of the government financial institutions. It shall have the preferential right to the management and operation of public terminals and ports whether land or sea transport where the cooperative operates and on securing a franchise for active or potential routes for the public transport;

(10) Cooperatives transacting business with the Government of the Philippines or any of its political subdivisions or any of its agencies or instrumentalities, including government-owned and controlled corporations shall be exempt from prequalification bidding requirements notwithstanding the provisions of Republic Act No.9184, otherwise known as, the Government Procurement Act;

(11) Cooperative shall enjoy the privilege of being represented by the provincial or city fiscal or the Office of the Solicitor General, free of charge, except when the adverse party is the Republic of the Philippines;

(12) Cooperatives organized by faculty members and employees of educational institutions shall have the preferential right in the management of the canteen and other services related to the operation of the educational institution where they are employed: Provided, That such services are operated within the premises of the said educational institution; and

(13) The appropriate housing agencies and government financial institutions shall create a special window for financing housing projects undertaken by cooperatives, with interest rates and terms equal to, or better than those given for socialized housing projects. This financing shall be in the form of blanket loans or long-term wholesale loans to qualified cooperatives, without need for individual processing.

The Authority, in consultation with the appropriate government agencies and concerned cooperative sector, shall issue rules and regulations on all matters concerning housing cooperatives.

CHAPTER VI INSOLVENCY OF COOPERATIVES

ARTICLE 63. Proceeding Upon Insolvency.- In case a cooperative is unable to fulfill its obligations to creditors due to insolvency, such cooperative may apply for such remedies as it may deem fit under the provisions of Act No. 1956, as amended, otherwise known as the Insolvency Law.

Nothing in this Article, however, precludes creditors from seeking protection from said insolvency law.

CHAPTER VII DISSOLUTION OF COOPERATIVES

ARTICLE 64. Voluntary Dissolution Where no Creditors are Affected. – If the dissolution of a cooperative does not prejudice the rights of any creditor having a claim against it, the dissolution may be affected by a majority vote of the board of directors, and by a resolution duly adopted by the affirmative vote of at least three-fourths (3/4) of all the members with voting rights, present and constituting a quorum at a meeting to be held upon call of the directors: Provided, That the notice of time, place and object of the meeting shall be published for three (3) consecutive weeks in a newspaper published in the place where the principal office of said cooperative is located, or if no newspaper is published in such place, in a newspaper of general circulation in the Philippines: Provided, further, That the notice of such meeting is sent to each member of record either by registered mail or by personal delivery at least thirty (30) days prior to said meeting. A copy of the resolution authorizing the dissolution shall be certified to by a majority of the board of directors and countersigned by the board secretary. The Authority shall thereupon issue the certificate of dissolution.

ARTICLE 65. Voluntary Dissolution Where Creditors Are Affected. – Where the dissolution of a cooperative may prejudice the rights of any creditor, the petition for dissolution shall be filed with the Authority. The petition shall be signed by a majority of its board or directors or other officers managing its affairs, verified by its chairperson or board secretary or one of its directors and shall set forth all claims and demands against it and that its dissolution was resolved upon by the affirmative vote of at least three-fourths (3/4) of all the members with voting rights, present and constituting a quorum at a meeting called for that purpose.

If the petition is sufficient in form and substance, the Authority shall issue an order reciting the purpose of the petition and shall fix a date which shall not be less than thirty (30) nor more than sixty (60) days after the entry of the order. Before such date, a copy of the order shall be published at least once a week for three (3) consecutive weeks in a newspaper of general circulation published in the municipality or city where the principal office of the cooperative is situated or in the absence of such local newspaper, in a newspaper of general circulation in the Philippines, and a copy shall likewise be posted for three (3) consecutive weeks in three (3) public places in the municipality or city where the cooperative’s office is located.

Upon expiry of the five (5) day notice to file objections, the Authority shall proceed to hear the petition and try any issue raised in the objection filed; and if the objection is sufficient and the material allegations of the petition are proven, it shall issue an order to dissolve the cooperative and direct the disposition of its assets in accordance with existing rules and regulations. The order of dissolution shall set forth therein:

(1) The assets and liabilities of the cooperative;

(2) The claim of any creditor;

(3) The number of members; and

(4) The nature and extent of the interests of the members of the cooperative.

ARTICLE 66. Involuntary Dissolution. – A cooperative may be dissolved by order of a competent court after due hearing on the grounds of:

(1) Violation of any law, regulation or provisions of its bylaws; or

(2) Insolvency.

ARTICLE 67. Dissolution by Order of the Authority. – The Authority may suspend or revoke, after due notice and hearing, the certificate of registration of a cooperative on any of the following grounds:

(1) Having obtained its registration by fraud;

(2) Existing for an illegal purpose;

(3) Willful violation, despite notice by the Authority, of the provisions of this Code or its bylaws;

(4) Willful failure to operate on a cooperative basis; and

(5) Failure to meet the required minimum number of members in the cooperative.

ARTICLE 68. Dissolution by Failure to Organize and Operate.- If a cooperative has not commenced business and its operation within two (2) years after the issuance of its certificate of registration or has not carried on its business for two (2) consecutive years, the Authority shall send a formal notice to the said cooperative to show cause as to its failure to operate. Failure of the cooperative to promptly provide justifiable cause for its failure to operate shall warrant the Authority to delete its name from the roster of registered cooperatives and shall be deemed dissolved.

ARTICLE 69. Liquidation of a Cooperative. – Every cooperative whose charter expires by its own limitation or whose existence is terminated by voluntary dissolution or through an appropriate judicial proceeding shall nevertheless continue to exist for three (3) years after the time it is dissolved; not to continue the business for which it was established but for the purpose of prosecuting and defending suits by or against it; settlement and closure of its affairs; disposition, conveyance and distribution of its properties and assets.

At any time during the said three (3) years, the cooperative is authorized and empowered to convey all of its properties to trustees for the benefit of its members, creditors and other persons in interest. From and after any such conveyance, all interests which the cooperative had in the properties are terminated.

Upon the winding up of the cooperative affairs, any asset distributable to any creditor, shareholder or member who is unknown or cannot be found shall be given to the federation or union to which the cooperative is affiliated with.

A cooperative shall only distribute its assets or properties upon lawful dissolution and after payment of all its debts and liabilities, except in the case of decrease of share capital of the cooperative and as otherwise allowed by this Code.

ARTICLE 70. Rules and Regulations on Liquidation. – The Authority shall issue the appropriate implementing guidelines for the liquidation of cooperatives.

CHAPTER VIII CAPITAL, PROPERTY, AND FUNDS

ARTICLE 71. Capital. - The capitalization of cooperatives and the accounting procedures shall be governed by the provisions of this Code and the regulations which shall be issued.

ARTICLE 72. Capital Sources.- Cooperatives registered under this Code may derive their capital from any or all of the following sources:

(1) Member’s share capital;

(2) Loans and borrowings including deposits;

(3) Revolving capital which consists of the deferred payment of patronage refunds, or interest on share capital; and

(4) Subsidies, donations, legacies, grants, aids and such other assistance from any local or foreign institution whether public or private: Provided, That capital coming from such subsides, donations, legacies, grants, aids and other assistance shall not be divided into individual share capital holdings at any time but shall instead form part of the donated capital or fund of the cooperative.

Upon dissolution, such donated capital shall be subject to escheat.

ARTICLE 73. Limitation on Share Capital Holdings.- No member of primary cooperative other than cooperative itself shall own or hold more than ten per centum (10%) of the share capital of the cooperative.

Where a member of cooperative dies, his heir shall be entitled to the shares of the decedent: Provided, That the total share holding of the heir does not exceed ten per centum (10%) of the share capital of the cooperative; Provided, further, That the heir qualify and is admitted as members of the cooperative: Provided finally , That where the heir fails to qualify as a member or where his total share holding exceeds ten per centum (10%) of the share capital , the share or shares excess will revert to the cooperative upon payment to the heir of the value of such shares.

ARTICLE 74. Assignment of Share Capital Contribution or Interest.- Subject to the provisions of this Code, no member shall transfer his shares or interest in the cooperative or any part thereof unless.

(1) He has held such share capital contribution or interest for not less than one (1) year.

(2) The assignment is made to the cooperative or to a member of the cooperative or to a person who falls within the field of the membership of the cooperative; and

(3) The board of directors has approved such assignment.

ARTICLE 75. Capital Build-Up.- The bylaws of every cooperative shall be provided for a reasonable and realistic member capital build-up program to allow the continuing growth of the members’ investment in their cooperative as their economic conditions continue to improve.

ARTICLE 76. Shares.- The term share refers to a unit of capital in a primary cooperative the par value of which may be fixed to any figure not more than One thousand pesos (P1,000.00). The share of capital of a cooperative is the money paid or required to be paid for the operations of the cooperative. The method for the issuance of share certificates shall prescribed in its bylaws.

ARTICLE 77. Fines. - The bylaws of a cooperative may prescribe a fine on unpaid subscribed share capital. Provided, that such fine is fair and reasonable under the circumstances.

ARTICLE 78. Investment of Capital. - A cooperative may invest its capital in any of the following:

(a) In shares or debentures or securities of any other cooperative;

(b) In any reputable bank in the locality, or any cooperative;

(c) In securities issued or guaranteed by the Government;

(d) In real state primarily for the use of the cooperative or its members; or

(e) In any other manner authorized in the bylaws.

ARTICLE 79. Revolving Capital. – The general assembly of any cooperative may authorize the board of directors to raise a revolving capital to strengthen its capital structure by deferring the payment of patronage refunds and interest on share capital or by the authorized deduction of a percentage from the proceeds of products sold or services rendered, or per unit of product or services handled. The board of directors shall issue revolving capital certificates with serial number, name, amount, and rate of interest to be paid and shall distinctly set forth the time of retirement of such certificates and the amounts to be returned.

CHAPTER IX AUDIT

ARTICLE 80. Annual Audit. – Cooperatives registered under this Code shall be subject to an annual financial, performance and social audit. The financial audit shall be conducted by an external auditor who satisfies all the following qualifications:

(1) He is independent of the cooperative or any of its subsidiary that he is auditing; and

(2) He is a member in good standing of the Philippine Institute of Certified Public Accountants (PICPA) and is accredited by both the Board and Accountancy and the Authority.

The social audit shall be conducted by an independent social auditor accredited by the Authority.

Performance and social audit reports which contain the findings and recommendations of the auditor shall be submitted to the board of directors.

The Authority, in consultation with the cooperative sector, shall promulgate the rules and standards for the social audit of cooperatives.

ARTICLE 81. Audit Report. – The auditor shall submit to the board of directors and to the audit committee the financial audit report which shall be in accordance with the generally accepted auditing standards for cooperatives as jointly promulgated by the Philippine Institute of Certified Public Accountants (PICPA) and the Authority.

Thereafter, the board of directors shall present the complete audit report to the general assembly in its next meeting.

ARTICLE 82. Nonliability for Defamations. – The auditor is not liable to any person in an action for defamation based on any act, done, or any statement made by him in good faith in connection with any matter he is authorized or required to do pursuant to this Code.

ARTICLE 83. Right to Examine. – A member shall have the right to examine the records required to be kept by the cooperative under Article 52 of this Code during reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records without charge except the cost of production.

Any officer of the cooperative who shall refuse to allow any member of the cooperative to examine and copy excerpts from its records shall be liable to such member for damages and shall be guilty of an offense which shall be punishable under Article 140 of this Code: Provided, That if such refusal is pursuant to a resolution or order of the board of directors, the liability under this article shall be imposed upon the directors who voted for such refusal: Provided, further, That it shall be a defense to any action under this article that the member demanding to examine and copy excerpts from the cooperative records has improperly used any information secured through any prior examination of the records of such cooperative or was not acting in good faith or for a legitimate purpose in making his demand.

ARTICLE 84. Safety of Records. – Every cooperative shall, at its principal office, keep and carefully preserve the records required by this Code to be prepared and maintained. It shall take all necessary precaution to prevent its loss, destruction or falsification.

CHAPTER X ALLOCATION AND DISTRIBUTION OF NET SURPLUS

ARTICLE 85. Net Surplus. – Notwithstanding the provisions of existing laws, the net surplus of cooperatives shall be determined in accordance with its bylaws. Every cooperative shall determine its net surplus at the close of every fiscal year and at such other times as may be prescribed by the bylaws.

Any provision of law to the contrary notwithstanding, the net surplus shall not be construed as profit but as an excess of payments made by the members for the loans borrowed, or the goods and services availed by them from the cooperative or the difference of the rightful amount due to the members for their products sold or services rendered to the cooperative including other inflows of assets resulting from its other operating activities and which shall be deemed to have been returned to them if the same is distributed as prescribed herein.

ARTICLE 86. Order of Distribution. – The net surplus of every cooperative shall be distributed as follows:

(1) An amount for the reserve fund which shall be at least ten per centum (10%) of net surplus: Provided, That, in the first five (5) years of operation after registration, this amount shall not be less than fifty per centum (50%) of the net surplus:

(a) The reserve fund shall be used for the stability of the cooperative and to meet net losses in its operations. The general assembly may decrease the amount allocated to the reserve fund when the reserve fund already exceeds the share capital.

Any sum recovered on items previously charged to the reserve fund shall be credited to such fund.

(b) The reserve fund shall not be utilized for investment, other than those allowed in this Code. Such sum of the reserve fund in excess of the share capital may be used at anytime for any project that would expand the operations of the cooperative upon the resolution of the general assembly.

(c) Upon the dissolution of the cooperative, the reserve fund shall not be distributed among the members. The general assembly may resolves:

(i) To establish a usufructuary trust fund for the benefit of any federation or union to which the cooperative is affiliated; and

(ii) To donate, contribute, or otherwise dispose of the amount for the benefit of the community where the cooperative operates. If the members cannot decide upon the disposal of the reserve fund, the same shall go to the federation or union to which the cooperative is affiliated.

(2) An amount for the education and training fund, shall not be more than ten per centum (10%) of the net surplus. The bylaws may provide that certain fees or a portion thereof be credited to such fund. The fund shall provide for the training, development and similar other cooperative activities geared towards the growth of the cooperative movement:

(a) Half of the amounts transferred to the education and training fund annually under this subsection shall be spent by the cooperative for education and training purposes; while the other half may be remitted to a union or federation chosen by the cooperative or of which it is a member. The said union or federation shall submit to the Authority and to its contributing cooperatives the following schedules:

(i) List of cooperatives which have remitted their respective Cooperative Education and Training Funds (CETF);

(ii) Business consultancy assistance to include the nature and cost; and

(iii) Other training activities undertaken specifying therein the nature, participants and cost of each activity.

(b) Upon the dissolution of the cooperative, the unexpended balance of the education and training fund appertaining to the cooperative shall be credited to the cooperative education and training fund of the chosen union or federation.

(3) An amount for the community development fund, which shall not be less than three per centum(3%) of the net surplus. The community development fund shall be used for projects or activities that will benefit the community where the cooperative operates.

(4) An optional fund, a land and building, and any other necessary fund the total of which shall not exceed seven per centum (7%).

(5) The remaining net surplus shall be made available to the members in the form of interest on share capital not to exceed the normal rate of return our investments and patronage refunds: Provided, That any amount remaining after the allowable interest and the patronage refund have been deducted shall be credited to the reserve fund.

The sum allocated for patronage refunds shall be made available at the same rate to all patrons of the cooperative in proportion to their individual patronage: Provided, That:

(a) In the case of a member patron with paid-up share capital contribution, his proportionate amount of patronage refund shall be paid to him unless he agrees to credit the amount to his account as additional share capital contribution;

(b) In the case of a member patron with unpaid share capital contribution, his proportionate amount of patronage refund shall be credited to his account until his account until his share capital contribution has been fully paid;

(c) In the case of a non-member patron, his proportionate amount of patronage refund shall be set aside in a general fund for such patrons and shall be allocated to individual non-member patrons only upon request and presentation of evidence of the amount of his patronage. The amount so allocated shall be credited to such patron toward payment of the minimum capital contribution for membership. When a sum equal to this amount has accumulated at any time within a period specified in the bylaws, such patron shall be deemed and become a member of the cooperative if he so agrees or requests and complies with the provisions of the bylaws for admission to membership; and

(d) If within any period of time specified in the bylaws, any subscriber who has not fully paid his subscribed share capital or any non-member patron who has accumulated the sum necessary for membership but who does not request nor agree to become a member or fails to comply with the provisions of the bylaws for admission to membership, the amount so accumulated or credited to their account together with any part of the general fund for nonmember patrons shall be credited to the reserve fund or to the education and training fund of the cooperative, at the option of the cooperative.

CHAPTER XI AGRARIAN REFORM COOPERATIVES

ARTICLE 87. Coverage. – The provisions of this Chapter shall primarily govern agrarian reform cooperatives: Provided, That the provisions of the other chapters of this Code shall apply suppletorily except insofar as this Chapter otherwise provides.

ARTICLE 88. Definition and Purpose. – An agrarian reform cooperative is one organized by marginal farmers, majority of which are agrarian reform beneficiaries, for the purpose of developing an appropriate system of land tenure, land development, land consolidation or land management in areas covered by agrarian reform.

An agrarian reform cooperative as defined shall be organized for any or all of the following purposes:

(1) To develop an appropriate system of land tenure, land development, land consolidation or land management in areas covered by agrarian reform;

(2) To coordinate and facilitate the dissemination of scientific methods of production, and provide assistance in the storage, transport, and marketing of farm products for agrarian reform beneficiaries and their immediate family, hereinafter referred to as beneficiaries;

(3) To provide financial facilities to beneficiaries for provident or productive purposes at reasonable costs;

(4) To arrange and facilitate the expeditious transfer of appropriate and suitable technology to beneficiaries and marginal farmers at the lowest possible cost;

(5) To provide social security benefits, health, medical and social insurance benefits and other social and economic benefits that promote the general welfare of the agrarian reform beneficiaries and marginal farmers;

(6) To provide non-formal education, vocational/technical training, and livelihood programs to beneficiaries and marginal farmers;

(7) To act as conduits for external assistance and services to the beneficiaries and marginal farmers;

(8) To undertake a comprehensive and integrated development program in agrarian reform and resettlement areas with special concern for the development of agro-based, marine-based, and cottage-based industries;

(9) To represent the beneficiaries on any or all matters that affect their interest; and

(10) To undertake such other economic or social activities as may be necessary or incidental in the pursuit of the foregoing purposes.

ARTICLE 89. Cooperative Estate. – Landholdings like plantations, estates or haciendas acquired by the State for the benefit of the workers in accordance with the Comprehensive Agrarian Reform Program which shall be collectively owned by the worker-beneficiaries under a cooperative set-up.

ARTICLE 90. Infrastructure. – In agrarian reform and resettlement areas, the Government shall grant to agrarian reform cooperatives preferential treatment in the construction, maintenance and management of roads, bridges, canals, wharves, ports, reservoirs, irrigation systems, waterworks systems, and other infrastructures with government funding. For this purpose, the Government shall provide technical assistance, facilities and equipment to such agrarian reform cooperatives.

ARTICLE 91. Lease of Public Lands. – The Government may lease public lands to any agrarian reform cooperative for a period not exceeding twenty-five (25%) years, subject to renewal for another twenty-five (25) years only: Provided, That the application for renewal shall be made one (1) year before the expiration of the lease: Provided, further, That such lease shall be for the exclusive use and benefit of the beneficiaries and marginal farmers subject to the provisions of the Comprehensive Agrarian Reform Program.

ARTICLE 92. Preferential Right. – In agrarian reform areas, an agrarian reform cooperative shall have the preferential right in the grant of franchise and certificate of public convenience and necessity for the operation of public utilities and services: Provided, That it meets the requirements and conditions imposed by the appropriate government agency granting the franchise or certificate of public convenience and necessity. If there is an electric service provider in the area, it shall upon the request of an agrarian reform cooperative, immediately provide electric services to the agrarian reform areas. If the electric service provider fails to provide the services requested within a period of one (1) year, the agrarian reform cooperative concerned may undertake to provide the electric services in the area through its own resources. All investments made by the said agrarian reform cooperative for the electrification of the agrarian reform resettlement areas shall be the subject of sale to the electric service provider once it takes on the service.

ARTICLE 93. Privileges. – Subject to such reasonable terms and conditions as the Department of Agrarian Reform (DAR) and the Authority may impose, agrarian reform cooperatives may be given the exclusive right to do any or all of the following economic activities in agrarian reform and resettlement areas;

(1) Supply and distribution of consumer, agricultural, aqua-cultural, and industrial goods, production inputs, and raw materials and supplies, machinery, equipment, facilities and other services and requirements of the beneficiaries and marginal farmers at reasonable prices;

(2) Marketing of the products and services of the beneficiaries in local and foreign markets;

(3) Processing of the members’ products into finished consumer or industrial goods for domestic consumption or for export;

(4) Provision of essential public services at cost such as power, irrigation, potable water, passenger and/or cargo transportation by land or sea, communication services, and public health and medical care services;

(5) Management, conservation, and commercial development of marine, forestry, mineral, water, and other natural resources subject to compliance with the laws and regulations on environmental and ecological controls; and

(6) Provision of financial, technological, and other services and facilities required by the beneficiaries in their daily lives and livelihood.

The Government shall provide the necessary financial and technical assistance to agrarian reform cooperatives to enable them to discharge effectively their purposes under this article. The DAR, the Authority and the BSP shall draw up a joint program for the organization and financing of the agrarian reform cooperatives subject of this Chapter. The joint program shall be geared towards the beneficiaries gradual assumption of full ownership and management control of the agrarian reform cooperatives.

ARTICLE 94. Organization and Registration. – Agrarian reform cooperatives may be organized and registered under this Code only upon prior written verification by the DAR to the effect that the same is needed and desired by the beneficiaries; results of a study that has been conducted fairly indicate the economic feasibility of organizing the same and that it will be economically viable in its operations; and that the same may now be organized and registered in accordance with requirements of this Code.

The Authority, in consultation with the concerned government agencies and cooperative sector, shall issue appropriate rules and regulations pertaining to the provisions of this Chapter.

CHAPTER XII COOPERATIVE BANKS

ARTICLE 95. Governing Law. – The provisions of this Chapter shall primarily govern cooperative banks registered under this Code and the other provisions of this Code shall apply to them only insofar as they are not inconsistent with the provisions contained in this Chapter.

ARTICLE 96. Supervision. – The cooperative banks registered under this Code shall be under the supervision of the BSP. The BSP, upon consultation with the Authority and the concerned cooperative sector, shall formulate guidelines regarding the operations and the governance of cooperative banks. These guidelines shall give due recognition to the unique nature and character of cooperative banks. To this end, cooperative banks shall provide financial and banking services to its members.

ARTICLE 97. Organization, Membership and Establishment of a Cooperative Bank. – (1) Cooperative organizations duly established and registered under this Code may organize a cooperative bank, which shall likewise be considered a cooperative registrable under provisions of this Code subject to the requirements and requisite authorization from the BSP. Only one cooperative bank may be established in each province: Provided, That an additional cooperative bank may be established in the same province to cater to the needs in the same province to cater to the needs of the locality depending on the economic conditions of the province as may be determined by the BSP: Provided, further, That the additional cooperative bank shall be located in the City or municipality other that the city or municipality where the first cooperative bank is located.

(2) Membership in a cooperative bank shall either be regular or associate. Regular membership shall be limited to cooperative organizations which are holders of common shares of the bank. Associate members are those subscribing and holding preferred shares of the bank, which may include but are not limited to the following:

(a) Individual members of the bank’s member-primary cooperatives; and

(b) Samahang Nayon and Municipal Katipunan ng mga Samahang Nayon (MKSN) which held common shares of cooperative banks prior to the effectivity of this Act shall apply for conversion to full-pledged cooperatives in order to maintain their status as regular members of cooperative banks: Provided, That they shall notify the cooperative bank concerned their intention to convert within a period of ninety (90) days from the effectivity of this Act. Samahang Nayon and MKSN are hereby given a period of one (1) year from the effectivity of this Act to complete their conversion as cooperatives. Cooperative bank shall exert reasonable efforts to inform their member Samahang Nayon and MKSN to finally convert or to give the notice of conversion within the prescribed period. Upon the failure of the Samahang Nayon and MKSN to finally convert to a full-pledged cooperative within the maximum period of one (1) year, the cooperative bank concerned may convert the common shares held by such associations to preferred shares.

(3) The articles of cooperative and bylaws of a cooperative bank, or any amendment thereto, shall be registered with the Authority only when accompanied by a certificate of authority issued by the BSP, under its official seal.

ARTICLE 98. Administration of Cooperative Banks. – To maintain the quality of bank management and accord appropriate protection to depositors and the public in general, the BSP shall prescribed the fit and proper qualifications of bank directors and officers for the purposes of this article, giving due recognition to the unique nature and character of cooperative banks.

Notwithstanding the provisions of this Code, the number, computation and term of the board of directors shall be defined in the articles of cooperation and bylaws of the cooperative bank.

ARTICLE 99. Quorum and Voting Rights. – The quorum requirement for general assembly meetings, whether special or regular, shall be one half plus one of the number of voting shares of all the members in good standing. In the meetings of the board of directors, whether special or regular, the quorum requirement shall be one-half plus one of all the members of the board of directors. Each director shall only have one vote.

Notwithstanding the provisions of this Code to the contrary, the quorum requirement for amendments of articles of cooperation and bylaws shall be three-fourths (3/4) vote of all the members with voting rights, present and constituting a quorum. All other voting requirements shall be as prescribed by the BSP.

The voting rights of the members shall be proportionate to the number of their paid-up shares.

ARTICLE 100. Powers, Functions and Allied Undertakings of Cooperative Banks. – A cooperative bank shall primarily provide financial, banking and credit services to cooperative organizations and their members. However, the BSP may prescribe appropriate guidelines, ceilings and conditions on borrowing of a cooperative organization from a cooperative bank.

The powers and functions of a cooperative bank shall be subject to such rules and regulations as may be promulgated by the BSP.

In addition to the powers granted by this Code and other existing laws, any cooperative bank may perform any or all of the banking services offered by other types of banks subject to the prior approval of the BSP.

ARTICLE 101. Capital Requirements of Cooperative Banks. – (1) A cooperative bank shall have a minimum paid-up capital in such amount as may be required by the BSP.

The BSP may prescribe rules and regulations on the types of shares a cooperative bank may issue, including the terms thereof and rights appurtenant thereto to determine compliance with laws and regulations governing capital and equity structure of banks: Provided, That cooperative banks shall issue par value shares only.

(2) The Barrio Savings Fund (BSF) and Barrio Guarantee Fund (BGF) collected/deducted by various banks throughout the country from the loan proceeds of farmer-borrowers who were members of cooperatives and Samahang Nayon in compliance with Presidential Decree No. 175 and accompanying letters of instruction, which are still floating and outstanding either as active or dormant deposit accounts in the books of those banks, shall be deposited to the cooperative bank located in the province where the depository banks of BSF and BGF are located, or if there is no cooperative bank in the province. The BSP, in coordination with the Authority, shall come up with the implementing guidelines on how to credit the owners of the funds.

Those funds whose owners could not be located or identified shall be subject to escheat.

ARTICLE 102. Privileges and Incentives of Cooperative Banks. – The cooperative banks registered under this Code shall be given the same privileges and incentives granted to the rural banks, private development bank, commercial banks, and all other banks to rediscount notes with the BSP, the Land Bank of the Philippines, and other government banks without affecting in any way the provisions of this Code.

(1) Subject to the approval of the BSP, a cooperative bank shall publish a statement of its financial statement of its financial condition, including those of its subsidiaries and affiliates in such terms understandable to the layman and in such frequency as may be prescribed by the BSP, in English or Filipino, at least once every quarter in a newspaper of local circulation in the city or province where the principal office is located or, if no newspaper is published in the same provinces, then in a newspaper published in the nearest city or province or in a newspaper of general circulation. The BSP, however, may allow the posting of the financial statements of the cooperative bank in conspicuous places it may determine in lieu of the publication required in the preceding sentence when warranted by the circumstances.

However, in cases of foreclosure of mortgages covering loans granted by a cooperative bank, and the execution of judgments thereon involving real properties and levied upon by a sheriff, it shall be exempt from publication requirement where the total amount of the loan, excluding interest and other charges due and unpaid, does not exceed Two hundred fifty thousand (P250,000.00) or such amount as the BSP may prescribe, as may be warranted by the prevailing economic conditions and by the nature and character of the cooperative banks. It shall be sufficient publication in such cases if the notice of foreclosure and execution of judgment are posted in conspicuous areas in the cooperative bank’s premises, the municipal hall, the municipal public market, the barangay hall, or the barangay public market, if there be any where the property mortgaged is situated, within a period of sixty (60) days immediately preceding the public auction or the execution of judgment. Proof of publication as required herein shall be accomplished by an affidavit of the sheriff or officer conducting the foreclosure sale or execution of judgment, and shall be attached to the record of the case.

(2) A cooperative bank shall be allowed to foreclosure lands mortgaged to its subject to the provisions of Republic Act No. 6657, otherwise known as Comprehensive Agrarian Reform Law of 1988.

ARTICLE 103. Assistance to Cooperative Banks. – In accordance with existing policies, government agencies, government-owned or controlled corporations and financial institutions shall provide assistance, technical or otherwise, to cooperative banks to permit them to grow, develop and perform their role in countryside development towards a sustainable national economic development. Whenever a cooperative bank organized under this Code is in a state of continuing inability or unwillingness to maintain a period of liquidity, the BSP may designate one of its officials or a person of recognized competence, preferably with experience in cooperative banking and finance, as conservator of the said bank pursuant to the appropriate provisions of existing banking laws.

ARTICLE 104. Applicability of Banking Laws and Regulations. – With respect to the provisions and governance of the cooperative banks, the provisions of the banking laws, rules and regulations shall prevail, notwithstanding Section 71 of Republic Act No. 8791, otherwise known as the General Banking Act of 2000.

The BSP and the Authority, in consultation with the concerned cooperative sector, shall issue appropriate rules and regulations pertaining to the provisions of this Chapter.

CHAPTER XIII INSURANCE COOPERATIVE

ARTICLE 105. Cooperative Insurance Societies. – Existing cooperatives may organize themselves into a cooperative insurance entity for the purpose of engaging in the business of insuring life and property of cooperatives and their members.

ARTICLE 106. Types of Insurance Provided. – Under the cooperative insurance program established and formed by the virtue of the provisions of this Code, the cooperative insurance societies shall provide its constituting members different types of insurance coverage consisting of, but not limited to, life insurance with special group coverage, loan protection, retirement plans, endowment, motor vehicle coverage, bonding, crop and livestock protection and equipment insurance.

ARTICLE 107. Applicability of Insurance Laws. – The provisions of the Insurance Code and all other laws and regulations relative to the organization and operation of an insurance company shall apply to cooperative insurance entities organized under this Code. The requirements on capitalization, investments and reserves of insurance firms may be liberally modified upon consultation with the Authority and the cooperative sector, but in no case may be requirement to be reduced to less than half of those provided for under the Insurance Code and other related laws.

ARTICLE 108. Implementing Rules. – The Insurance Commission and the Authority, in consultation with the concerned cooperative sector, shall issue the appropriate rules and regulations implementing the provisions of this Chapter.

CHAPTER XIV PUBLIC SERVICE COOPERATIVES

ARTICLE 109. Definition and Coverage. – A public service cooperative, within the meaning of this Code, is one organized to render public services as authorized under a franchise or certificate of public convenience and necessity duly issued by the appropriate government agency. Such services may include the following:

(1) Power generation, transmission, and/or distribution;

(2) Ice plants and cold storage services;

(3) Communication services including telephone, telegraph, and communications:

(4) Land and sea transportation cooperatives for passenger and/or cargo. Transport cooperatives organized under the provisions of Executive Order No. 898, Series of 1983, shall be governed by this Chapter.

(5) Public markets, slaughterhouses and other similar services; and

(6) Such other types of public services as may be engaged in by any cooperative. Such cooperative shall be primarily governed by this Chapter and the general provisions of this Code insofar as they may be applicable unless they are inconsistent herewith.

ARTICLE 110. Registration Requirements. – Unless otherwise provided in this Code, no public service cooperative shall be registered unless it satisfies the following requirements.

(1) Its articles of cooperation and bylaws provide for the membership of the users and/or producers of the service of such cooperatives; and

(2) Such other requirements as may be imposed by the other pertinent government agencies concerned. In case there are two (2) or more applicants for the same public service franchise or certificate of public convenience and necessity, all things being equal, preference shall be given to a public service cooperative.

ARTICLE 111. Regulation of Public Service Cooperatives. – (1) The internal affairs of public service cooperatives such as the rights and privileges of members, the rules and procedures for meetings of the general assembly, board of directors and committees; for the election and qualifications of officers, directors, and committee members; allocation and distribution of surpluses; and all other matters relating to their internal affairs shall be governed by this Code.

(2) All matters relating to the franchise or certificate of public convenience and necessity of public service cooperatives such as capitalization and investment requirements, equipment and facilities, frequencies, rate-fixing and such other matters affecting their public service operations shall be governed by the proper government agency concerned.

(3) The Authority and the proper government agency concerned shall jointly issue the necessary rules and regulations to implement this Chapter.

(4) The Authority shall establish a committee for the monitoring of transportation service cooperatives composed of representatives from the Authority, the Land Transportation Franchising and Regulatory Board (LTFRB), the Land Transportation Office (LTO), Office of Transport Cooperatives (OTC), other concerned government agencies, as may be necessary, and the National Federation of Transportation Cooperatives. A local monitoring committee shall likewise be established at the extension offices of the Authority to facilitate the monitoring of transportation cooperatives.

ARTICLE 112. Engagement in Allied Business by Transportation Service Cooperatives. – Subject to pertinent national laws and local ordinances, primary transportation service cooperatives including secondary and tertiary federation of cooperatives may engage in a business related to transportation service, including but not limited to:

(1) Importation, distribution and, marketing of petroleum products in accordance with existing laws;

(2) Operation of gasoline stations and transportation service centers;

(3) Importation, distribution and marketing of spare parts and supplies; and

(4) Marketing of vehicle/drivers insurance policies.

ARTICLE 113. Renewal of Franchise and Vehicle Registration. – Renewals of franchise and vehicle registration shall be granted to transportation service cooperatives: Provided, That such cooperative presents a certificate of good standing issued by the Authority, OTC, and the local government unit concerned as proof that it has continuously provided the required public transportation services.

The Authority, in consultation with the concerned government agencies and cooperative sector, shall issue appropriate rules and regulations pertaining to the provisions of this Chapter.

CHAPTER XV CREDIT COOPERATIVES

ARTICLE 114. Coverage. – This Chapter shall apply to credit cooperatives and other cooperatives, including multipurpose cooperatives, that provide savings and credit to their members only. The rest of the provisions of this Code shall apply to them insofar as the same are not inconsistent with the provisions of this Chapter.

ARTICLE 115. Definition and Objectives. – A credit cooperative is a financial organization owned and operated by its members with the following objectives:

(1) To encourage savings among its members;

(2) To create a pool of such savings for which loans for productive or provident purpose may be granted to its members; and

(3) To provide related services to enable its members to maximize the benefit from such loans.

ARTICLE 116. Organization and Registration.- Credit cooperatives shall be organized and registered in accordance with the general provisions of this Code.

ARTICLE 117. Organizational Linkage. – Credit cooperatives may organize chapters or subsidiaries, or join leagues and federations for the purpose of providing commonly needed essential services including but not limited to the following:

(1) Interlending of surplus fund;(2) Mutual benefits;(3) Deposit guarantee;(4) Bonding;(5) Education and training;(6) Professional and technical assistance;(7) Research and development;(8) Representation; and (9) Other services needed to improve their performance.

Existing support organizations such as federations of credit cooperatives, credit cooperatives at the provincial, regional and national levels may continue as such under this Code.

ARTICLE 118. Conversion of Credit Cooperatives to Financial Service Cooperatives. – Existing credit and multipurpose cooperatives with savings and credit facilities shall formally inform the Authority of its intention to continue performing its present functions. Should the said cooperatives decide to exercise enhanced functions, it shall notify the Authority and satisfy the requirements for conversion to financial service cooperative.

CHAPTER XVI FINANCIAL SERVICE COOPERATIVES

ARTICLE 119. Definition and Functions of Financial Services Cooperatives. – A financial service cooperative is a financial organization owned and operated by its members and authorized to provide the following service, exclusively to its members:

(a) The functions of credit cooperatives and other cooperatives, including multipurpose cooperatives, that provide savings and credit to their members, and(b) Other financial services subject to regulation by the BSP.

The articles of cooperation and bylaws of any financial service cooperative, or any amendment thereto, shall be registered with the Authority only if accompanied by a certificate of authority issued by the BSP, under its official seal.

The authority granted this provision may be revoked by the BSP if any of the grounds for receivership mentioned under Section 53 and 56 of Republic Act No. 8791 is present or if the financial service cooperative has willfully violated this Code of any of the related rules and regulations.

The BSP shall issue a cease and desist order to cooperatives exercising the function of a financial service cooperative without authority from the BSP.

The BSP may charge equitable rates or fees, as may be prescribed by the Monetary Board for licensing, examination and other services which it renders under this Code.

Upon the favorable certification of the BSP and the prior approval of the Authority, a cooperative, the main purpose of which is to perform savings and credit functions, may convert to financial service cooperative subject to the required qualifications and procedures provided under this Code and in the implementing rules and regulations.

ARTICLE 120. Membership and Affiliation. – A financial service cooperative shall have the two (2) types of members:

(1) Regular members, who are natural persons; and

(2) Associate members, who are natural persons but who do not immediately qualify under the requirements for membership set out in the bylaws of the cooperative. All associate members who are natural persons shall be given two (2) years to become regular members. Failure to convert within the said period shall mean automatic withdrawal of their associate membership. They may, however, re-apply as regular members after two (2) years.

Minors who are dependents of regular members can qualify as associate members. When they reach the age of majority and within two (2) years from acceptances of their associate membership, they have the option to convert into regular members. As associate members, they may open accounts, deposit funds and withdraw from their account, subject to the bylaws and rules of the cooperative, and the rules and regulations of the Authority, notwithstanding the provisions of existing laws to the contrary.

ARTICLE 121. Regulation and Supervision. – The Authority shall exercise lead regulatory powers and supervision over the operations of the financial service cooperatives, to wit:

(1) Issue rules and regulations for the safe and sound conduct of operations of financial service cooperatives;

(2) Establish standards of operation for uniform application to all financial service cooperatives;

(3) Prescribe ratios, ceilings, limitations, or other forms of regulation on the different types of accounts and practices of financial service cooperatives which shall, conform to internationally accepted standards;

(4) Investigate to determine whether a financial service cooperative is conducting its business in a safe and sound manner;

(5) Conduct regular examination of the books of accounts, records and other documents of financial service cooperatives;

(6) Inquire into the solvency and liquidity of a financial service cooperatives;

(7) Prescribe appropriate fees for supervision and examination of financial service cooperatives to among others, monitor and oversee that existing laws and regulations are complied with;

(8) Pass upon and review the qualifications and disqualifications of individuals elected or appointed directors or officers and disqualify those found unfit;

(9) Disqualify, suspend or remove any director or officer who commits or omits an act which render him unfit for the position;

(10) Select, designate and deputize federations, through an approved accreditation criteria, that will supervise primary financial service cooperatives and issue basic guidelines therefor;

(11) Require the submission of relevant reports from the deputized supervisor;

(12) Provide remedial measures in the operations of financial service cooperatives that are in a state of continuing inability or unwillingness to maintain a period of liquidity at the request of the deputized supervisor or when the deputized supervisor fails to perform its functions;

(13) Accredit external auditors in accordance with standards for audit and financial reporting in cooperation with the PICPA; and

(14) Appoint a conservator or a receiver as may be necessary subject to the rules and regulations to be promulgated by the Authority in coordination with the BSP, taking into consideration the grounds, powers and procedures under Sections 29 and 30 of Republic Act No. 7653 as may be deemed appropriate to financial service cooperatives.

The Authority shall include in its rules and regulations, appropriate sanctions and penalties, on the financial service cooperatives, its members, officers and responsible persons, for any action that fails to adhere to sound and prudent management practices or are inconsistent with the provisions of this Code, other applicable laws on cooperatives, rules, regulations, circulars or orders issued by the Authority, and require the cooperative to undertake corrective or remedial measures relative thereto.

The BSP is authorized to conduct risk-based supervision and examination of financial service cooperatives as it may deem necessary.

ARTICLE 122. Promulgation of Rules and Regulations. – The BSP, in coordination with the Authority, shall prescribe the appropriate prudential rules and regulations applicable to the financial service cooperatives.

Subject to the regulations of the BSP, the banking laws, rules and regulations shall have suppletory application to financial services cooperatives: Provided, however, That the provisions on access to borrowing or financial assistance to be extended by the BSP of the Philippine Deposit Insurance Corporation (PIDC) shall not apply to financial service cooperatives: Provided, further, That the deposit liabilities of the financial service cooperatives shall not be insured by the PDIC.

ARTICLE 123. Financial Service Cooperative Federations. – Financial service cooperatives may organize themselves into financial service cooperative may organize themselves into financial service cooperative federations, and register their federation with the Authority. These financial service cooperative federations may be deputized by the Authority as the supervisor of their members, and they shall have the following functions:

(a) Develop standards and provide services for the benefit of its affiliates and their members in accordance with the rules and regulations of the Authority;

(b) Define common objectives and coordinate activities for the financial service cooperative federation;

(c) Establish and administer funds such as liquidity fund, loan fund, investment fund, stabilization fund and such other funds;

(d) Establish a savings guarantee system for the protection of their affiliates' member-depositors within three (3) years from the approval of this Code;

(e) Exercise on-site and off-site supervisory power over its members;

(f) Provide remedial assistance to its members concerning their operations and management;

(g) Act as the liquidator and when applicable, sequester properties to satisfy an obligation secured by a mortgage when authorized by the Authority; and

(h) Transmit relevant and required information regarding the operations and performance of member-cooperatives to the Authority.

The Authority and other government agencies, government-owned or controlled corporations and government financial institutions shall provide technical and such other assistance that may be allowed by their charters to financial service cooperative federations for the establishment and/or strengthening of their respective cooperative savings guarantee system. The technical assistance to be provided shall include, among others, training supervision and examination.

ARTICLE 124. Designation of Existing Unit at the Cooperative Development Authority to Perform Regulatory and Supervisory Functions. – Within six (6) months from the approval of this Code, the Authority shall designate the unit to formulate and implement the necessary regulations, rules, policies, guidelines and standards applicable solely to financial service cooperatives and deputized federations in the performance of their savings, credit and such other related enhanced financial service operations.

The Department of Finance, the BSP and other concerned government agencies shall provide technical and training support for the effective and efficient implementation of the regulatory and supervisory functions and responsibilities of the Authority.

ARTICLE 125. Prohibition. – The terms credit cooperative, financial service cooperative and financial service cooperative federation shall be used exclusively by those who are duly registered under this Code, and no person, group of persons, or organizations shall use the said terms unless duly registered with the Authority. Violations of this prohibition shall be punishable in accordance with Article 140 of this Code.

CHAPTER XVII ELECTRIC COOPERATIVE

ARTICLE 126. Coverage. – The provisions of this Code shall apply to all electric cooperatives registered with the Authority. This shall also cover new distribution utilities that will register with the Authority.

Electric cooperatives may undertake power generation utilizing renewable energy sources, including hybrid systems, acquisition and operation of subtransmission or distribution as its primary purposes.

ARTICLE 127. Registration of Electric Cooperatives. – The registration of an electric cooperative with the Authority under this Code shall be submitted for approval to the members through a referendum, called for the purpose as provided for under Articles 183 and 129 of this Code.

ARTICLE 128. Voting Requirement for Registration. – In compliance with the referendum as a voting procedure, the required number of votes for registration with the Authority shall be twenty percent (20%) of all members in good standing.

ARTICLE 129. Documents to be Submitted for Registration with the Authority. – For purposes of registration, electric cooperatives shall submit the following documents:

(a) Copy of the board resolution certifying to the result of the vote approved through a referendum approving the registration of the cooperative with the Authority in compliance with Article 128;

(b) Certified copy of the articles of incorporation/cooperation and bylaws as required by the Authority;

(c) Duly audited financial statements for the past two (2) years;

(d) List of names of incumbent board of directors and their addresses certified by the board secretary and attested by the chairperson;

(e) Within six (6) months from the registration, the treasurer shall submit a sworn statement of the authorized share capital, the subscribed share capital of members and the amount of paid-up share capital received by the treasurer; and

(f) Bonds of accountable officers.

ARTICLE 130. Registration Options of Electric Cooperatives. – Electric Cooperatives registered with the National Electrification Administration (NEA) under Presidential Decree No. 269, as amended which opt not to register with the Authority are allowed to retain the word ‘cooperative’ in their registered names: Provided, That they shall not be entitled to the benefits and privileges under this Code.

ARTICLE 131. Role of the Energy Regulatory Commission. – All rates and tariffs of electric cooperatives registered under the Authority shall be subject to the rules on application and approval of and by the Energy Regulatory Commission for distribution utilities.

ARTICLE 132. Effects of Registration with the Authority. – (1) Upon the effectivity of this Code, electric cooperatives that are duly registered with the Authority, and issued a certificate of registration, shall no longer be covered by Presidential Decree No. 269, as amended by Presidential Decree No. 1645: Provided, That electric cooperatives registered with the Authority shall now be covered by the provisions of this Code as well as future rules and issuances of the Authority: Provided, however, That the security of tenure and the collective bargaining agreement between the cooperative management and the employees shall be respected, with no diminution of their existing salaries, emoluments, ranks and other benefits;

(2) The electric cooperatives registered with the Authority with existing loans obtained from NEA after June 26, 2001 shall continue to observe the terms of such loans until full payment or settlement thereof;

(3) Except as provided in the immediately preceding paragraph, the NEA shall no longer exercise regulatory or supervisory powers on electric cooperatives duly registered with the Authority;

(4) Electric cooperatives registered with the Authority are entitled to congressional allocations, grants, subsidiaries and other financial assistance for rural electrification which can be coursed through the Department of Energy, the Authority and/or local government units. The electric cooperatives registered under this Code can avail of the financial services and technical assistance provided by the government financial institutions and technical development agencies on terms respecting their independence as autonomous cooperatives;

(5) All condoned loans, subsidies, grants and other assistance shall form part of the donated capital and funds of the electric cooperatives and as such, it shall not be sold, traded nor be divided into shareholdings at any time; these donated capital/fund shall be valuated for the sole purpose of determining the equity participation of the members: Provided, That in the case of dissolution of the cooperative, said donated capital shall be subject to escheat; and

(6) Electric cooperatives registered and confirmed with the Authority under Republic Act No. 6938 and Republic Act No. 6939 are hereby deemed registered under this Code.

ARTICLE 133. Share Capital in the Electric Cooperatives. – The electric cooperative shall issue and distribute share certificates under the name of their members, taking into consideration their previous equity contributions, the amortization component through the payments made, capital build-up and other capital contributions.

ARTICLE 134. Cancellation of Registration with the Authority. – The cancellation of the registration of an electric cooperative shall be granted by the Authority as provided under Articles 64 to 70 of this Code.

The Authority, in consultation with the concerned cooperative sector, shall issue appropriate rules and regulations pertaining to the provisions of this Chapter.

CHAPTER XVIII MISCELLANEOUS PROVISIONS

ARTICLE 135. Compliance With Other Laws. – The Labor Code and all other labor laws, the Social Security Act, the Medical Care Act, and all other social legislations, and all other laws and executive orders shall apply to cooperatives duly registered under this Code.

ARTICLE 136. Register of Cooperatives. – The Authority shall establish a register which shall contain a chronological entry of the name of every cooperative registered or dissolved under this Code together with the basic information required for registration or dissolution and any other information considered useful. The Authority shall publish annually a list of existing cooperatives, cooperatives under dissolution and those whose registration are cancelled during the year together with such information on each of them as may be prescribed in the rules and regulations.

ARTICLE 137. Settlement of Disputes, Conciliation, and Mediation Proceedings. – Disputes among members, officers, directors, and committee members, and intra-cooperative, inter-cooperative, intra-federation or inter-federation disputes shall, as far as practicable, be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the bylaws of cooperatives and in such other applicable laws.

The conciliation and mediation committee of the cooperative shall facilitate the amicable settlement of intra-cooperative disputes and disputes among members, officers, directors, and committee members.

Should such conciliation or mediation proceeding fail, the matter shall be settled through voluntary arbitration: Provided, however, That before any party can validly file a complaint with the Authority for voluntary arbitration, it must first secure a certification from its conciliation and mediation committee and from its conciliation and mediation committee and from the cooperative union or federation to which it belongs that despite all efforts to settle the issues, the same have failed.

The jurisdiction of the voluntary arbitrators shall be exclusive and original and their decisions shall be appealable to the Office of the President. The Authority shall issue and adopt the proper rules of procedure governing arbitration as the primary and exclusive mode for dispute resolution in accordance with the Alternative Dispute Resolution Act of 2004.

For this purpose, the Authority shall constitute a list of qualified voluntary arbitrators.

ARTICLE 138. Joint Congressional Oversight Committee on Cooperative (JCOCC). – There is hereby created a Joint Congressional Oversight Committee composed of the Chairman of the Senate Committee on Cooperatives and the Chairman of the House Committee on Cooperatives Development, with four (4) members each from both Houses. The said members shall be duly appointed by the Senate President and the Speaker of the House of Representatives from the members of the respective committee based on the proportional representation of the parties or coalition therein.

The Joint Oversight Committee shall review and approve the implementing rules and regulations of this Code and monitor its proper implementation.

The annual appropriate for the oversight committee shall be charged to the budget of both Houses of Congress in the General Appropriations Act (GAA).

CHAPTER XIX FINAL PROVISIONS

ARTICLE 139. Implementing Rules and Regulations. – The Authority shall issue rules and regulations to implement those provisions of this Code which expressly call for the issuance thereof. This paragraph shall not apply to those cases wherein a specific provision of this Code expressly designates particular government agencies which shall issue the regulations called for by any provision of this Code.

ARTICLE 140. Penal Provisions. – The following acts or omissions affecting cooperatives are hereby prohibited:

(1) The use of the word ‘cooperative’ by any person or of persons or organizations, unless duly registered as a cooperative under this Code except as provided for under Article 130 hereof. In case of violation, the individual or individuals concerned, or in the case of an organization, its officers and directors shall, upon conviction, each suffer the penalty of imprisonment of not less than two (2) years nor more than five (5) years and a fine not exceeding Twenty thousand pesos (P20,000.00) or both at the discretion of the court;

The Authority may motu proprio, initiate complaints for violations of this provision.

(2) Any person who willfully attempts in any manner to evade or defeat tax in violation of the provisions of Articles 60 and 61 of this Code shall in addition thereof, be punished by a fine of not less than Thirty thousand pesos (P30,000.00) but not more than One hundred thousand pesos (P100,000.00) and suffer imprisonment of not less than two (2) years but not more than four (4) years: Provided, That the conviction or acquittal obtained under this Article shall not be a bar to the filing of a civil suit for the collection of taxes;

(3) Direct or indirect violation or circumvention of the provisions of Articles 60 and 61 of this Code committee by any public official or employee of any bureau, office or agency of the government that deprives, diminishes or in any manner hinders or restricts any duly registered cooperative from the full enjoyment of the exemption from the payment of the taxes, fees and charges enumerated therein, shall upon conviction, suffer a penalty of not less that one (1) year but not more than five (5) years imprisonment or a fine in the amount of not less than Five thousand pesos (P5,000.00) or both at the discretion of the court and shall further be disqualified to hold any other office;

(4) Direct or indirect interference or intervention by any public official or employee into the internal affairs of a cooperative of which he is not a member, such as, but not limited to, the following:

(a) Influencing the election or appointment of officers, directors, committee members and employees through public or private endorsement or campaign for or against any person or group of persons;

(b) Requiring prior clearances for any policy or decision within the cooperative;

(c) Requesting or demanding for the creation of positions or organizational units, or recommending any person for appointment, transfer, or removal from his position; or

(d) Any other acts inimical or adverse to the autonomy and independence of cooperatives.

(5) A director, officer or committee member who violated the provisions of Article 45 on the Liability of Directors, Officers and Committee Members, Article 48 on the Disloyalty of a Director, and Article 49 on the Illegal Use of Confidential Information shall upon conviction suffer a fine of not less than Five hundred thousand pesos (P500,000.00) nor more than Five hundred thousand pesos (P500,000.00) or imprisonment of not less than five (5) years but not more than ten (10) years or both at the court’s discretion;

(6) The following are considered offenses punishable by a penalty of imprisonment of not less than one (1) year nor more than five (5) years or a fine of not more than Fifty thousand pesos (P50,000.00) or both at the discretion of the court:

(a) Omission or refusal to furnish any information, report or other document that is required under this Code;

(b) Providing information, reports or other documents to the Authority that are required under this Code which the person knows to be false or misleading;

(c) Omission or refusal to keep a book or register under this Code or to make the required entry therein;

(d) Making an entry required under this Code in a book or register, which the person knows to be false or misleading;

(e) Hindering an authorized person from making an inspection, audit, examination or investigation required under this Code;

(f) Failure to comply with an order or written instructions issued or given by the Authority;

(g) Violation of the provisions regarding transactions with a restricted party; and

(h) Abetting, counseling, allowing, authorizing or commanding another person to commit an offense punishable by this Code: Provided, That in case the violator is a cooperative or juridical person, the penalty shall be imposed on its directors and officers.

(7) Any violation of any provision of this Code for which no penalty is imposed shall be punished by imprisonment of not less than six (6) months nor more than one (1) year and a fine of not less than One thousand pesos (P1,000.00), or both at the discretion of the court.

In case of violation of any provision of this Code, the individual or individuals, and in the case of organizations or government agencies, its officers, and directors shall, upon conviction by a Court, each suffer a penalty of not less than two (2) years but not more than five (5) years imprisonment or a fine in the amount of not less than Twenty thousand pesos (P20,000.00), or both at the discretion of the court. In the case of a public official or employee, the offender shall upon conviction, suffer the accessory penalty of temporary absolute disqualification.

ARTICLE 141. Printing and Distribution. – (1) The National Printing Office shall publish this Code in the Official Gazette in full within sixty (60) days from the date of approval thereof. Copies of this Code shall be given to every department, agency and instrumentality of the National Government, including regional, provincial offices and local governments including government-owned and controlled corporations.

(2) All duly registered cooperatives and their federations, unions and associations, and cooperative corporations shall be given one (1) copy each at cost. Thereafter, every newly registered cooperative shall be issued at cost a copy of this Code and the regulations promulgated thereon together with its certificate of registration.

ARTICLE 142. Interpretation and Construction. – In case of doubt as to the meaning of any provision of his Code or the regulations issued in pursuance thereof, the same shall be resolved liberally in favor of the cooperatives and their members.

ARTICLE 143. Repealing Clause. – Except as expressly provided by this Code, Presidential Decree No. 175 and all other laws, or parts thereof, inconsistent with any provision of this Code shall be deemed repealed: Provided, That the provisions of Sections 3, 5, and 7 of Presidential Decree No. 1645, Executive Order No. 623, series of 2007. Revenue Regulation No. 20-2001, and all laws, decrees, executive orders, implementing rules and regulations, BIR circulars, memorandum orders, letters of instruction, local government ordinances, or parts thereof inconsistent with any of the provisions of this Act are hereby repealed, amended or modified accordingly.

ARTICLE 144. Transitory Provisions.- (1) All cooperatives registered and confirmed with the Authority under Republic Act No. 6938 and Republic Act No. 6939, are hereby deemed registered under this code, and a new certificate of registration shall be issued by the authority: Provided, That such cooperative shall submit to the nearest office of the authority a copy of their certificate of registration or certificate of confirmation, the articles of cooperation, their bylaws, and their latest audited financial statement within one (1) year from the effectivity of this code, otherwise the shall be deemed cancelled motu proprio.

(2) Following the issuance of the new certificate of registration, the registered cooperatives shall secured their certificate of tax exemption from the nearest office of the Bureau of Internal Revenue (BIR): Provided, That such exemptions shall be valid of five (5) years from the date of issue: Provided, further, That all unpaid assessments of previously registered cooperative shall be the subject of compromise settlement on terms favorable to such cooperative; and: Provided, finally, That the BIR and the authority shall be jointly issue the necessary regulations on this exemption and compromise within ninety (90) days from the effectivity from this Code.

(3) Registration of electric cooperatives with the Authority shall not be considered as a transferred of ownership of its assets and liabilities nor shall it constitute a change in the nature, structure, and status of the cooperative. Said registration shall not result in the revocation of the condoned loans under Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act: Provided, That electric cooperatives with existing loans shall not be subject to the control and supervisions of its creditors and shall only be limited to the fulfillment of each civil obligations.

ARTICLE 145. Separability Clause. - Should any part of this code be declared unconstitutional, the validity of remaining provision hereof shall remain in full and effect.

ARTICLE 146. Effectivity Clause. - This code shall take effect fifteen (15) days from its publication in a newspaper of general circulation.

August 22, 2008

AN ACT ESTABLISHING A PROVIDENT PERSONAL SAVINGS PLAN, KNOWN AS THE PERSONAL EQUITY AND RETIREMENT ACCOUNT (PERA)

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

SECTION 1. Title. - This Act shall be known as the "Personal Equity and Retirement Account (PERA) Act of 2008".

SEC. 2. Declaration of Policy. - It is declared the policy of the State to promote capital market development and savings mobilization by establishing a legal and regulatory framework of retirement plans for persons, comprised of voluntary personal savings and investments. The State recognizes the potential contribution of PERA to long-term fiscal sustainability through the, provision of long-term financing and reduction of social pension benefits.

SEC. 3. Definition of Terms. -Unless the context requires otherwise, the following terms shall have the following significance as used in this Act:

(a) "Administrator" is an entity accredited by the Bureau of Internal Revenue (BIR), after pre qualification by the concerned Regulatory Authority. The Administrator shall be responsible for overseeing the PERA, whose core functions shall include, but not limited to: reporting on contributions made to the account, computing the values of investments, educating the Contributor, enforcing PERA contributions and withdrawal limits, collecting appropriate taxes and penalties for the government, securing BIR Income Tax Credit Certificates for the Contributor, consolidating reports on all investments, income, expenses and withdrawals on the account and ensuring that PERA contributions are invested in accordance with the prudential guidelines set by the Regulatory Authorities.

(b) "Contributor" is any person with the capacity to contract and possesses a tax identification number. The Contributor establishes and makes contributions to a PERA.

(c) "Custodian" is a separate and distinct entity unrelated to the Administrator, accredited by the Bangko Sentral ng Pilipinas, providing services in connection with the custodianship of funds and securities comprising the PERA investments. The Custodian shall be responsible for receiving all funds in connection with the PERA, maintaining custody of all original securities, evidence of deposits or other evidence of investment. The Custodian shall operate independently from the Administrator. The Custodian is required to report to the Contributor and the concerned Regulatory Authority at regular intervals all financial transactions and all documents in its custody under a PERA.

(d) "Early withdrawal" shall pertain to any withdrawal prior to the period of distribution as set forth under Section 12 hereof.

(e) "Investment Manager" is a regulated person or entity authorized by a Contributor to make investment decisions for his PERA. As such, it shall assume fiduciary duty and responsibility for PERA investments. An Investment Manager shall act with utmost fidelity by observing policies directed towards confidentiality, scrupulous care, safety and prudent management of PERA funds.

(f) "Personal Equity and Retirement Account (PERA)" refers to the voluntary retirement account established by and for the exclusive use and benefit of the Contributor for the purpose of being invested solely in PERA investment products in the Philippines. The Contributor shall retain the ownership, whether legal or beneficial, of funds placed therein, including all earnings of such funds.

(g) "PERA Investment Product" refers to a unit investment bust fund, mutual fund, annuity contract, insurance pension products, pre-need pension plan, shares of stock and other securities listed and traded in a local exchange, exchange-traded bonds or any other investment product or outlet which the concerned Regulatory Authority may allow for PERA purposes: Provided, however, That to qualify as a PERA investment product under this Act, the product must be non-speculative, readily marketable, and with a track record of regular income payments to investors. The concerned Regulatory Authority must first approve the product before being granted tax-exempt privileges by the BIR.

(h) "Regulatory Authority" refers to the Bangko Sentral ng Pilipinas (BSP) as regards banks, other supervised financial institutions and trust entities, the Securities and Exchange Commission (SEC) for investment companies, investment houses stockbrokerages and pre-need plan companies, and the Office of the Insurance Commission (OIC) for insurance companies.

(i) "Overseas Filipino" refers to (1) an individual citizen of the Philippines who is working or deriving income from abroad, including one who retained or reacquired his Philippine citizenship under Republic Act No. 9225, otherwise known as the "Citizenship Retention and Reacquisition Act of 2003"; or (2) the legitimate spouse, whether or not said spouse is of Filipino ancestry, and the children of the Filipino citizen mentioned in item (1) hereof.

SEC. 4. Establishment of a PERA. - A Contributor may create and maintain a maximum of five (5) PERA, at any one time: Provided, That the Contributor shall designate and maintain only one (1) Administrator for all his PERA. The Contributor shall make all investment decisions pertaining to his PERA. However, he has the option of appointing an Investment Manager, either in writing or in electronic form, to make investment decisions on his behalf without prior consultation.

SEC. 5. Maximum Annual PERA Contributions. - A Contributor may make an aggregate maximum contribution of One hundred thousand pesos (P l00,000.00) or its equivalent in any convertible foreign currency at the prevailing rate at the time of the actual contribution, to his her PERA per year: Provided, That if the Contributor is married, each of the spouses shall be entitled to make a maximum contribution of One hundred thousand pesos (P l00,000.00) or its equivalent in any convertible foreign currency per year to his her respective PERA: Provided, further, That if the Contributor is an overseas Filipino, he shall be allowed to make maximum contributions double the allowable maximum amount. A Contributor has the option to contribute more than the maximum amount prescribed herein: Provided, That the excess shall no longer be entitled to a tax credit of five percent (5%). The Secretary of Finance may adjust the maximum contribution from time to time, taking into consideration the present value of the said maximum contribution using the Consumer Price Index as published by the National Statistics Office, fiscal position of the government and other pertinent factors.

SEC. 6. Employer's Contribution. - A private employer may contribute to its employee's PERA to the extent of the amount allowable to the Contributor: Provided, however: That the employer complies with the mandatory Social Security System (SSS) contribution and retirement pay under the Labor Code of the Philippines. Such contribution shall be allowed as a deduction from the employer's gross income. The Contributor, however, retains the prerogative to make investment decisions pertaining to his PERA.

SEC. 7. Separate Asset. -The PERA shall be kept separate from the other assets of an Administrator/Custodian and shall not be part of the general assets of the Administrator/Custodian for purposes of insolvency.

SEC. 8. Tax Treatment of Contributions. - The Contributor shall be given an income tax credit equivalent to five percent (5%) of the total PERA contribution: Provided, however: That in no instance can there be any refund of the said tax credit arising from the PERA contributions. If the Contributor is an overseas Filipino, he shall be entitled to claim tax credit from any tax payable to the national government under the National Internal Revenue Code of 1997, as amended.

SEC. 9. Tax Treatment of Investment Income. - All income earned from the investments and reinvestments of the maximum amount allowed herein is tax exempt.

SEC. 10. Tax Treatment of Distributions. - All distributions in accordance with Section 12 hereof are tax exempt.

SEC. 11. Termination. -Any premature termination shall be treated as an early withdrawal under Section 13 hereof: Provided, That the penalties thereunder shall not apply if the entire proceeds there from are immediately transferred to another PERA investment and/or another Administrator.

SEC. 12. Distributions Upon Retirement/Death. - Distributions may be made upon reaching the age of fifty-five (55) years: Provided, That the Contributor has made contributions to the PERA for at least five (5) years. The distribution shall be made in either lump sum or pension for a definite period or lifetime pension, the choice of which shall be at the option of the Contributor. The Contributor, however, has the option to continue the PERA. Complete distribution shall be made upon the death of the Contributor, irrespective of the age of the Contributor at the time of his death.

SEC. 13. Penalty on Early Withdrawal. - Any early withdrawal shall be subject to a penalty, the amount of which would be determined by the Secretary of Finance and payable to the government: Provided, That the amount of the penalty shall in no case be less than the tax incentives enjoyed by the Contributor.

No early withdrawal penalty shall be imposed on any withdrawal of any funds for the following purposes:

(a) For payment of accident or illness-related hospitalization in excess of thirty (30) days; and

(b) For payment to a Contributor who has been subsequently rendered permanently totally disabled as defined under the Employees Compensation Law, Social Security Law and Government Service Insurance System Law.

SEC. 14. Non-Assignability. - No portion of the assets of a PERA may be assigned, alienated, pledged, encumbered, attached, garnished, seized or levied upon. PERA assets shall not be considered assets of the Contributor for purposes of insolvency and estate taxes.

SEC. 15. Rules and Regulations. - Consistent with the policy of promoting transparency in PERA investment and thereby affording protection to the Contributor, the Department of Finance, the Bureau of Internal Revenue and the concerned Regulatory Authorities, with the Bangko Sentral ng Pilipinas as lead agency, shall coordinate to establish uniform rules and regulations pertaining to the following subject matters:

(a) Qualification and disqualification standards for Administrators, Custodians and Investment Managers, including directors and officers thereof;

(b) Qualified and/or eligible PERA investment products;

(c) Valuation standards for PERA investments;

(d) Disclosure requirements on the terms and conditions of the PERA investments;

(e) Minimum requirements imposed on the Administrators as regards inculcating financial literacy in investors;

(f) Ascertainment of client suitability for PERA products;

(g) Fees to be charged by the Administrator, Custodian or Investment Manager shall always be reasonable and approved by the concerned Regulatory Authority;

(h) Record-keeping, reporting and audit requirement of Administrators and Custodians pertaining to records for all contributions, earnings and total account balances; and

(i) Other pertinent matters to be determined by the Regulatory Authorities.

SEC. 16. Administration of Tax Incentives. - The BIR shall issue the implementing rules and regulations regarding all aspects of tax administration relating to PERA. The BIR shall coordinate the qualification standards of the Administrator with the Regulatory Authorities.

SEC. 17. Penalty. - A fine of not less than Fifty thousand pesos (P 50,000.00) nor more than Two hundred thousand pesos (P 200,000.00) or imprisonment of not less than six (6) years and one (1) day to not more than twelve (12) years or both such fine and imprisonment, at the discretion of the court, shall be imposed upon any person, association, partnership or corporation, its officer, employee or agent, who, acting alone or in connivance with others, shall:

(a) Act as Administrator, Custodian or Investment Manager without being properly qualified or without being granted prior accreditation by the concerned Regulatory Authority;

(b) Invest the contribution without written or electronically authenticated authority from the Contributor, or invest the contribution in contravention of the instructions of the Contributor;

(c) Knowingly and willfully make any statement in any application, report, or document required to be filed under this Act, which statement is false or misleading with respect to any material fact;

(d) Misappropriate or convert, to the prejudice of the Contributor, contributions to and investments or income from the PERA;

(e) By gross negligence, cause any loss, conversion, or misappropriation of the contributions to, or investments from, the PERA or

(f) Violate any provision of this Act or rules and regulations issued pursuant to this Act. Notwithstanding the foregoing, any willful violation by the accredited Administrator, Custodian or Investment Manager of any of the provisions of this Act, or its implementing rules and regulations, or other terms and conditions of the authority to act as Administrator, Custodian or Investment Manager may be subject to the administrative sanctions provided for in applicable laws. The above penalties shall be without prejudice to whatever civil and criminal liability provided for under applicable laws for the same act or omission.

SEC. 18. Abuse of the Tax Exemption and Privileges. - Any person, natural or juridical, who unduly avails of the tax exemption privileges herein granted, possibly by co-mingling PERA accounts in an investment with other investments, when such person is not entitled hereto, shall be subject to the penalties provided in Section 17 hereof. In addition, the offender shall refund to the government double the amount of the tax exemptions and privileges enjoyed under this Act, plus interest of twelve percent (12%) per year from the date of enjoyment of the tax exemptions and privileges to the date of actual payment.

SEC. 19. Separability Clause. - If any provision or part hereof is held invalid or unconstitutional, the remainder of the law or the provision not otherwise affected shall remain valid and subsisting.

SEC. 20. Repealing Clause. - All laws, decrees, orders, rules and regulations or parts thereof inconsistent with this Act are hereby amended or modified accordingly.

SEC. 21. Effectivity. -This Act shall take effect fifteen (15) days following its publication in a newspaper of general circulation: Provided, That the tax incentives granted hereunder shall take effect on January 1, 2009.

Rules and Regulations Implementing the Magna Carta for Public Social Workers

April 11, 2007

AN ACT PROVIDING FOR A MAGNA CARTA OF SOCIAL WORKERS

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

SECTION 1. Title. - This Act shall be known as the "Magna Carta for Public Social Workers."

SEC. 2. Declaration of Policy. - The state shall promote and improve the social and economic well-being of public social workers, their living and working conditions, and terms of employment. It shall develop their skills and capabilities to make them more responsive to the needs and problems of their clients and better equipped in delivering social services and programs. The state shall likewise encourage those with proper qualifications and excellent abilities to apply and remain in social development work in the government service.

SEC. 3. Definition of Terms. - As used in this Act, the following terms shall mean as follows:

(a) 'Social Work' - refers to the profession which helps individuals, families, groups, and communities develop, improve, maintain or restore their capability for coping with the demands of their environment, through the use of social work methods and interventions;

(b) 'Registered Social Workers' - refers to a graduate of Bachelor of Science in Social Work or Master's Degree in Social Work and who has passed the social work licensure examination;

(c) 'Public Social Worker' - refers to registered social worker employed in the government service;

(d) 'Public Social Welfare and Development Worker' - refers to those employed in government social welfare and development agencies;

(e) 'CSC' - refers to the Civil Service Commission;

(f) 'DSWD' - refers to the Department of Social Welfare and Development;

(g) 'DOLE' - refers to the Department of Labor and Employment;

(h) 'DILG' - refers to the Department of the Interior and Local Government;

(i) 'NLRC' - refers to the National Labor Relations Commission; and

(j) 'PRC' - refers to the Professional Regulations Commission.

SEC. 4. Coverage. - This Act shall cover all registered social workers employed in the government service.

SEC. 5. Recruitment and Qualifications. - The selection and appointment of social workers shall be in accordance with the merit and fitness principle.

All government social work agencies and institutions shall be headed by registered social worker except for cabinet and non-career positions. Priority shall be given to registered social workers in filling up social work positions in the government.

SEC. 6. Merit Promotion and Career System. - A Social Work Management and Consultative Council shall be created to prepare a uniform career and personnel development plan applicable to public social workers. Such career and personnel development plan shall include provisions on merit, promotion, performance evaluation, in-service training grants, job rotation, incentive awards system and other policies that govern the social security of the social workers

SEC. 7. Composition. - The Social Work Management and Consultative Council shall be composed of representative of the DSWD, CSC, DILG, DOLE, Philippine Association of Social Workers, Inc. (PASWI), Association of Provincial/City and Municipal Social Welfare and Development Officer of the Philippines, Inc. (APCMSWDOPI), the League of Provinces, League of Cities and League of Municipalities. The Secretary of the DSWD or his/her representative shall be the head of the Council.

SEC. 8. Classification of Social Work Personnel. - The Social Work Management and Consultative Council shall develop a career ladder and classification system for all social work positions in government service: Provided, That all position classification shall carry Social Worker title.

SEC. 9. Code of Conduct. - All public social workers shall be guided by the Social Work Code of Ethics as adopted by the Board of Social Work and as approved by the PRC within six months from the effectivity of this Act.

SEC. 10. Normal Hours of Work. - The normal hours of work of any public social worker shall not exceed eight hours a day or forty (40) hours a week. Hours of work shall include:

(a) the time during which a public social worker is required to be on active duty or to be at a prescribed workplace;

(b) the time during which the public social worker is permitted to work; or

(c) the time during which a public social worker is required in a place other than the prescribed workplace.

Provided, That, the time when a public social worker is placed on 'On Call' status shall not be considered as hours worked but shall entitle the public social worker to an 'On Call' pay equivalent to fifty percent (50%) of his/her regular wage. 'On Call' status refers to a condition when public social workers are called upon to respond to urgent or immediate need or relief work during emergencies such that he/she cannot devote the time for his/her own use: Provided, further, That, no public social worker shall be placed in 'On-Call' status beyond seven days per month. Public social workers can also teach or practice their profession after office hours.

SEC. 11. Overtime Work. - Where the exigencies of the service so require, any public social worker may be required to render service beyond the normal eight hours a day, inclusive of Saturday, Sundays or non-working holidays. In such a case, the public social workers shall be paid an additional compensation in accordance with existing laws.

SEC. 12. Compensation. - The existing law on the salary scale of government employees shall apply in determining the salaries of public social workers. In case of violations of this provision, the public social worker concerned shall file the necessary complaint to the CSC or NLRC through the Social Work Management and Consultative Council.

SEC. 13. Leave Benefits. - Public social workers shall be entitled to all leave benefits and privileges, such as but not limited to maternity, paternity, vacation and sick leaves, as provided for under existing laws: Provided, That upon separation of the public social workers from service, they shall be entitled to all accumulated leave credits with pay.

SEC. 14. Highest Basic Salary Upon Retirement. - Upon retirement, a public social worker shall automatically be granted an increase of one salary grade higher than his/her basic salary and his/her retirement benefits shall be computed on the basis of his/her highest salary received.

SEC. 15. Other Benefits. - Aside from the benefits received as required under existing laws and executive orders, the public social workers shall receive the following:

(a) Hazard Allowance - Public social workers and public social welfare and development workers assigned in remote and depressed areas, strife-torn or embattled areas, distressed or isolated stations, mental hospitals, leprosaria, areas declared under a state of calamity or emergency which expose them to great danger, volcanic activity/eruption, occupational risks or threats to life shall be compensated with hazard allowance equivalent to at least twenty per centum (20%) of the monthly basic salary.

(b) Subsistence/Transportation Allowance - Public social workers who are required to render services in communities, institutions, hospitals and other social work establishments in order to make their services available at all times, shall be entitled to daily full subsistence allowance of three meals which shall be computed according to prevailing circumstances. Those assigned out of their regular work stations shall be entitled to per diem in place of this allowance. Actual transportation allowance shall also be provided to public social workers on field work.

(c) Housing and Living Quarters Allowance - All public social workers who are transferred to another assignment due to the exigency of the service shall be entitled to free housing within the agency concerned: Provided, That, if living quarters are not available within the agency and the personnel has his/her residence outside of fifty (50) kilometers radius from such government facility, he/she shall receive a housing allowance, and: Provided, further, That the rate of such housing allowance shall be periodically adjusted for inflation.

(d) Longevity Pay - A monthly longevity pay equivalent to five per centum (5%) of his/her latest monthly basic pay shall be paid to a public social worker for every five years of continuous, efficient and meritorious service rendered as certified by the chief of office concerned, commencing with the service after approval of this Act.

(e) Clothing Allowance - All public social workers shall be entitled to a minimum of One thousand five hundred pesos (P1,500.00) clothing allowance annually, which amount shall be adjusted as needed.

SEC. 16. Compensation From Injuries. - Public social workers shall be protected against work-related injuries in accordance with the Labor Code and Civil Service Law, as the case may be. Injuries incurred while doing overtime work shall be presumed work-connected.

SEC. 17. Rights of a Public Social Worker. - Public social workers shall have the following rights:

(a) Protection from discrimination by reason of sex, sexual orientation, age, political or religious beliefs, civil status, physical characteristics/disability, or ethnicity;

(b) Protection from any form of interference, intimidation, harassment, or punishment, to include, but not limited to, arbitrary reassignment or termination of service, in the performance of his/her duties and responsibilities;

(c) Join, organize, or assist organizations or unions for lawful purposes;

(d) Protection from any act that will prevent his/her from applying professional interventions that the client's situation may require; and

(e) Opportunities for continuing professional growth and development.

SEC. 18. Reassignment of Public Social Workers. - Except in the interest of public service, no transfer or geographical reassignment shall be made or effected without written notice to a public social worker: Provided, That, said written notice, stating the reasons for the reassignment, shall be made at least thirty (30) days prior to the date of transfer or reassignment: Provided, further, That, if the public social worker believes that there is no justification for the transfer and/or reassignment, he/she may appeal his/her case to the CSC, which shall cause his/her transfer and/or reassignment to be held in abeyance: Provided, furthermore, That, reassignment coinciding with any local or national election shall be made in compliance with Election Code and other existing laws and rules: Provided, finally, That the necessary expenses of the transfer and/or reassignment of the public social worker and his/her immediate family shall be paid for by the agency concerned.

SEC. 19. Married Public Social Workers. - Whenever possible, the proper authorities shall take steps to enable married couples, both of whom are public social workers, to be employed or assigned in the same municipality, but not in the same office: Provided, That it shall not apply to married public social workers already assigned in the same office at the time this law takes effect.

SEC. 20. Freedom from Interference or Coercion. - It shall be unlawful for any person to commit any of the following acts of interference or coercion:

(a) To intimidate or force a public social worker to submit valuable documents that will violate the principles of confidentiality of records agreed upon between him/her and the clientele groups: Provided, That the release of such documents shall be approved by the clients concerned and shall redound to their social well-being, and upon court order;

(b) to prevent a public social worker from upholding and applying the basic social work principles in carrying out the programs and services for the target client groups of the social work agency;

(c) To intimidate in order to encourage or discourage membership in any social work organization or union;

(d) to prevent a public social worker from carrying out his/her duties and functions in the social work organization or union or to penalize the public social worker for any lawful action performed in that capacity;

(e) To make calculated harassment and interference with the intention of intimidating or preventing the public social worker from performing his duties and functions;

(f) To make calculated harassment against, or, to transfer, penalize or terminate the services of a public social worker who is carrying out his/her advocacy function role for and in behalf of his/her clientele groups who are victims of social injustice.

SEC. 21. Human Resources Development. - The DSWD shall conduct a periodic human resource development and management study in the following areas:

(a) Adequate facilities and resources to render quality social service to the clientele;

(b) Opportunities for public social workers to grow professionally and to develop their potentials and experience a sense of worth and dignity in their work;

(c) Mechanisms for democratic consultations;

(d) Staffing patterns and standards of social work to ensure that the clients receive quality care;

(e) Upgrading of working conditions, reclassification of positions and salaries of public social workers to correct the disparity vis-a-vis other professions.

(f) Allocation of funds for the participation of public social workers in seminars, conferences, conventions and similar activities as part of their continuing professional growth.

SEC. 22. Security of Tenure. - No public social worker holding a permanent position shall be terminated except for cause: Provided, That, in the event the public social worker is found to be unjustly dismissed by the CSC or the NLRC; as the case may be, he/she shall be entitled to reinstatement without loss of seniority rights and backwages with twelve per centum (12%) interest to be computed from the time his/her compensation was withheld from him/her up to the time of reinstatement.

SEC. 23. Implementing Rules and Regulations.. - The Social Work Management and Consultative Council, upon consultation with the Chairperson of the Senate Committee on Social Justice, Welfare and Rural Development and the Chairperson of the House Committee on Social Services, shall formulate the necessary rules and regulations, not inconsistent with any provisions of this law, for the implementation of the Magna Carta for Public Social Workers. The rules and regulations shall be promulgated within six months from the effectivity of this Act.

SEC. 24. Penal Provisions. - Any person who shall willfully interfere with restrain or coerce any public social worker in the exercise of his/her rights or shall in any manner commit any act in violation of any of the provisions of this Act, upon conviction, shall be punished by a fine not less than Twenty thousand pesos (P20,000.00) but not more than Forty thousand pesos (P40,000.00) or imprisonment of not more than one year, or both at the discretion of the court. If the offender is a public official, the court, in addition to the abovementioned penalties, may impose the additional penalty of disqualification from office.

SEC. 25. Separability Clause. - If any provision of this Act is declared unconstitutional or invalid, the remainder thereof not affected thereby shall continue to be in full force and effect.

SEC. 26. Repealing Clause. - All laws, ordinances, rules and regulations, other issuances or parts thereof which are inconsistent with this law are hereby repealed or modified accordingly.

SEC. 27. Effectivity. - This Act shall take effect fifteen (15) days after its publication in at least two newspapers of general circulation.

Rules and Regulations Implementing the Expanded Senior Citizens Act of 2010

February 26, 2004

AN ACT GRANTING ADDITIONAL BENEFITS AND PRIVILEGES TO SENIOR CITIZENS AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7432, OTHERWISE KNOWN AS "AN ACT TO MAXIMIZE THE CONTRIBUTION OF SENIOR CITIZENS TO NATION BUILDING, GRANT BENEFITS AND SPECIAL PRIVILEGES AND FOR OTHER PURPOSES"

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

SECTION 1. Declaration of Policies and Objectives. – As provided in the Constitution of the Republic of the Philippines, it is the declared policy of the State to promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living and an improved quality of life. In the Declaration of Principles and State Policies in Article II, Sections 10 and 11, it is further declared that the State shall provide social justice in all phases of national development and that the State values the dignity of every human person and guarantees full respect for human rights.

Article XIII, Section 11 of the Constitution provides that the State shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods, health and other social services available to all the people at affordable cost. There shall be priority for the needs of the underprivileged, sick, elderly, disabled, women and children. Article XV, Section 4 of the Constitution Further declares that it is the duty of the family to take care of its elderly members while the State may design programs of social security for them.

Consistent with these constitutional principles, this Act shall serve the following objectives:

(a) To recognize the rights of senior citizens to take their proper place in society and make it a concern of the family, community, and government;

(b) To give full support to the improvement of the total well-being of the elderly and their full participation in society, considering that senior citizens are integral part of Philippine society;

(c) To motivate and encourage the senior citizens to contribute to nation building;

(d) To encourage their families and the communities they live with to reaffirm the valued Filipino tradition of caring for the senior citizens;

(e) To provide a comprehensive health care and rehabilitation system for disabled senior citizens to foster their capacity to attain a more meaningful and productive ageing; and

(f) To recognize the important role of the private sector in the improvement of the welfare of senior citizens and to actively seek their partnership.

In accordance with these objectives, this Act shall:

(1) establish mechanisms whereby the contributions of the senior citizens are maximized;

(2) adopt measures whereby our senior citizens are assisted and appreciated by the community as a whole;

(3) establish a program beneficial to the senior citizens, their families and the rest of the community they serve: and

(4) establish community-based health and rehabilitation programs for senior citizens in every political unit of society. (as amended by RA No 9994)

SECTION 2. Definition of Terms. – For purposes of this Act, these terms are defined as follows:

(a) Senior citizen or elderly refers to any resident citizen of the Philippines at least sixty (60) years old;

(b) Geriatrics refer to the branch of medical science devoted to the study of the biological and physical changes and the diseases of old age;

(c) Lodging establishment refers to a building, edifice, structure, apartment or house including tourist inn, apartelle, motorist hotel, and pension house engaged in catering, leasing or providing facilities to transients, tourists or travelers;

(d) Medical Services refer to hospital services, professional services of physicians and other healthcare professionals and diagnostics and laboratory tests that the necessary for the diagnosis or treatment of an illness or injury;

(e) Dental services to oral examination, cleaning, permanent and temporary filling, extractions and gum treatments, restoration, replacement or repositioning of teeth, or alteration of the alveolar or periodontium process of the maxilla and the mandible that are necessary for the diagnosis or treatment of an illness or injury;

(f) Nearest surviving relative refers to the legal spouse who survives the deceased senior citizen: Provided, That where no spouse survives the decedent, this shall be limited to relatives in the following order of degree of kinship: children, parents, siblings, grandparents, grandchildren, uncles and aunts;

(g) Home health care service refers to health or supportive care provided to the senior citizen patient at home by licensed health care professionals to include, but not limited to, physicians, nurses, midwives, physical therapist and caregivers; and

(h) Indigent senior citizen, refers to any elderly who is frail, sickly or with disability, and without pension or permanent source of income, compensation or financial assistance from his/her relatives to support his/her basic needs, as determined by the Department of Social Welfare and development (DSWD) in consultation with the National Coordinating and Monitoring Board.

(as amended by RA No 9994)

(i) Pension Provider refers to any government office or agency, or any private entity which provides pensions to entitled recipients on the basis of contributions, gratuity, or as mandated by any governing law or issuance, including the Social Security System (SSS), the Government Service Insurance System (GSIS), and the Pension and Gratuity Management Center (PGMC); and

(j) Social Pension refers to the monetary grant from the government to support the daily subsistence and medical needs of senior citizens which shall not be less than One thousand pesos (PI,000.00) per month.

(as inserted by RA No 11916)

SECTION 3. Contribution to the Community. – Any qualified senior citizen as determined by the Office for Senior Citizens Affairs (OSCA) may render his/her services to the community which shall consist of, but not limited to, any of the following:

(a) Tutorial and/or consultancy services;

(b) Actual teaching and demonstration of hobbies and income generating skills;

(c) Lectures on specialized fields like agriculture, health, environment protection and the like;

(d) The transfer of new skills acquired by virtue of their training mentioned in Section 4, paragraph (d); and

(e) Undertaking other appropriate services as determined by the Office for Senior Citizens Affairs (OSCA) such as school traffic guide, tourist aide, pre-school assistant, etc.

In consideration of the services rendered by the qualified elderly, the Office for Senior Citizens Affairs (OSCA) may award or grant benefits or privileges to the elderly, in addition to the other privileges provided for under this Act.

SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

(a) the grant of twenty percent (20%) discount and exemption from the value -added tax (VAT), if applicable, on the sale of the following goods and services from all establishments, for the exclusive use and enjoyment or availment of the senior citizen

(1) on the purchase of medicines, including the purchase of influenza and pneumococcal vaccines, and such other essential medical supplies, accessories and equipment to be determined by the Department of Health (DOH).

The DOH shall establish guidelines and mechanism of compulsory rebates in the sharing of burden of discounts among retailers, manufacturers and distributors, taking into consideration their respective margins;

(2) on the professional fees of attending physician/s in all private hospitals, medical facilities, outpatient clinics and home health care services;

(3) on the professional fees of licensed professional health providing home health care services as endorsed by private hospitals or employed through home health care employment agencies;

(4) on medical and dental services, diagnostic and laboratory fees in all private hospitals, medical facilities, outpatient clinics, and home health care services, in accordance with the rules and regulations to be issued by the DOH, in coordination with the Philippine Health Insurance Corporation (PhilHealth);

(5) in actual fare for land transportation travel in public utility buses (PUBs), public utility jeepneys (PUJs), taxis, Asian utility vehicles (AUVs), shuttle services and public railways, including Light Rail Transit (LRT), Mass Rail Transit (MRT), and Philippine National Railways (PNR);

(6) in actual transportation fare for domestic air transport services and sea shipping vessels and the like, based on the actual fare and advanced booking;

(7) on the utilization of services in hotels and similar lodging establishments, restaurants and recreation centers;

(8) on admission fees charged by theaters, cinema houses and concert halls, circuses, leisure and amusement; and

(9) on funeral and burial services for the death of senior citizens;

(b) exemption from the payment of individual income taxes of senior citizens who are considered to be minimum wage earners in accordance with Republic Act No. 9504;

(c) the grant of a minimum of five percent (5%) discount relative to the monthly utilization of water and electricity supplied by the public utilities: Provided, That the individual meters for the foregoing utilities are registered in the name of the senior citizen residing therein: Provided, further, That the monthly consumption does not exceed one hundred kilowatt hours (100 kWh) of electricity and thirty cubic meters (30 m3) of water: Provided, furthermore, That the privilege is granted per household regardless of the number of senior citizens residing therein;

(d) exemption from training fees for socioeconomic programs;

(e) free medical and dental services, diagnostic and laboratory fees such as, but not limited to, x-rays, computerized tomography scans and blood tests, in all government facilities, subject to the guidelines to be issued by the DOH in coordination with the PhilHealth;

(f) the DOH shall administer free vaccination against the influenza virus and pneumococcal disease for indigent senior citizen patients;

(g) educational assistance to senior citizens to pursue pot secondary, tertiary, post tertiary, vocational and technical education, as well as short-term courses for retooling in both public and private schools through provision of scholarships, grants, financial aids, subsides and other incentives to qualified senior citizens, including support for books, learning materials, and uniform allowances, to the extent feasible: Provided, That senior citizens shall meet minimum admission requirements;

(h) to the extent practicable and feasible, the continuance of the same benefits and privileges given by the Government Service Insurance System (GSIS), the Social Security System (SSS) and the PAG-IBIG, as the case may be, as are enjoyed by those in actual service;

(i) retirement benefits of retirees from both the government and the private sector shall be regularly reviewed to ensure their continuing responsiveness and sustainability, and to the extent practicable and feasible, shall be upgraded to be at par with the current scale enjoyed by those in actual service;

(j) to the extent possible, the government may grant special discounts in special programs for senior citizens on purchase of basic commodities, subject to the guidelines to be issued for the purpose by the Department of Trade and Industry (DTI) and the Department of Agriculture (DA);

(k) provision of express lanes for senior citizens in all commercial and government establishments; in the absence thereof, priority shall be given to them; and

(l) death benefit assistance of a minimum of Two thousand pesos (Php2, 000.00) shall be given to the nearest surviving relative of a deceased senior citizen which amount shall be subject to adjustments due to inflation in accordance with the guidelines to be issued by the DSWD.

In the availment of the privileges mentioned above, the senior citizen, or his/her duly authorized representative, may submit as proof of his/her entitled thereto any of the following:

(1) an identification card issued by the Office of the Senior Citizen Affairs (OSCA) of the place where the senior citizen resides: Provided, That the identification card issued by the particular OSCA shall be honored nationwide;

(2) the passport of the senior citizen concerned; and

(3) other documents that establish that the senior citizen is a citizen of the Republic and is at least sixty (60) years of age as further provided in the implementing rules and regulations.

In the purchase of goods and services which are on promotional discount, the senior citizen can avail of the promotional discount or the discount provided herein, whichever is higher.

The establishment may claim the discounts granted under subsections (a) and (c) of this section as tax deduction based on the cost of the goods sold or services rendered: Provided, That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted: Provided, further, That the total amount of the claimed tax deduction net of VAT, if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code (NIRC), as amended.

(as amended by RA No 9994)

SECTION 5. Government Assistance. –The government shall provide the following:

(a) Employment

Senior citizens who have the capacity and desire to work, or be re-employed, shall be provided information and matching services to enable them to be productive members of society. Terms of employment shall conform with the provisions of the Labor Code, as amended, and other laws, rules and regulations.

Private entities that will employ senior citizens as employees, upon the effectivity of this Act, shall be entitled to an additional deduction from their gross income, equivalent to fifteen percent (15%) of the total amount paid as salaries and wages to senior citizens, subject to the provision of Section 34 of the NIRC, as amended: Provided, however, That such employment shall continue for a period of at least six (6) months: Provided, further, That the annual income of the senior citizen does not exceed the latest poverty threshold as determined by the National Statistical Coordination Board (NSCB) of the National Economic and Development Authority (NEDA) for that year.

The Department of Labor and Employment (DOLE), in coordination with other government agencies such as, but not limited to, the Technology and Livelihood Resource Center (TLRC) and the Department of Trade and Industry (DTI), shall assess, design and implement training programs that will provide skills and welfare or livelihood support for senior citizens.

(b) Education

The Department of Education (DepED), the Technical Education and Skills Development Authority (TESDA) and the Commission on Higher Education (CHED), in consultation with nongovernmental organizations (NGOs) and people's organizations (POs) for senior citizens, shall institute programs that will ensure access to formal and nonformal education.

The Private entities that will employ senior citizens as employees, upon the effectivity of this Act, shall be entitled to an additional deduction from their gross income, equivalent to fifteen percent (15%) of the total amount paid as salaries and wages to senior citizens, subject to the provision of Section 34 of the NIRC, as amended: Provided, however, That such employment shall continue for a period of at least six (6) months: Provided, further, That the annual income of the senior citizen does not exceed the latest poverty threshold as published by the Philippine Statistics Authority (PSA) for that year. (as amended by RA No 11916)

(c) Health

The DOH, in coordination with local government units (LGUs), NGOs and POs for senior citizens, shall institute a national health program and shall provide an integrated health service for senior citizens. It shall train community-based health workers among senior citizens and health personnel to specialize in the geriatric care and health problems of senior citizens.

The national health program for senior citizens shall, among others, be harmonized with the National Prevention of Blindness Program of the DOH.

Throughout the country, there shall be established a "senior citizens' ward" in every government hospital. This geriatric ward shall be for the exclusive use of senior citizens who are in need of hospital confinement by reason of their health conditions. However, when urgency of public necessity purposes so require, such geriatric ward may be used for emergency purposes, after which, such "senior citizens' ward" shall be reverted to its nature as geriatric ward.

(d) Social Services

At least fifty percent (50%) discount shall be granted on the consumption of electricity, water, and telephone by the senior citizens center and residential care/group homes that are government-run or non-stock, non-profit domestic corporation organized and operated primarily for the purpose of promoting the well-being of abandoned, neglected, unattached, or homeless senior citizens, subject to the guidelines formulated by the DSWD.

(1) “self and social enhancement services" which provide senior citizens opportunities for socializing, organizing, creative expression, and self-improvement;

(2) "aftercare and follow-up services" for citizens who are discharged from the homes or institutions for the aged, especially those who have problems of reintegration with family and community, wherein both the senior citizens and their families are provided with counseling;

(3) "neighborhood support services" wherein the community or family members provide caregiving services to their frail, sick, or bedridden senior citizens; and

(4) "substitute family care " in the form of residential care or group homes for the abandoned, neglected, unattached or homeless senior citizens and those incapable of self-care.

(e) Housing

The national government shall include in its national shelter program the special housing needs of senior citizens, such as establishment of housing units for the elderly.

(f) Access to Public Transport

The Department of Transportation and Communications (DOTC) shall develop a program to assist senior citizens to fully gain access to public transport facilities.

(g) Incentive for Foster Care

The government shall provide incentives to individuals or non-governmental institution caring for or establishing homes, residential communities or retirement villages solely for, senior citizens, as follows:

(1) realty tax holiday for the first five (5) years starting from the first year of operation; and

(2) priority in the construction or maintenance of provincial or municipal roads leading to the aforesaid home, residential community or retirement village.

(h) Additional Government Assistance

(1) Mandatory Social Pension

Indigent senior citizens shall be entitled to a monthly stipend amounting to not less than One thousand pesos (P1,000.00) to augment the daily subsistence and other medical needs of senior citizens.

The DSWD shall, subject to the approval of the Department of Budget and Management (DBM), in consultation with other stakeholders, review and, when necessary, adjust the amount of the social pension every two (2) years after the effectivity of this Act, taking into account the present consumer price index as published by the PSA and relevant economic indicators, as reported and published by pertinent government agencies and authorities. (as amended by RA No 11916)

(2) Mandatory PhilHealth Coverage

All senior citizens shall be covered by the national health insurance program of PhilHealth. Funds necessary to ensure the enrollment of all senior citizens not currently covered by any existing category shall be sourced from the National Health Insurance Fund of PhilHealth from proceeds of Republic Act No. 10351, in accordance with the pertinent laws and regulations. (as amended by RA No 10351)

(3) Social Safety Nets

Social safety assistance intended to cushion the effects of economic shocks, disasters and calamities shall be available for senior citizens. The social safety assistance which shall include food, medicines, and financial assistance for domicile repair, shall be sourced from the disaster/calamity funds of LGUs where the senior citizens reside, subject to the guidelines to be issued by the National Commission of Senior Citizens (NCSC). (as amended by RA Nos 9994, 11916)

SECTION 6. The Office for Senior Citizens Affairs (OSCA). – There shall be established in all cities and municipalities an OSCA to be headed by a senior citizen who shall be appointed by the mayor for a term of three (3) years without reappointment but without prejudice to an extension if exigency so requires. Said appointee shall be chosen from a list of three (3) nominees as recommended by a general assembly of senior citizens organizations in the city or municipality.

The head of the OSCA shall be appointed to serve the interest of senior citizens and shall not be removed or replaced except for reasons of death permanent disability or ineffective performance of his duties to the detriment of fellow senior citizens.

The head of the OSCA shall be entitled to receive an honorarium of an amount at least equivalent to Salary Grade 10 to be approved by the LGU concerned.

The head of the OSCA shall be assisted by the City Social Welfare and Development officer or by the Municipal Social Welfare and Development Officer, in coordination with the Social Welfare and Development Office.

The Office of the Mayor shall exercise supervision over the OSCA relative to their plans, activities and programs for senior citizens. The OSCA shall work together and establish linkages with accredited NGOs Pos and the barangays in their respective areas.

The OSCA shall have the following functions:

(a) To plan, implement and monitor yearly work programs in pursuance of the objectives of this Act;

(b) To draw up a list of available and required services which can be provided by the senior citizens;

(c) To maintain and regularly update on a quarterly basis the list of senior citizens and to issue national individual identification cards, free of charge, which shall be valid anywhere in the country;

(d) To serve as a general information and liaison center for senior citizens;

(e) To monitor compliance of the provisions of this Act particularly the grant of special discounts and privileges to senior citizens;

(f) To report to the mayor, any individual, establishments, business entity, institutions or agency found violating any provision of this Act; and

(g) To assist the senior citizens in filing complaints or charges against any individual, establishments, business entity, institution, or agency refusing to comply with the privileges under this Act before the Department of Justice (DOJ), the Provincial Prosecutor's Office, the regional or the municipal trial court, the municipal trial court in cities, or the municipal circuit trial court.

(as amended by RA No 9994)

SECTION 7. Municipal/ City Responsibility. – It shall be the responsibility of the municipal/city through the mayor to require all establishment covered by this Act to prominently display posters, stickers, and other notices that will generate public awareness of the right and privileges of senior citizens and to ensure that the provisions of this Act are implemented to its fullest.

SECTION 8. Partnership of the National and Local Government Units. – The national government and local government units shall explore livelihood opportunities and other undertaking to enhance the well-being of senior citizens. The shall encourage the establishment of grassroots organizations for the elderly in their respective territorial jurisdictions.

SECTION 9 Support for Non-Governmental Organizations (NGOs). – Non-governmental organizations or private volunteer organizations dedicated to the promotions, enhancement and support of the welfare of senior citizens are hereby encouraged to become partners of government in the implementation of program and projects for the elderly.

According, the government shall recognize the vital role of NGOs in complementing the government in the delivery of services to senior citizens. It shall likewise encourage NGOs for the senior citizens to develop innovative service models and pilots projects and to assist in the duplication of successful examples of these models elsewhere in the country.

SECTION 10. Penalties. – Any person who refuses to honor the senior citizen card issued by this the government or violates any provision of this Act shall suffer the following penalties:

(a) For the first violation, imprisonment of not less than two (2) years but not more than six (6) years and a fine of not less than Fifty thousand pesos (Php50,000.00) but not exceeding One hundred thousand pesos (Php100,000.00);

(b) For any subsequent violation, imprisonment of not less than two (2) years but not more than six (6) years and a fine of not less than One Hundred thousand pesos (Php100,000.00) but not exceeding Two hundred thousand pesos (Php200,000.00); and

(c) Any person who abuses the privileges granted herein shall be punished with imprisonment of not less than six (6) months and a fine of not less than Fifty thousand pesos (Php50,000.00) but not more than One hundred thousand pesos (Php100,000.00).

If the offender is a corporation, partnership, organization or any similar entity, the officials thereof directly involved such as the president, general manager, managing partner, or such other officer charged with the management of the business affairs shall be liable therefor.

If the offender is an alien or a foreigner, he/she shall be deported immediately after service of sentence.

Upon filing of an appropriate complaint, and after due notice and hearing, the proper authorities may also cause the cancellation or revocation of the business permit, permit to operate, franchise and other similar privileges granted to any person, establishment or business entity that fails to abide by the provisions of this Act.

(as amended by RA No 9994)

SECTION 11. Monitoring and Coordinating Mechanism. – A National Coordinating and Monitoring Board shall be established which shall be composed of the following:

(a) Chairperson - the Secretary of the DSWD or an authorized representative;

(b) Vice Chairperson - the Secretary of the Department of the Interior and Local Government (DILG) or an authorized representative; and

(c) Members:

(1) the Secretary of the DOJ or an authorized representative;

(2) the Secretary of the DOH or an authorized representative;

(3) the Secretary of the DTI or an authorized representative; and

(4) representatives from five (5) NGOs for senior citizens which are duly accredited by the DSWD and have service primarily for senior citizens. Representatives of NGOs shall serve a period of tree (3) years.

"The Board may call on other government agencies, NGOs and Pos to serve as resource persons as the need arises. Resource person have no right to vote in the National Coordinating and Monitoring Board.

(as amended by RA No 9994)

SECTION 12. Implementing Rules and Regulations. – The Secretary of Social Welfare and Development, within sixty (60) days from the approval of this Act, shall promulgate the implementing, rules and regulations for the effective implementation of the provisions of this Act. In consultation and coordination with the following agencies and offices:

(a) Department of Health;

(b) Department of Labor and Employment;

(c) Department of Education;

(d) Depart of Transportation and Communications;

(e) Department of Justice;

(f) Department of Interior and Local Government;

(g) Department of Trade and Industry;

(h) Department of Finance;

(i) Commission of Higher Education;

(j) Technical Education and Skills Development Authority;

(k) National Economic and Development Authority;

(l) Housing and Urban Development Coordinating Council; and

(m) Five (5) non-governmental organizations of people's organizations for the senior citizens duly accredited by the DSWD.

SECTION 13. Appropriation. – The necessary appropriation for the operation and maintenance of the OSCA shall be appropriated and approved by the local government units concerned. The amount necessary to carry out the provisions of this Act upon its effectivity shall be charged out of the funds of the Office of the President. Thereafter, any such sum as shall be needed for the regular implementation of this Act shall be included in subsequent General Appropriations Act following its enactment into law.

SECTION 3. All laws, presidential decrees, executive orders and rules and regulations or part thereof, contrary to, or inconsistent with the provisions of this Act, are hereby repealed or modified accordingly.

SECTION 4. Should any provision of this Act be found unconstitutional by a court of law, such provision shall be severed from the remainder of this Act, and such action shall not affect the enforceability of the remaining provisions of this Act.

SECTION 5. This Act shall take effect fifteen (15) days after its complete publication in any two (2) national newspapers of general circulation.

November 13, 2002

AN ACT TO PROMOTE THE ESTABLISHMENT OF BARANGAY MICRO BUSINESS ENTERPRISES (BMBEs), PROVIDING INCENTIVES AND BENEFITS THEREFOR, AND FOR OTHER PURPOSES.

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

PRELIMINARY PROVISIONS

Section 1. Short Title – This Act shall be known as the "Barangay Micro Business Enterprises (BMBE's) Act of 2002."

Section 2. Declaration of Policy – It is hereby declared to be the policy of the State to hasten the country's economic development by encouraging the formation and growth of barangay micro business enterprises which effectively serve as seedbeds of Filipino entrepreneurial talents, and integrating those in the informal sector with the mainstream economy, through the rationalization of bureaucratic restrictions, the active granting of incentives and benefits to generate much-needed employment and alleviate poverty.

Section 3. Definition of Terms – As used in this Act, the following terms shall mean:

(a) "Barangay Micro Business Enterprise," hereinafter referred to as BMBE, refers to any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, shall not be more than Three Million Pesos (P3,000,000.00) The Above definition shall be subjected to review and upward adjustment by the SMED Council, as mandated under Republic Act No. 6977, as amended by Republic Act No. 8289.

For the purpose of this Act, "service" shall exclude those rendered by any one, who is duly licensed government after having passed a government licensure examination, in connection with the exercise of one's profession.

(b) "Certificate of Authority" is the certificate issued granting the authority to the registered BMBE to operate and be entitled to the benefits and privileges accorded thereto.

(c) "Assets" refers to all kinds of properties, real or personal, owned by the BMBE and used for the conduct of its business as defined by the SMED Council: Provided, That for the purpose of exemption from taxes and fees under this Act, this term shall mean all kinds of properties, real or personal, owned and/or used by the BMBE for the conduct of its business as defined by the SMED Council.

(d) "Registration" refers to the inclusion of BMBE in the BMBE Registry of a city or municipality.

(e) "Financing" refers to all borrowings of the BMBE from all sources after registration.

REGISTRATION AND OPERATION OF BMBE

Section 4. Registration and Fees - The Office of the Treasurer of each city or municipality shall register the BMBE's and issue a Certificate of Authority to enable the BMBE to avail of the benefits under this Act. Any such applications shall be processed within fifteen (15) working days upon submission of complete documents. Otherwise, the BMBEs shall be deemed registered. The Municipal or City Mayor may appoint a BMBE Registration Officer who shall be under the Office of the Treasurer. Local government units (LGU's) are encouraged to establish a One-Stop-business Registration Center to handle the efficient registration and processing of permits/licenses of BMBEs. Likewise, LGUs shall make a periodic evaluation of the BMBE's financial status for monitoring and reporting purposes.

The LGUs shall issue the Certificate of Authority promptly and free of charge. However, to defray the administrative costs of registering and monitoring the BMBEs, the LGUs may charge a fee renewal.

The Certificate of Authority shall be effective for a period of two (2) years, renewable for a period of two (2) years for every renewal.

As much as possible, BMBEs shall be subject to minimal bureaucratic requirements and reasonable fees and charges.

Section 5. Who are Eligible to Register – Any person, natural or juridical, or cooperative, or association, having the qualifications as defined in Section 3(a) hereof may apply for registration as BMBE.

Section 6. Transfer of Ownership - The BMBE shall report to the city or municipality of any changer in the status of its ownership structure, and shall surrender the original copy of the BMBE Certificate of Authority for notation of the transfer.

INCENTIVES AND BENEFITS

Section 7. Exemption from Taxes and Fees – All BMBEs shall be exempt from tax for income arising from the operations of the enterprise.

The LGUs are encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt BMBEs from local taxes, fees and charges.

Section 8. Exemption from the Coverage of the Minimum Wage Law – The BMBEs shall be exempt from the coverage of the Minimum Wage Law: Provided, That all employees covered under this Act shall be entitled to the same benefits given to any regular employee such as social security and healthcare benefits.

Section 9. Credit Delivery – upon the approval of this Act, the land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation (SBGFC), and the People's Credit and Finance Corporation (PCFC) shall set up a special credit window that will service the financing needs of BMBEs registered under this Act consistent with the Banko Sentral ng Pilipinas (BSP) policies; rules and regulations. The Government Service Insurance System (GSIS) and Social Security System (SSS) shall likewise set up a special credit window that will serve the financing needs of their respective members who wish to establish a BMBE. The concerned financial institutions (FIs) encouraged to wholesale the funds to accredited private financial institutions including community-based organizations such as credit, cooperatives, non-government organizations (NGOs) and people's organizations, which will in turn, directly provide credit support to BMBEs.

All loans from whatever sources granted to BMBEs under this Act shall be considered as part of alternative compliance to Presidential Decree no, 717,, otherwise known as the Agri-Agra Law, or to Republic Act. No. 6977, known as the Magna Carta for Small and Medium Enterprises, as amended. For purposes of compliance with presidential Decree no. 717 and Republic Act No. 6977, as amended, loans granted to BMBEs under this Act shall be computed at twice the amount of the face value of the loans.

To minimize the risks in lending to the BMBEs, the SBGFC and the Quedan and Rural Credit Guarantee Corporation (QUEDANCOR) under the Department of Agriculture, in case of agribusiness activities, shall set up a special guarantee window to provide the necessary credit guarantee to BMBEs under their respective guarantee programs.

The LBP, DBP. PCFC, SBGFC, SSS, GSIS, and QUEDANCOR shall annually report to the appropriate Committee of Both Houses of Congress on the status of the implementation of this provision.

The BSP shall formulate the rules for the implementation of this provision and shall likewise establish incentive programs to encourage and improve credit delivery to the BMBEs.

Section 10. Technology Transfer, Production and Management Training, and marketing Assistance – A BMBE Development Fund shall be set up with an endowment of Three Hundred Million pesos (P300,000,000.00) from the Philippine Amusement and Gaming Corporation (PAGCOR) and shall be administered by the SMED Council.

The Department of Trade and Industry (DTI), the Department of Science and Technology (DOST), the university of the Philippines Institute for Small Scale Industries (UP ISSI), Cooperative Development Authority (CDA), Technical Education and Skills Development Authority (TESDA), and Technology and Livelihood Resource Center (TLRC) may avail of the said Fund for technology transfer, production and management training and marketing assistance to BMBEs.

The DTI, in coordination with the private sector and non-government organization (NGOs), shall explore the possibilities of linking or matching-up BMBEs with small, medium and large enterprises and likewise establish incentives therefor.

The DTI, in behalf of the DOST, UP ISSI, CDA. TESDA and TLRC shall be required to furnish the appropriate Committees of both Houses of Congress a yearly report on the development and accomplishments of their projects and programs in relation to technology transfer, production and management training and marketing assistance extended to BMBEs.

Section 11. Trade and Investment Promotions – The data gathered from business registration shall be made accessible to and shall be utilized by private sector organizations and non-government organizations for purposes of business matching, trade and investment promotion.

INFORMATION DISSEMINATION

Section 12. Information Dissemination - The Philippine Information Agency (PIA), in accordance with the Department of Labor and Employment (DOLE), the DILG and the DTI, shall ensure the proper and adequate information dissemination of the contents and benefits of this Act to the general public especially to its intended beneficiaries specifically in the barangay level.

PENALTY

Section 13. Penalty - Any person who shall willfully violates any provision of this Act or who shall in any manner commit any act to defeat any provisions of this Act shall, upon conviction, be punished by a fine of not less than twenty-five Thousand Pesos (P25,000.00) but not more than Fifty Thousand Pesos (P50,000.00) and suffer imprisonment of not less than six (6) months but not more than two (2) years.

In case of non-compliance with the provisions of Section 9 of this Act, the BSP shall impose administrative sanctions and other penalties on the concerned government financial institutions, including a fine of not less than Five Hundred Thousand Pesos (P500,000.00)

MISCELLANEOUS PROVISIONS

Section 14. Annual Report – The DILG, DTI, and BSP shall submit an annual report to the Congress on the status of the implementation of this Act.

Section 15. Implementing Rules and Regulations – The Secretary of the Department of Trade and Industry, in consultation with the Secretaries of the DILG, DOF, and the BSP Governor shall formulate the necessary ruled and regulations to implement the provisions of this Act within ninety (90) days after its approval. The rules and regulations issued pursuant to this section shall take effect fifteen (15) days after its publication in a newspaper of general circulation.

Section 16. Separability Clause - If any provision or part hereof, is held invalid or unconstitutional, the remainder of the law or the provision not otherwise affected shall remain valid and subsisting.

Section 17. Repealing Clause – Existing laws, presidential decrees, executive orders, proclamations or administrative regulations that are inconsistent with the provisions of this Act are hereby amended, modified, superseded or repealed accordingly.

Section 18. Effectivity – This Act shall take effect fifteen (15) days after its publication in the Office Gazette or in at least two (2) newspaper of general circulation.

Rules and Regulations Implementing the Solo Parents' Welfare Act of 2000

AN ACT PROVIDING FOR BENEFITS AND PRIVILEGES TO SOLO PARENTS AND THEIR CHILDREN, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippine Congress assembled:

Section 1. Title. - This Act shall be known as the "Expanded Solo Parents Welfare Act."

Section 2. Declaration of Policy. - It is the policy of the State to promote a just and dynamic social order that ensures the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living and an improved quality of life. The State shall also promote social justice in all phases of national development, value the dignity of every human person and guarantee full respect for human rights. Towards these ends, the government shall:

(a) Support the natural and primary rights and duty of solo parents in rearing their children by providing for their basic needs, and extending to them assistance in social services and welfare benefits, with the end in view of uplifting their status and circumstances; and

(b) Adhere to international agreements and national laws on families. (as amended by RA No 11861)

Section 3. Definition of Terms. - As used in this Act:

(a) Child minding center refers to a facility or area within the workplace or in accessible locations to the solo parent or workplace of the guardian provided by the employer where the children of a solo parent employee aged seven (7) years old and below are habitually received for purposes of care and supervision during working hours;

(b) Children or dependents refer to those living with and dependent upon the solo parent for support who are unmarried, unemployed and twenty-two (22) years old or below, or those over twenty-two (22) years old but who are unable to fully take care or protect themselves from abuse, neglect, cruelty, exploitation, or discrimination because of a physical or mental disability or condition: Provided, that this

definition shall only apply for purposes of availing the benefits under this Act;

(c) Flexible work schedule refers to a work arrangement granted to a solo parent employee to vary the arrival and departure time in the workplace without affecting the core work hours as defined by the employer;

(d) Parental care and support refer to the acts of providing for the basic needs health care, mental and physical safety, emotional support and formation of the personality of the child;

(e) Parental leave refers to leave benefits granted to a solo parent to enable the performance of parental duties and responsibilities where physical presence is required or beneficial to the child; and

(f) Spouse refers to a husband or wife by virtue of a valid marriage or a partner in a common-law relationship as defined under Article 147 of Executive Order No. 209, otherwise known as The Family Code of the Philippines. (as amended by RA No 11861)

Section 4. Categories of Solo Parent. - A solo parent refers to any individual who falls under any of the following categories:

(a) A parent who provides sole parental care and support of the child or children due to -

(1) Birth as a consequence of rape, even without final conviction: Provided, that the mother has the sole parental care and support of the child or children: Provided, further, That the solo parent under this category may still be considered a solo parent under any of the categories in this section;