FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES d
FIRST REGULAR SESSION

HOUSE OF REPRESENTATIVES

Introduced by Representative Maximo B. Rodriguez, Jr. and
Representative Rufus B. Rodriguez

House Bill No,_ 2648

EXPLANATORY NOTE

Promises to reduce poverty always feature prominently in Philippine
presidential campaigns, and every administration since 1986 has prioritized
poverty reduction in its development plans. Institutional reforms have taken
place that significantly changed the scope and breadth of poverty policy making
in the country. As the concept of poverty evolved in the literature, the treatment
of poverty by various Philippine governments also saw dynamic changes.
‘Some innovative program interventions were introduced in the process. Each
president has had specific poverty reduction project: The Tulong sa Tao
program of the Aquino Administration; the Social Reform Agenda (SRA) of the
Ramos administration, the Lingap para sa Mahihirap program of President
Estrada, and the Kapit-Bisig Laban sa Kahirapan (KALAHI) Program of the
Arroyo Government. Overall, however, the implementation of government
poverty programs has been weak and politicized.

A considerable number of cases of broken homes are found in our
society. Since the mothers often have the custody of their offspring, they find
great difficulty in making a comfortable living. They struggle to live from hand
to mouth. They may be surviving on the meager funds from our welfare
department, but the amounts they receive are usually quite insufficient to meet
their basic needs.

With the advent of modernization that we are going through, the number
of such disadvantaged groups may be increasing. They live in squatter areas
around cities, not because they are attracted to the bright lights of cities, but
rather because they find it easier to get some income out of the odd jobs they
may find.

We cannot say at this juncture that our social security system is able to
capture each and every such case. Our social security system is currently
confined to the employed. But as we know it, we do not have the financial
ability to capture all these unfortunate cases. This doe not imply that we have
done nothing to take care of them. The extent of development commitment that
our government has continuously demonstrated in the poverty eradication


programs, since independence is highly commendable. We are still pursuing
these policies with more vigor and enthusiasm as reflected in our government
poverty reduction program.

The current undertaking by the govemment in building low-cost
dwellings is yet another evidence of the existence of those unfortunate families
who just cannot afford to meet their basic needs otherwise. The fact is that we
have so far put a lot of emphasis on the urban areas. The rural dwellers have
received relatively less attention. There are also those who are completely
ignorant of the availability of welfare aids. There are also cases of those who
have some pride in themselves not to approach the appropriate authorities. The
pertinent question is how do we enlarge the social security net to capture
everyone in this situation.

For our Muslim brothers, they believe that life on earth is a test for
humans. All their actions will be judged and rewarded accordingly in the
hereafter. This test, among others, aims to know how people deal with
differences in income and wealth put under their disposal. In this respect, both
the poor and the rich are expected to behave in accordance with certain
principles laid down by Islam.

The Islamic concept of social security system rests on the principle of
social justice which demands that everyone has the right to live. Life itself is
sacred and that suicide is completely abhorred. Wealth is considered a basic
necessity along with religion, education or intellect, progeny and the physical
self. The term physical self implies all the basic human needs, such as minimal
food, drink, clothing and shelter which are required to maintain one's life. The
concept of basic needs in Islam clearly covers a wider spectrum of necessities
which are aimed at fulfing both the physical and spiritual needs. Social justice
demands equitable income and wealth distribution. It is based on this principle

that the Islamic social security system ensures annual stipend to every
individual in need.

The social security system of Islam is Divine in character and based
entirely on the Qur'an and Sunnah. It is a system to accomplish the high
standard of morality expressed under the term righteousness. Keeping in view
the obligations enjoined in the above verse, which man has to fulfill in life, the
Qur'an affixes enormous significance to offer material help to the needy and the
poor. Islam discourages extreme income inequality and poverty.

In Islam, right from the beginning, fulfillment of basic needs of everyone
who is unable to meet his/her needs was conceived to be the concem of the
State. Zakat is the first institution of social security in Islam. Payment of 2.5
percent of his/her savings for the zakat fund is one of the fundamental duties of
a Muslim. The State is responsible to collect zakat and make arrangements for
its distribution.

This bill proposes to institutionalize the payment of zakat by Muslims in
the Philippines and proposes the creation of the Philippine Bait-ul-Mal. The
Bait-ul-Mal would be a new form of public organization with corporate like


features that increase managerial flexibility but strengthen performance
requirements and accountabilities.

The establishment of the Philippine Bait-ulMal and allowing it to
exercise the powers and have the characteristics of goverment corporate
entities may help contain, and possibly, eliminate the prevailing poverty in
Muslim communities throughout the country

Finally, pursuant to the spirit of the provision of the Constitution of the
Philippines that, in order to promote the advancement and effective
participation of the Filipino Muslims to alleviate poverty and promote socio-
economic development in the country in general and the Autonomous Region
in Muslim Mindanao in particular, the State shall consider their customs,
traditions, beliefs and interests in the formulation and implementation of its
Policies. The Islamic law and its principles of equity and justice, to which the
Filipino Muslim communities adhere, provide an essential basis for the
enforcement, with the full sanction of the State of the zakat and sadaqah
system among Filipino Muslims that shall redound to the attainment of a more
ordered life amongst them.

It is in this light that the immediate approval of this measure is eamestly

Wy

MAXIMO B. RODRIGUEZ, JR.

RUFUS B. RODAJGUEZ


FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES =)
FIRST REGULAR SESSION )

HOUSE OF REPRESENTATIVES

Introduced by Representative Maximo B. Rodriguez, Jr. and
Representative Rufus 8. Rodriguez

2648

House Bill No._

AN ACT
INSTITUTIONALIZING THE PAYMENT OF ZAKAT BY MUSLIMS IN THE
PHILIPPINES, CREATING THE PHILIPPINE BAIT-UL-MAL,
APPROPRIATING FUNDS THEREFORE, AND FOR OTHER PURPOSES

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

SECTION 1. Short Title. - This Act shall be known and cited as the
“Philippine Bait-ul-Mal Act of 2010.”

SEC. 2. Declaration of Policy.- It is the policy of the State to provide for
basic necessities of life such as food, clothing, housing, education and medical
relief for all citizens, irrespective of their sex, caste, creed or race, who are
permanently or temporarily unable to eam their livelihood on account of
sickness or unemployment or circumstances beyond their control. Towards
this end, the State shall create a Bait-ulMal Fund for Filipino Muslims, provide
assistance to the destitute and needy, widows, orphans, invalid, infirm and
such other persons, and thereby save them from hardship and suffering and to
enable them to lead an honorable life in the society, that operates based on the
basic principles and rulings of Islamic Shari'a within the purview of the
Philippine Constitution that shall be endowed with fiscal and administrative
powers necessary to discharge its mandate with excellence.

SEC. 3. Definition. - When used in this Title:

(A) The term “Bait-ul-Mal” means the welfare fund, established
under Section 4 of this Act;

(B) The term “Board” means the Bait-ul-Mal Board constituted
under Section11 of this Act for the administration of Bait-ul-
Mal;


(©) The term “Chairperson” means the Chairperson of the Board;

(D) The term “Employee” means an employee who is holding
neither managerial nor supervisory position as defined under
existing provisions of the Labor Code of the Philippines, as
amended;

(E) The term "Chief Executive Officer’ means the chief executive
officer (CEO) of the Bait-u-Mal;

(F) The term “Member” means a member of the Board;

(G) The term “Shari'ah” means the Islamic laws derived from the
AL-Quran and As-Sunnah;

(H) The term “As-Sunnah’ means the acts or sayings of Prophet
Muhammad;

()) The term “Zakat” means tithe or obligatory contribution
assessed based on certain assets owned by a Muslim that
satisfy certain conditions and is to be distributed to specified
categories of beneficiaries; and

(J) The term “Sadawah” means voluntary contribution.

SEC. 4. Creation of the Philippine Bait-ul-Mal; Corporate Powers. —
There is hereby established a public organization to be known as the Philippine
Bait-ul-Mal, herein after referred to as the Bait-ul-Mal, which shall be
responsible for the implementation of zakat and sadagah system among
Muslims in the Philippines and shall be attached to the Department of Social
Welfare and Development (DSWD). It shall be organized within 180 days from
the effectivity of this Act

The Bait-ul-Mal shall have its principal place of business in Metro Manila
and may establish branches and offices in such other places as may be
deemed necessary for the performance of its mandate.

SEC. 5. Responsibility and Primary Objective. — The primary
responsibility and objective of the Bait-ul-Mal is to alleviate poverty, promote
and accelerate the socio-economic development of the Autonomous Region in
Muslim Mindanao by institutionalizing, centralizing and coordinating the center
of collection of zakat and sadaqah, and the distribution thereof, and to carry out
Charitable, humanitarian, and other social services based on the Islamic
concept of social welfare system as ascertained by the Shari'a Advisory
Council consistent with fiscal policy and zakat/sadaqah collection targets.

SEC. 6. Sharia Advisory Council, — There is hereby created a Shari'a
Advisory Council of the Bait-ul-Mal which shall be composed of not more than
five (5) members, selected from among Islamic scholars and jurists of
comparative law. The members shall be elected at an annual Board meeting of
the Bait-ul-Mal. The Board is hereby authorized to select the members of the
first Shari'a Advisory Council and to determine their remunerations.

SEC. 7. Functions of the Shar’a Advisory Council. - The functions of the
Shari'a Advisory Council shall be to offer advice and undertake reviews
pertaining to the application of the principles and rulings of the Islamic Sharia
on zakat and sadaqah transactions, but it shall not directly involve itself in the
operations of the Bait-ul-Mal.


Any member of the Shari'a Advisory Council may be invited to sit in the
regular or special meeting of the Board of the Bait-ul-Mal to expound his views
on matters of Islamic Shar?a affecting a particular transaction but he shall not
be entitled to vote on the question presented before the board meetings.

SEC. 8. Powers and Functions of the Board. — The Bait-ul-Mal shall
exercise the powers and duties heretofore provided. Such powers and duties
shall include the assessment and collection of zakat from Muslim zakat payers,
receive sadaqah and the enforcement of all forfeitures, penalties and fines
connected therewith, including the execution of judgments in all cases decided
in its favor by the regular courts and the Sharia Court. The mechanics of the
assessment and collection of zakat and receiving of sadaqah shall be provided
for in the Implementing Rules and Regulations (IRR) for this Act. The said IRR
shall prescribe, among others, the persons liable to zakat, rates of zakat, items
or assets/properties subject to zakat, zakat base, time, venue and manner of
payment of zakat, etc.

The Bait-ul-Mal shall give effect to and administer its poverty alleviation
program to Filipino Muslims, and perform the following services connected
therewith:

a Provide financial assistance to the destitute and the needy,
widows, orphans, invalid, infirm and other needy persons;

b. Render heip for rehabilitation of the persons specified in clause
(a) in various professions or vocations;

©. Provide assistance to children of the persons specified in
clause (a) for educational pursuits;

4. Provide residential accommodation and necessary facilities to
the persons specified in clause (a);

e. Provide free medical treatment for indigent sick persons and to

‘set up free hospitals, poor houses and rehabilitation centers
and to give financial aid to charitable institutions, including
industrial homes and other educational institutions established
specially for the poor and needy;

f. Provide stipends to educated youth during their training before
their employment,
9. Provide stipends and financial assistance to brilliant but poor

students who cannot afford to acquire higher technical or
medical education abroad due to financial constraints;

h ‘Sponsor and promote a self-employment scheme;

i. Establish an Ummah credit union that would extend micro
loans and assistance to poor Muslim entrepreneurs; and

ji Any other purpose approved by the Board having regard to the
aims and objectives of the Bait-ul-Mal.

In addition, the Bait-ul-Mal shall have the following corporate powers:
a. Prescribe its operating policies;

b. Adopt, alter and use an official seal which shall be judicially noticed;
c. Enter into contacts;

d. Lease or own real and personal property;

e. Sell or otherwise dispose of the same;


f. Accept grants, donations, endowments and subsidies, or funds
and/or property offered by individuals and organizations, who may
earmark such grants for a specific purpose or for such other
purposes beneficial to the Muslim communities, without prejudice to
the general objectives of the Bait-ul-Mal;

g. Seek financing from governments, organizations, individuals or
banks based on the Islamic concept of financing:

h. Incur obligations necessary in the conduct of its operations;

i. Employ such officers and personnel, preferably qualified Muslims, as
may be necessary to carry-out Bait-ul-Mal business;

j. Establish such branches and agencies in provinces and cities in the
Philippines, particularly where Muslims are predominantly located,
and such correspondent offices in other areas in the country or
abroad as may be necessary to carry on its business; and

k. Perform any and all acts necessary or proper to carry out the
purposes of this Act.

The Bait-ul-Mal may acquire and hold such assets and incur such
liabilities in connection with its operations authorized by the provisions of this
Act and other laws, or as are essential to the proper conduct of such
operations.

SEC. 9. Capitalization .- The Bait-ul-Mal shall have an authorized capital
of Five Hundred Million Pesos (P500,000,000) which shall be fully subscribed
by the Republic of the Philippines and shall be paid up by the transfer to the
Bait-ul-Mal of cash | such amount. Initially, the national government shall
transfer to the Bait-ul-Mal fifty percent (50%) of the aforesaid authorized capital
within 180 days after the effectivity of this Act to finance the first three years
operating and capital expenditures of the Bait-ul-Mal and the remaining fifty
percent (50%) shall be transferred within 180 days from the lapse of the third
year operation of the Bait-ul-Mal.

SEC. 10. Sources of Finance. — The Bait-ul-Mal shall be financed from
the following sources namely:

a Authorized capital of Five Hundred Million Pesos
(P500,000,000) fully subscribed by the Republic of the
Philippines as provided under Section 9 of this Act;

Receipts from zakat levied for this purpose;

Receipts from sadaqah or voluntary donations from individuals,

societies, bodies, institutions or organizations;

Grants from the Philippine Government;

Grants from the intemational agencies and/or organizations;

and

f. Sale of property of the Bait-ul-Mal, whether movable or
immovable, and income from such property, investments and
other assets.

oo

go

Provided however, that not less eighty seven point five percent (87.5%)
of the total zakat collected in the immediately preceding year shall be


exclusively used for the poverty alleviation program fro which the Bait-ul-Mal
was created

In determining the income tax liability of an assessee for an assessment
year under the National intemal Revenue Code of 1997, as amended, his/her
income tax liabilities shall be reduced by the amount paid by him/her as zakat.

SEC. 11. Composition of the Bait-ul-Mal Board; Qualifications of
Members. ~ (a) There is hereby created a Bait-ul-Mal Board, hereinafter
referred to as the Board, composed of the Secretary of Social Welfare and
Development or his duly designated Undersecretary, the Executive Director of
the Office of Muslim Affairs or his duly designated Senior Director, the Regional
Governor of the Autonomous Region in Muslim Mindanao or his duly
designated Regional Secretary, and the President of the Al-Amanah Islamic
Investment Bank of the Philippines or his duly designated Senior Vice-
President, all of whom shall serve in an ex officio capacity and without any
compensation; and five (5) representatives from non-government sector to be
appointed by the President, who shall serve full-time for a term of three (3)
years, and may be reappointed once: Provided, however, that reappointment of
representatives from the non-government sector shall follow the nomination
process outlined in this Section. The Chairman of the Board shall be
designated by the President of the Philippines from among its members

(b) The five (5) members from the non-govemment sector shall include
an ulama, Islamic accountant, an economist, an engineer, and a lawyer, each
of whom shail be a natural born citizen of the Philippines, at least forty (40)
years of age, and of good moral character. Each shall be selected and
appointed by the President from a pool of candidates to be nominated by peak
professional organizations of ulamas, Islamic accountants, economists,
engineers, and lawyers respectively, which nominees must have a good
reputation for their honesty, integrity and devotion to Islamic ideology and who
genuinely believe in, and practice, moral values and well-versed in Islamic law
and jurisprudence, and a recognized expert in the field of zakat system,
taxation, fiscal policy, public finance, fiscal administration, Islamic economy,
Islamic accounting, Islamic management, or law. A “peak professional
organization” refers to an organization duly recognized by members as
Tepresentative of, and having the largest active membership in, their
profession. The mechanics of the nomination process shall be provided for in
the IRR for this Act.

(c) Of the initial members appointed from the non-govemment sector,
the first two appointees shall serve for three (3) years, the second two
appointees for two (2) years, and the last for one (1) year: Provided, however,
that they shall continue to hold office until their successors shall have been
appointed and duly qualified. All vacancies, prior to the expiration of the term,
‘shall be filled for the unexpired term only.

(d) During the absence of the Chairperson, he may nominate a member
to convene and preside over the meetings of the Board to dispose of urgent
business.

(e) The President of the Philippines shall initially fix the compensation of
the members from the non-government sector based on an objective
classification system, to be specified in the IRR of this Act, at a sum
commensurate to the importance and responsibilities attached to the position.


The Board may increase such compensation: Provided however, That the
increase shall not affect the compensation of a member during whose
incumbency the increase was approves for the duration of such member's
term.

‘SEC. 12. Powers of the Bait-ul-Mal Board. - The Bait-ul-Mal Board shall:

(a) Adopt and promulgate policies and rules fro the effective
enforcement of the provisions of this Act;

(b) Upon the recommendation of the CEO, approve the annual
and supplemental budget of receipts and expenditures of the
Bait-ul-Mal, and authorize such operating and capital
expenditures of the Bait-ulMal as may be necessary or
proper for the effective management, operation and
administration of the Bait-ul-Mal;

(c) Upon the recommendation of the CEO, appoint such other
personnel as may be deemed necessary; fix reasonable
compensation, allowances and other benefits; prescribe their
duties and establish such methods and procedures as may
be necessary to ensure the efficient, honest and economical
administration of the provisions and purposes of this Act:
Provided, however, That the personnel of the Bait-ul-Mal
below the rank of CEO shall be appointed by the Bait-ul-Mal
CEO subject to the confirmation by the Board: Provided
further, That the personnel of the Bait-ul-Mal shall be
selected only from civil service eligibles and be subject to
civil service rules and regulations;

(a) Form committees, including an executive committee, which
shall assist the Board in the performance of its functions:
Provided, however, That no person shall be appointed to the
executive committee who has been employed within the past
ten (10) years by the Bait-ul-Mal created under this Act; and

(e) Exercise such powers and perform such other acts as may
be necessary, useful, incidental or auxiliary to carry out the
provisions of this Act, or to perform the purposes and
‘objectives of this Act.

SEC. 13. Administrative Control over the Board. — The Board shall be
under the direct administrative control of the Department of Social Welfare and
Development.

SEC. 14. Conflict of interest. ~ In addition to the requirements of
Republic Act No. 6713, otherwise known as the Code of Ethical Standards, any
member of the Board with personal or pecuniary interest in any matter in the
agenda of the Board shall disclose such interest to the Board and shall inhibit
himself during the deliberations when such matter is taken up. The decision
taken on the matter shall be made public and the minutes of the meeting shall
reflect the disclosure made and the inhibition of the member concerned.

SEC. 15. Disqualifications. — In addition to the disqualification imposed
by RA 6713, a member of the Board from the non-government sector shall not


hold any other public office or employment during his tenure, unless such office
or employment is with a state university or college or is connected with the
performance of their duties as members of the Board.

SEC. 16. Removal of Members from the Non-Government Sector. - The
President, upon recommendation by majority of all the members of the Board,
may remove any member of the Board from the non-government sector for any
of the following reasons:

(a) The member suffers from physical or mental incapacity that
renders him or her incapable of properly discharging he duties
and responsibilities of membership in the Board and such
incapacity has lasted for more than six (6) months;

() The member has committed acts or operations that are shown
prima facie to be fraudulent or illegal or manifestly opposed to
the aims and interests of the Bait-ul-Mal;

© The member no longer possesses the qualifications specified
in Section 11 of this Act; or

() The member is subsequently disqualified under the provisions
of existing laws.

SEC. 17. Meetings. - The Board shall meet once a month. The Board
may be called to a meeting by the Chairperson or by three (3) other members
of the Board. The presence of five (5) shall constitute a quorum: Provided, That
in all cases the Chairperson or the Chairperson’s duly designated alternate
shall be among the five (5).

SEC. 18. The Chief Executive Officer; Qualifications; Appointment; Term
of Office. - The Bait-ul-Mal shall be headed by a Chief Executive Officer,
hereinafter referred to as CEO, who shall be a natural-born citizen of the
Philippines, at least forty (40) years of age, of good moral character, known for
good reputation for honesty, integrity and devotion to Islamic ideology, and who
genuinely believes in, and practices, the moral values and well-versed in
Islamic law and their jurisprudence, and a recognized expert in the field of
zakat system, taxation, fiscal policy, public finance, fiscal administration,
Islamic economy, Islamic accounting, Islamic management or law.

The CEO of the Bait-u-Mal shall be appointed by the Board for a term of
three (3) years. The CEO shall enter into a performance contract with the
Board and may be re-appointed depending on the CEO's performance:
Provided, however, That no person may be appointed as CEO for more than
three (3) terms. In addition to other grounds for removal as may be provided for
by law, the CEO may be removed by a majority vote of all members of the
Board prior to the end of the CEO's 3-year term for failure to meet
commitments in the performance contract, unless such failure is attributable to
a Cause or causes beyond the CEO’s control.

SEC. 19. Powers and Functions of the CEO. - The general conduct of
the operations and management functions of the Bait-ul-Mal shall be vested in
the CEO, who is immediately responsible for carrying out the mandate of the
Bait-ul-Mal.

In addition, the CEO shall:


Execute, administer and implement the policies and measures
approved by the Board;

Direct and supervise the operations and administration of the
Bait-ul Mal;

Represent the Bait-ul-Mal in all dealing with offices, agencies
and instrumentalities of the Government and with all persons
and entities, public or private, domestic or foreign:

Direct and supervise the preparation of the agenda for the
meeting of the Board, and to submit for the consideration of
the Board such policies and measures as he or she believes
necessary to carry out the purposes and objectives of this Act;
Determine the organizational structure, including the
geographical location of the branches and offices, of the Bait-
ul-Mal; reorganize its personnel and issue such rules and
regulations as he or she may deem necessary or convenient
for these purposes;

Establish a performance-based management system which
shall gover the selection, hiring, appointment, transfer,
promotion or dismissal of all personnel. Such system shall aim
to attract and retain Islamically and professionally competent,
well-trained, honest, courteous and efficient personnel and to
establish professionalism and excellence at all levels of the
Bait-ul-Mal;

All positions in the BaitulMal shall be governed by a
compensation and position classification system and
qualification standards approved by the Board based on a
comprehensive job analysis and audit of actual duties and
responsibilities. The Board shall have the authority to establish
@ compensation plan for the Bait-ul-Mal: Provided, however,
That the total personal services budget of the Bait-ul-Mal shall
not be more than sixty percent (60%) of its total operating
budget;

Remove personnel of the Bait-ulMal: Provided, That the
Board shall have final appellate authority in cases involving
promotion, transfer, assignment or re-assignment of personnel
of the Bait-ul-Mal and these personnel actions are deemed
made in the interest of the service and not disciplinary;

Provide for the continuing education and training of Bait-ul-Mal
officials and employees. For this purpose, the Bait-ul-Mal may
establish a training institute or enter into agreements with
institutions of higher leaming in the country for the
establishment of training programs for its technical personnel
in the field of zakat system, Baitul-Mal administration and
related fields. The Bait-ul-Mal is likewise authorized to defray
the costs of study, at home or abroad, of qualified employees
of the Bait-ul-Mal, of promising university graduates or of any
other qualified persons who shall be determined by proper
competitive examinations;

Promulgate, with the approval of the Board, all necessary
rules and regulations for the effective enforcement of the



provisions of this Act specially on the power and authority of
the CEO to interpret the zakat system based on the basic
principles and rulings of Islamic Shari'a and to decide zakat
cases; to obtain information, and to summon, examine, and
take testimony of persons; to make assessments and
prescribe additional requirements for zakat administration and
enforcement; and the duty of the CEO to ensure the provision
and distribution of forms, receipts, certificates and the
acknowledgement of payment of zakat and sadaqah; and
k To exercise such other powers and functions as may be
vested in the CEO by the Board.
The CEO shall have the authority to delegate any of the foregoing
powers in such official or officials of the Bait-ul-Mal as he or she deems
necessary.

SEC. 20. Salary of the CEO. — The Board shall fix the salary of the CEO
based on an objective classification system to be specified in the IRR of this
Act at a sum commensurate to the importance and responsibilities attached to
the position.

‘SEC. 21. Indemnification for Legal Defense Costs and Expenses. - The
Bait-ul-Mal shall indemnify members of the Board and other officials of the Bait-
ul-Mal, including personnel of the units performing assessment, audit,
collection, and distribution functions, against all costs and expenses
reasonably incurred by such persons in connection with any civil or criminal
action, suit or proceeding to which they may be or are made a party by reason
of their performance of their functions or duties, unless they are finally
adjudged in such action or proceeding to be liable for gross negligence or
misconduct.

In the event of settlement or compromise, indemnification shall be
provided only in connection with such matters covered by the settlement as to
which the Bait-ul-Mal is advised by external counsel that the persons to be
indemnified did not commit any gross negligence or misconduct.

The costs and expenses incurred in defending the aforementioned
action, suit or proceeding may be paid by the Bait-ul-Mal in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
‘or on behalf of the member of the Board, official, or employee to repay the
amount advanced should it ultimately be determined by the Bait-ul-Mal that
said member of the Board, official or employee is not entitled to be indemnified
as provided in this Sections.

SEC.22. Implementing Details. - The Bait-ul-Mal shall be made
operational by the performance ofthe following acts:
a. The President shall constitute the Bait-ul-Mal Board by
appointing the members thereof within one hundred eighty
(180) days from the effectivity of this Act; and
b The completion of the initial transfer of such cash or assets as
provided in Section 9 of this Act.


‘SEC. 23. Mandate to Organize. - (a) The Bait-ul-Mal shall be organized
by the Board, by adopting an organizational structure or staffing pattern to suit
the operations of the Bait-ul-Mal under this Act. Selection shall be based strictly
on merit and fitness to ensure their suitability for appointment to the Bait-ul-Mal.
The formulation of the program of organization shall be completed within six (6)
months after the effectivity of this Act, and shall be fully implemented within a
period of six (6) months thereafter.

SEC. 24. Administrative Complaints. — For purposes of administrative
complaints against officers and employees of the Bait-ul-Mal, an internal audit
to be created by and reporting directly to the Board shall conduct the
investigations on such complaints. For this purpose, such internal audit unit
shall be deemed deputized by the Office of the Ombudsman under Republic
Act No. 670.

SEC. 25. Tax Exemption. - The Bait-ul-Mal assets, revenues,
distributions and all contracts, deeds, documents and transactions related to
the conduct of business of the Bait-ul-Mal shall be exempt from all local and
national taxes.

SEC. 26. Exemption from Customs Duties. — All importations by the Bait-
ulMal of machinery, equipment, calculators and computers and the
accompanying spare parts, as may be necessary for its operation, shall be
exempt from customs duties and compensating taxes payable thereon:
Provided, however, That the same shall not be disposed of domestically unless
payment is made of all duties thereof at the tariff rates and according to their
condition at the time of disposal and upon compliance with all import and
exchange procedures.

SEC. 27. Maintenance of Accounts. - The Board shall maintain
complete and accurate books of accounts in connection with the discharge of
its responsibilities and those delegated by it to its officers and staff, as may be
prescribed.

SEC. 28. Accounting Period. — The financial year of the Bait-ul-Mal shail
be based on the Gregorian calendar, but the corresponding Islamic Hijra date
‘shall be mentioned on all correspondence, contracts, printed materials, forms
and records of the Bait-ul-Mal. The accounting period shall commence from the
first day of January and close at the end of December each year.

SEC 29. Annual Statement of Accounts. - In the month of January each
year, the Board shall submit to the Secretary of Social Welfare and
Development, for approval, a statement of estimated receipts and expenditures
in respect of the next financial year.

SEC. 30. Submission of Annual Reports and Statements, etc. - As soon
as possible, the Board shall submit to the Department of Social Welfare and
Development, after the end of every financial year but before the last day of

September next following, an annual report on the conduct of its affairs during
the year.


SEC, 31. Audit. - The accounts of Bait-ul-Mal shall be audited every year
by the Commission on Audit in such manner as may be prescribed by the
Board. A copy of the Audit report shall be sent to the Board for comments and
remedial action.

‘SEC. 32. Confidential Information. — Bait-ul-Mal transactions relating to
all zakat payers and sadaqah givers of whatever nature are confidential. It shalt
be unlawful for any official or employee of the Bait-ul-Mal or any person as may
be designated by the Board of Directors to examine or audit the books of the
Bait-ul-Mal, or to disclose or reveal to any person any confidential information
except under the circumstances to be provided in the IRR for this Act

SEC. 33. Disposition of Bait-ul-Mal Revenue. - Zakat, sadaqah and
grants collected and/or received shall accrue to the Bait-ul-Mal Fund and shall
be treated as automatically appropriated. The said fund shall be available to
finance the poverty alleviation program fro which the Bait-ul-Mal was created:
Provided, That an amount equivalent to twelve point five percent (12.5%) of the
total receipts from zakat shall be utilized to finance the operating and capital
expenditures of the Bait-ul-Mal.

SEC. 34. Initial Appropriation for the Bait-ul-Mal. — The Secretary of
Budget and Management is hereby authorized to transfer from the Treasury an
amount equivalent to fifty percent (50%) of the authorized capital as provided
for under Section 9 of this Act and to remit the same directly to the Bait-ul-Mal
within 180 days after the effectivity of this Act under such rules and regulations
as may be promulgated by the Secretary of Social Welfare and Development.
The said amount shall be exclusively utilized to subsidize the operating and
capital expenditures for the first three year operation of the Bait-ul-Mal.

SEC. 35. 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. 36. 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 are hereby repealed,
modified or amended accordingly.

SEC. 37. Effectivity Clause. This Act shall take effect fifteen (15) days
after its publication in at least two (2) newspapers of general circulation.

Approved,