PEPRES,
Se a>
(3 RECEIVED 2

EIGHTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES, )

Second Regular Session

Introduced by REPRESENTATIVE VIRGILIO S. LACSON

EXPLANATORY NOTE

One of the most challenging tasks in drafting bills, is finding a balance between public good and
private rights. Individual rights and freedoms are never absolute, but state policies and ws are
always construed in favor of said freedom. However, an exemption to this ruke is the common
good requirement, such as public safety and public health, or when public interests are involved.

Over the course of many months, we have scen unsettling news about how money knders take
advantage of borrowers by requiring them to surrender their ATM payroll cards or their
goverment benefits cash card as collateral for loans. The practice has becom: widespread that
various Goverment agencies express concem.

In fact, on April 18,2020, Department of Education Secretary Leonor Magtolis Briones issued a
Memorandum order OM-OSEC-2020-006! reminding all DepEd employces to refrain from using
ATM Payroll cards as collateral for loans or engaging in the ATM Sangh Scheme or ATM Card
Pawning. It was reported that countless of our beloved teachers are forced to swrender their
ATMs to money lenders as collateral.

Similarly, another disturbing news? that has been going on recently is the 4Ps Sangh scheme. In
this setup, beneficiaries of 4Ps pawn their cash cards as collateral for loan obligations from
unregulated money lenders. For instance, in Davao City alone, there are 186 reported cases for

1 "APRIL 18, 2020, OM OSEC 2020-006 - Reminder To Refrain From Using ATM Payroll Cards As Collateral
For Loans Or Engaging In The ATM Sangla Scheme | Department Of Education”. Deped.Gov.Ph, 2020,

https://www.deped. gov.ph/2020/04/21/om -osec-2020-006/. : F
Q Murray, Eugene. "Prov. Legislature Wants Ban Vs ‘Sangla Atm’ By 4Ps Members”. Palawan Daily News,

2020, https://palawandailynews. ‘com/provincial-news/provi-legislature-wants-ban-vs-sangla-alm-by-4ps~
members/.

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cash card pawning for the month of February 2019. Undoubtedly, there are still many unreported
cases all over the country that go unnoticed.

While the same may be viewed as a purely private transaction between two consenting parties,
the State needs to look into this practice of “ATM Sangla scheme", which no less than the Bangko
Sentral has described as “a dangerous scheme, for it exposes borrowers to identity theft and
unauthorized use of personal data possibly for unlawful activities.” This scheme has become so
rampant that the public has grown used to it, and sees it as a regular occurrence, without realizing
that many lenders take advantage of the borrower's vulnerability.

It is high time that we puta stop to this form of unfair business practice by imposing penalties

against those who engage in the same, and protect the public from these unscrupulous practices.

In view of the foregoing, the immediate passage of this house bill is camestly sought.

HON. VIRGILIO S. LACSON
Manila Teachers Partylist

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EIGHTEENTH Cc JRE!
: ‘ONGRESS OF THE
REPUBLIC OF THE PHILIPPINES, ; ‘

Second Regular Session

= OF REPRESENTATIVES,
HOUSE BILL No,_7966

Introduced by REPRESENTATIVE VIRG!

AN ACT
DEFINING ATM PAWNING SCHEME, AND PRESCRIBING PENALTIES
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 “Anti-ATM Pawning Scheme
Act of 2020."

Section 2, Declaration of Policy. - Its hereby declared the policy of the State to
promote the protection of each citizen’s right to property and general welfare as an essential part
of enjoyment of the blessings of democracy. To this end, the State shall develop policies and
initiate “means to discourage the unauthorized claiming of another person's benefits, wages,
salaries and renumeration. Further, it shall be the policy of the State to regulate the operation of
money lenders or lending entities, to prevent and mitigate, as fir as practicable, practices
prejudicial to public interest; and to impose criminal penalties to those who woull undermine
existing policies aimed at protecting the public.

Section 3. Definition. — As used in this Act, the following tems shall be defined —

a. “ATM pawning scheme" refers to the act of pawning the ATM card of
an individual as collateral for payment of loan obligations.

b. “ATM card” refers to automated teller machine card through which
the wages, salaries, and other renumerations of a person may be
deposited or withdrawn.

“Cash card” refers to the card through which identified beneficiaries
ofGovemment programs reccive their monetary benefits.

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4. “Government henefits" refers 0 the amount of money received by a

Qualified beneficiary, provided by the State through any of its
Programs, including but not limited to conditional cash transfers,
pensions, schokuships.

e. “Unfair Trade Practice in Lending” refers to the use of deceptive,
fraudulent, or unethical methods to obtain business. from borrowers.
This practice woukl inchde misrepresentation. fake advertising,
deceptive pricing and non-accreditation with any government
reguktory body.

f- “Issuing Entity” refers to the entity which issues the cash card/ ATM
card.

Section 4. Construction. — This Act shall be liberally construed to promote the
protection and welfire of beneficiaries, employees, and workers.

Section 5. Prohibited acts. - Any person who engages in the business of money
lending and profits from the same, by exacting payments for due and demandable
obligations, through any of following means shall be guilty of the violation of this Act:

a. Chiming any govemment benefits fom the ATM/cash card of a qualified
beneficiary without the latter's express authority stating cause why he or she
cannot claim the benefit himself or herself

b. Withdrawing or causing the withdrawal of any amount from the ATM card of
a worker, laborer, or employee, without the latter’s express authority. stating
cause why he or she cannot claim the salary orrenumeration himself or herself

c. Disposing, withholding, transferring, or otherwise possessing of the
ATM/cash card necessary for the chim of a govemment benefit, to a person
other than the intended government beneficiary

d. Employing any unfair trade practice in lending, such as, but not limited to,
misrepresentation, fie advertising, deceptive pricing and non-accrediation
with any goverment regulatory body.

Section 6. Penalties. Any person who willfully or knowingly does or who shall
aid, permit, or cause to be done any of the acts declared to be unlawful in Section 5 of this
Act, or who violates the provisions thereof, or of any order issued thereunder, or aids,
permits, or causes such violation shall, upon conviction thereof, be penalized with the
imprisonment of not less six (6) months but not more than one (1) one year, and a fine of
not less than one hundred thousand pesos (P100,000.00).

Section 7. Prima Facie Evidence. ~The possession or custody of 5 or more ATM
cards or cash cards belonging to another shall be prima ficie evidence that a violation o|

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Act has beet it
Sonantes ethics and therefore shall be immediately confiscated from said unauthorized
Possession, control, or custody thereof, by the appropriate aw enforcement officer.

Section 8 Data Protection. — The apprehending officer, after filing the proper
Complaint, shall immediately cause the cancellation of the instrument, informing the owner
thereof. Any data necessary for the prosecution of the offense shall be preserved or retrieved as
needed through subpoena. The apprehending officer shall ensure protection of data and integrity
of the intended payroll hokler’s account, cancelling the reported instrument and all other
necessary implements thereof, informing all its branches and the intended payee of such
cancellation.

Section 9. Duty of Card Issuer. — In cases wherein, the cash card/ATM card has been
surrendered to any person engaged in the business of money lending, who collects the same for
the purpose of exacting payment, the issuing entity has the mandatory duty to issue replacement
card, and cause the cancellation of the surrendered cash card or ATM card, at any time upon the
request of the depositor’ account holder.

Section 10. Implementing Rules. — Within sixty (60) days from the effectivity of this
Act, all concemed government agencies and relevant stakcholders shall issue the appropriate
implementing rules and regulations of this Act.

Section 11. Separability Clause. — If any provision or part of this Act is declared
invalid or unconstitutional, the remaining parts or provisions not affected shall remain in full
force and effect.

Section 12. Repealing Clause. - All laws, decrees, orders, niles and regulations and
other issuances or parts thereof which are inconsistent with the provisions of this Act are hereby
repeakd or amended accordingly.

Section 12. Effectivity. - This Act shall take effect fifteen (15) days afler its
publication in the Official Gazette or in any newspaper of general circulation,

Approved,

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