NINETEENTH CONGRESS OF TIIE
REPUBLIC OF TIIE PHILIPPINES
First RIgular Session
HOUSE 0F REPRESENTATIVES
HouSEBILLNo.H57
Introduced by REPRESENTATIVES VIRGILI0 S. LACSON  AND RODANTE
D. MARCOLETA
EXPLANATORY NOTE
In times of great economic distress, Filipinos come together as a community to
alleviate  each  other's financial  burden.  This  practice  has  ripened  into  a  decades-old
system,alsoknownasthepaluwagan.PaluwaganisaTagalogwordthatmeaus``easing
up"- a quite literal denomination of its purpose which is to ease up the each other's
burden.
TheconceptofpaluwaganisnotuniqueinthePhilippinesetting.Althoughnamed
differentlyatdifferentsocieties,theconceptstaysthesame.Eachparticipantgivesafixed
amount as contribution to a pooled fund. The pooled fund will be given to a certain
member who is appointed as the manager of the funds on an agreed date. The money
collected for the period is then given to a person scheduled to receive it. The order of the
payout  is  usually  determined  by  drawing  of  lots.  The  cycle  continues  until  all  the
members have received their share.


The P¢Z#zo¢g#re system has many benefits. First, it inculcates the habit of saving
amongitsmembers.Thedutytocontributetothepoolregularlypromotesaccountability
among the members.
Second, it enables access to a lump sum amount of money, even to the poorest of
the poor. According to a United States Agency for International Development study,
credit  access  in  the  Philippines  was  the  most  restrictive  out  of  all  Association  of
Southeast  Asian  Nations  countries  in  2015.  Since  then,  certain  reforms  have  been
introduced to improve credit access especially in rural areas.  Despite this, access to
credit,  insurance,  or  savings  from  formal  iustitutious  for  low-income  individuals
remains elusive. There are many contributing factors why financial inclusion remains a
problem. One of them is what we call the demand barrier. A demand barrier is a factor
that  effectively  excludes  individuals,  especially  the  poor,  from  accessing  financial
services.   It  can  be  socioeconomic   or  cultural  elements,  such  as  lack  of  formal
identificationsystems,andlowlevelsoffinancialliteracy,1ackofawarenessofavailable
services, inappropriateness of certain services to the needs of the low-income sectors.
Lack  of  financial  inclusion  in  formal  institutions  causes  people  to  be  creative  in
addressing   their   financial   necessities,   hence   the   creation   of   p¢Z#zo¢gr7t.   These
community-based financial systems are accessible even to those who are uneducated.
Thirdly,  the  system  promotes  a  sense  of  Z7¢y¢7z!.fe¢7t.  It  strengthens  social  and
financial network within a community through unity, responsibility, and cooperation.
Whenamemberfailstopay,itaffectsthebenefitsofotherparticipantsinthep¢J%zo¢g#7t.
Theadvantagesofthesystemarenotwithoutdowusides.Althoughpez#zpng##has
beeninexistencesincetimeimmemorial,thepracticeremainsinformalanduuregulated.
Anyone  can  form  a  group  through  verbal  agreements.  It  is  not  regulated  by  any
governlnentalbody.DepartmentofTradeandlndustry(DTI)oncetaggedthepflz#zo¢g##
system as a form of pyramid scheme, because of the fact that the first person to receive
thepotisactuallytheonewhowillgetthemostbenefitfromthesystem.Thelastpersous
2


to receive the pooled funds have the highest risk in case other participants fail to pay and
the system collapses. Since the system only relies on trust, it also becomes prone to fraud.
Since most p¢Z#zong#7t system is uuregistered and undocumented, it is hard to prove
claims of losses and damages in court.
This  bills  aims  to  regulate  the p¢Zt"ng¢7t  system  by  creating  an  independent
agencycalledP¢Zc{zong¢77Mi.c7io¢7ifl7tceAdministration.TheAdministrationshallprescribe
rules and regulations for the creation and registration of p¢Zt"ng¢77, and shall exercise the
power of supervision over registered paluwagans. The bill also provides for the creation
of the P¢Z#an¢g#7i Insurance Fund, which aims to protect members of insured paluwagan
in case of cessation of business.
This bill principally aims to provide an avenue for the Filipino people to achieve
financial autonomy and self-sufficiency, by promoting entrepreneurship and providing
them with affordable credit and financial assistance. It is hoped that the formalization
and strengthening of the paluwagan microfinance system, as well as the establishment of
the Paluwagan Microfinance Administration, shall contribute to the realization of the
people's aspirations towards financial stability and self-reliance.
For the foregoing reasons, the passage of this bill is earnestly sought.
Manila Teachers Party-list
3


NINETEENTH CONGRESS OF TIIE
REPUBLIC OF THE PHILIPPINES
First Regular Sesston
HOUSE OF REPRESENTATIVES
HoUSE BILL NO.7JE7
Introduced by REPRESENTATIVES VIRGILI0 S. LACSON  AND
RODANTE D. MARCOLETA
AN ACT
PROVIDING FOR THE REGULATION OF ORGANIZATION AND OPERATION
0F     COMMUNITY     MICROHNANCE     GROUPS     ALSO     KNOWN     AS
PALUWAGAN, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House Of Rlepresentatives Of the Phittppines in  Congress
assembled:
CHAPTER I
Title and Definitions
SECTION   1.   Title   -   This   Act   may   be   cited   ais   ``Colrmunity   P¢Z%zo¢g#re
Morofirance AIct."
SEC. 2. Declaration of Policies. - The State hereby declares its policy to pursue
a program that emboldens the people to achieve financial autonomy through
capacity building and  self-financing activities.  The Filipino  people  shall  be
encouraged to come together and undertake serf-financing activities to inspire
themtocultivateacultureofentrepreneurship,meettheirbasicneeds,improve
their financial resources, and promote income security.


In this regard, the State shall place great importance on facilitating easy and
efficient access to necessary funds and credits, for they are crucial elements in
realizing the people's aspirations towards financial stability and self-reliance.
To achieve this end, the paluwagan, a traditional community microfinance
system, shall be formalized and strengthened for the protection and benefit of
the people. Through this system, the people shall have access to affordable
credit and financial  assistance,  and they  shall be empowered to engage in
entrepreneurial activities and other forms of self-sustenance.
SEC.3. Definitions - As used in this Act, the term -
Co77z77€"7!t.fy  P¢Zwzung¢7z  refers  to  a  microfinance  group  that  caters  to  a  select
group  of persons with residence  or  employment in a  defined  community,
created in accordance with the provisions laid out in this Act, for the noble
purpose  of  instilling  a  culture  of  entrepreneurship,  while  simultaneously
promoting their financial welfare by providing them with a ready source of
credit for provident and productive objectives.
Chairman    refers    to    the    Chairman    of    the    Pflz#zung#7t    Microfinance
Administration;
Administration refers to the P¢Zc"¢g#7t Microfinance Administration,.
Board refers to the Pflz#zo¢gr7£ Microfinance Administration Board;
Member  means  a  person  who  holds  an  account  in  the  p¢Zwzo¢g#7!,  which
evidences member's contribution (hulog) received or held in the usual course
of business and for which it has given or is obligated to give credit to the
account of the member;
Paluwagan refers to a duly registered Corrmunity Pflzt"ngfl7t,.


Board of Trustees refers to the Board of Trustees of a registered P¢Zw"ng¢77.
CHAPTER 11
P¢Zwzt)#g#77 Microfinance Administration
SEC. 4. Creation of P¢Zctzo¢g#7t Microfinance Administration - There is hereby
established in the executive branch of the Government an independent agency
to be known as the P¢Zz4zu¢g#7t Microfinance Administration, which shall be
under the management of the P¢Zc{zo¢gr77 Microfinance Administration Board.
SEC. 5. Membership of the Board -The Board shall consist of three members,
who  are  broadly  representative  of  the  public  interest,  appointed  by  the
PresidentofthePhilippinesuponcousultationandrecommendationofexisting
paluwagan.  In  appointing  the  members  of  the  Board,  the  President  shall
designate the Chairman.
Pending the appointments by the President of the Philippines to the Inaugural
Paluwagan  NIcrofinance  Administration  Board,  an  interim  board  shall  be
established   to   oversee   the   operations   of   the   Paluwagan   Microfinance
Administration.  The  interim  board  shall  consist  of  the  Secretary  of  the
Department  of  Trade  and  Industry,  the  Commissioner  of  the  Insurance
Commission, and the Chairman of the Securities and Exchange Commission,
ortheirdesignatedrepresentatives.Theinterimboardshallhaveallthepowers
and duties of the Paluwagan Microfinance Administration Board until such
time as the initial appointments to the Board have been made by the President
ofthePhilippines.TheSecretaryoftheDepartmentofTradeandlndustryshall
serve as interim Chairman.
SEC. 6. Qualifications of Board Members -


(A)ExperienceinFinancialServices-IncousideringappointmentstotheBoard
under  the  preceding  section,  the  President  shall  give  consideration  to
individuals  who,  by  virtue  of  their  education,  training,  or  experience
relating to a broad range of financial services, financial services regulation,
or financial policy, are especially qualified to serve on the Board.
(8) Limitations - Not more than one member may be appointed to the Board
from among individuals who, at the time of the appointment, are involved
with any p¢Zt"ng¢7t as a trustee, committee member, officer, or employee.
SEC. 7. Term of Office - Each member of the Board shall have a term of 6 years,
except that of the two members, other than the Chairman, initially appointed
shall expire, one upon the expiration of two years from date of appointment,
and the other upon the expiration of four years from the date of appointment.
In no case shall there be re-appointments.
In the event of death, resignation, removal of a member, the successor shall
only serve the unexpired portion of the term of the predecessor.
SEC. 8. Functions of the Board. - The management of the Administration shall
be vested in the Board. A majority of the Board shall constitute a quorum.
Among its functions -
(i)        the Board shall adopt such rules as it sees fit for the transaction of its
business and shall keep permanent and complete records and minutes
Of its acts and proceedings.
(ii)       the Board is authorized and empowered to require that every person
appointed or elected by any pflz#zong¢7i to any position requiring the
receipt,  payment,  or  custody  of  money  or  other  personal  property
owned  by  a  pflz#zong#%,  or  in  its  custody  or  control  as  collateral  or
otherwise, give bond in a corporate surety company duly registered in
the Philippines, any such bond or bonds shall be in a form approved by


the Board with a view to providing surety coverage to the p¢Zg4zu#g#7i
with reference to loss by reason of acts of fraud or dishonesty including
forgery, theft, embezzlement, wrongful abstraction, or misapplication
on the part of the person, directly or through connivance with others,
and  such other surety coverages  as the Board  may  determine to be
reasonably appropriate or as elsewhere required by this Act.
Any such bond or bonds shall be in such an amount in relation to the
money or other personal property involved or in relation to the assets of
the  pflzc"¢g¢7t  as  the  Board  may  from  time  to  time  prescribe  by
regulation for the purpose of requiring reasonable coverage. In lieu of
individual bonds the Board may likewise approve the use of a form of
schedule or blanket bond which covers all of the officers and employees
of a p¢Zz4zong#7t whose duties include the receipt, payment, or custody of
money or other personal property for or on behalf of the pez#zongfl7t.
(iii)      The Board is authorized in carrying out its functions under this Act to
appoint   such   personnel   as   may   be   necessary   to   enable   the
Administration to carry out its functions.
(iv)      The Board is authorized to expend such funds, enter into such contracts
with   public   and   private   organizations   and   persons,   make   such
payments in advance or by way of reimbursement, acquire and dispose
of,byleaseorpurchase,realorpersonalproperty,withoutregardtothe
provisions  of any  other law  applicable  to  executive  or  independent
agencies of the Philippines, and perform such other functions or acts as
it may deem necessary or appropriate to carry out the provisions of this
Act, in accordance with the rules and regulations or policies established
by the Board not inconsistent with this Act.
(v)       The Board shall make an annual report to the congress through the
Committee   on   Micro,   Small,   Medium   Enterprise   Development
Committee  of  the  House  of  Representatives.  Such  a  report  shall
summarize  the  operations  of the  Administration and  set forth such
information as  is necessary f or the Congress to review the financial
program approved by the Board.


(vi)      The financial transactions of the Administration shall be subject to audit
by the Commission on Audit. Audit shall be conducted at the place or
places where the accounts of the Administration are kept.
(vii)     Upon recommendation of the Board, the Administration may invest and
reinvest such portions of the annual operating fees deposited under this
Act as the Board determines are not needed for current operations. Such
investments  may be  made  only  in  interest bearing securities  of  the
Government   of   the   Philippines.   All   income   derived   from   such
investments and reinvestments shall be deposited to the account of the
Adhinistration.
(viii)   The Board shall fix the compensation and number of, and appoint and
direct,  employees  of  the  Administration,  in  accordance  with  the
applicable laws on government employee compensation.
(ix)      The   Board   shall   provide   technical   assistance   to   duly   registered
paluwagan   in   the   efficient   management   and   operation   of   their
respective   microfinance   systems.   This   includes   the   conduct   of
specialized  training  programs  that  are  carefully  crafted  to  equip
members with vital knowledge, skills, and competencies necessary for
their business operations and for enhancing their entrepreneurial skills.
SEC.  9.  Chairman  of the  Board  -  The  Chairman  of the  Board  shall  be  the
spokesman for the Board and shall represent the Board and the Administration
in its official relations with other branches of the Government.
TheChairmanshalldetermineeachBoardmember'sareaofrespousibilityand
shall  review  such  assignments  bi-annually.   It  shall  be  the  Chairman's
responsibility  to  direct  the  implementation  of  the  adopted  policies  and
regulations of the Board.
CHAPTER Ill
community p¢z#zong#7i


SEC. 10. Creation of a Community Pflzztzo¢g#7t - Any seven or more persons with
residence  or  employment  in  a  defined  community,  who  desire  to  form  a
community pflz#zuflgce7t shall apply either before the Administration who shall
approve  the  creation  of  said  microfinance  group.    The  application  shall
specifically state:
(1) Name of the communrty p¢Zztzong#7z
(2) Location of the proposed community p¢Z#zo¢gan
(3) Names and Addresses of the members
(4) Proposed field of membership
(5) Term of existence, not exceeding 50 years,  renewable for another 50
years upon approval of the Administration
(6) Articles of the pez#"¢g#7i
(7) By-Laws
SEC. 11. Application -In order to simplify the organization of p¢Z„zong#7t,  the
Board shall from time to time cause to be prepared a form of application and a
formofbylaws,consistentwiththisAct,whichshallbeusedbyapplicants,and
shall be supplied to them on request.
Beforeanyapplicationisapproved,anappropriateinvestigationshallbemade
for the purpose  of determining:  a)  whether the p#Zc"¢gow  conforms to the
provisions  of this  Act,  b)  the general character and fitness  of members,  c)
economic viability of establishing the proposed p¢Z#zong##.
The Board may prescribe the payment of reasonable amount of fees for the
processing of application under this provision.
SEC. 12.  Powers and Functions of a pflz#co¢gan  - Upon approval of the creation
of  a  p¢Z#zo¢g#7t,  a    certificate  shall  be  issued  by  the  Administration.  The
certification shall grant the p¢Z#zong#7z the authority to exist as body corporate
and as such, subject to the limitations herein contained, shall be vested with all


of the powers and charged with all of the liabilities conferred and imposed by
this Act, which includes the power:
(1) to make contracts;
(2) to sue and be sued;
(3) to adopt and use a common seal and alter the same at pleasure;
(4) to purchase, hold, and dispose of property necessary, incidental, or
beneficial to its operations;
(5) to make loans, the maturities  of which shall not exceed 30 years,
except as otherwise provided herein, and extend lines of credit to its
members, in accordance with the following:
a.  loans  to  members  shall  be  made  in  conformity  with  criteria
established in the By-laws of the p¢Z#zong#7t. Provided, That -
(i)        a residential real estate loan on a family dwelling, that is
or will be used as the principal residence of a pflJz4"¢g##
member, and which is secured by a first lien upon such
dwelling, may have a maturity not exceeding thirty years
or such other limits as shall be set by the Board, subject to
the rules and regulations of the Board;
(ii)       a loan or aggregate of loans to a trustee or member of the
supervisory or credit committee of the pflzwzu#gr7z making
the  loan  which  exceeds  5,000,000  Philippine  Pesos,  be
approved  by  the  board  of  trustees  of  the  p¢Zctzo¢g#7!;
provided   that   the   said   trustee   or   member   has   no
participation in the approval of said loan;
(iii)      loans to other members for which trustees or members of
the supervisory or credit committee act as guarantor or
endorser  be  approved  by  the  board  of  trustees  of  the
p#Z#co¢g#7t when such loans standing alone or when added
to  any  outstanding  loan  or  loans  of  the  guarantor  or


endorser  exceeds  the  amount  of  5,000,000  Philippine
Pesos;
(iv)      loans shall be paid or amortized in accordance with rules
and regulations prescribed by the Board after taking into
account  the  needs  or  conditions  of  the  borrowers,  the
amounts and duration of the loans,  the interests  of the
members,    and  such  other factors  as  the  Board  deems
relevant;
(v)       loans mustbe approved by the credit committee or a loan
officer;
(vi)      the rate of interest is reasonable;
(vii)     a  self-replenishing line  of credit  to  a  borrower  may be
established to a stated maximum amount on certain terms
and conditions which may be different from the terms and
conditions established for another borrower;
Provided, however, that a p¢Zc4zong¢7z shall not commit itself to
makeanyloansforamountsinexcessofthetotalofthefollowing
amounts:
1) amount of cash available for loan purposes;
2) amount of cash which can be readily realized upon the
sale or redemption of permissible investments made by
the pahawagan; and
3)  amount  of  credit  available  for  loan  purposes  from
government or private financing iustitutious;
Provided    further,    any    government    office,    agency,    or
iustrumentality  employing  a  paluwagan  member  is  required,
notwithstanding  the  provision  of  any  existing  law,  rule  and
regulation to the contrary, to make deductions from his salary,
wage, income or retirement pension pursuant to the terlns of his


loan, and all other deductions authorized by the member, to remit
such deductions to the paluwagan concerned, and to collect such
reasonable fee for his  services  as  may be  authorized  by rules
promulgated by the Board.
(6) to  receive  from  its  members  payments,  representing  member's
contribution  (hulog)  which  shall  be  evidenced  by  a  certificate  of
membership;
(7) to  invest  its  funds   in  accordance  with  rules   and  regulations
prescribed by the Board, in the total amount not exceeding 25 per
centum of its paid-in and uninpaired capital;
(8) to borrow, in accordance with such rules and regulations as may be
prescribed by the Board, from any source, in an aggregate amount
not exceeding 50 per centum of its paid-in and unimpaired capital
and surplus;
(9)  to levy late charges and penalties, in accordance with the by-laws,
for failure of members to meet promptly their obligations to the
paluwagan.,
(10)to  impress  and  enforce  a  lien  upon  the  member's  contribution
(hulog) of  any member, to the extent of any loan made to him and
any dues or charges payable by him;
(11 )in accordance with regulations prescribed by the Board -
(i)        to sell to persons in the field of membership negotiable
checks  (including  travelers  checks),  money  orders,  and
other   similar   money   transfer   instruments   (including
international and domestic electronic fund transfers and
remittance transfers), and;
(ii)       to cash checks and money orders for persons in the field of
membership for a fee;
(iii)      to issue credit cards;


(iv)      to  engage  existing  digital  platforms,  or  other  financial
technologies that may be devised in the future, to enhance
or automate financial services for members;
(12)in accordance with rules and regulations prescribed by the Board, to
purchase, sell, pledge, or discount or otherwise receive or dispose
of, in whole or in part, any eligible obligations (as defined by the
Board) of its members and to purchase from any liquidating notes
made by individual members of the liquidating p#Zc4zu¢gow at such
prices  as  may  be  agreed  upon  by  the  board  of  trustees  of  the
liquidating p¢Z#zu#gr7t and the board of trustees of the purchasing
pflzttavngfl7t, but no purchase may be made under authority of this
paragraph if, upon the making of that purchase, the aggregate of the
unpaid  balances   of  notes   purchased  under  authority   of  this
paragraphwouldexceed5percentumoftheunimpairedcapitaland
surplus of the p¢Z#zo¢g¢77;
(13)to sell all or a part of its assets to another p¢Z#zo¢gr7i, to purchase all
orpartoftheassetsofanotherp¢Z#zong¢rzandtoassumetheliabilities
of  the  selling  p¢Zc/zo¢g#77   and  those   of  its   members   subject  to
regulation of the Board;
(14)to invest in securities that are offered and sold pursuant to Section
3, Chapter I of Republic Act no. 8799, subject to such regulation as
theBoardmayprescribe,includingregulationprescribingndnimum
size  of  the  issue  at  the  time  of  initial  distribution,  minimum
aggregate sales prices, or both;
(15) to exercise such incidental powers as shall be necessary or requisite
to  enable  it  to  carry  on  effectively  the  business  for  which  it  is
incorporated.
(16)to provide additional services for the mutual benefit of its members,
upon approval of the Board. Provided, that such services involve no
risk to the assets of the p¢J#zong4z7t or the funds of its members;


(17)Notwithstanding any other provision of law, to accept investment
from a minimum seven persons within the defined community for
thepurposeofaugmentingresourcesandincreasingliquidityforthe
purpose of providing credit line to the development of micro, small
and medium-sized businesses. The contributors shall be members of
the p¢Zwzo¢g¢7t, and shall be subject to the same terms and conditions
of  membership  as  other  members.  The  p¢Z#zo¢gfl7t  shall  have  the
discretion to determine the terms and conditions of the investments,
including  the  amount  of  the  investment,  the  duration  of  the
investment,  and  the  potential  return  on  the  investment.   The
z7¢ZwttJflg#ri  shall  also  have  the  discretion  to  limit  the  amount  of
investments it will accept;
(18)To   collect member's contribution thulog) from its members upon
admission, and distribute such member's contribution thulog), plus
any interest and earnings thereon, to the members after a certain
period of time as share in the paluwagan's income. The z7flzz"¢g#7!
shall have the discretion to determine the frequeney and amount of
such distributions, based on the pflJ#zo¢gr7t's financial performance
and other factors.
No person, association, partnership or corporation shall do business, or hold
itself   out   as   doing   business,   as   a  p¢Z"zo¢g#7t,   or   shall   use   the   term"
p¢Zc"flg#7z " or any other title or name tending to give the public the impression
that it is engaged in the operations and activities  of a p¢Zz/"¢gow, unless so
authorized under this Act.
SEC. 13. Duties of the p#Zztzung#7t  - In accordance with rules prescribed by the
Board, each p¢Z#w¢gr7t shall pay to the Administration an armual operating fee
which may be composed of one or more charges identified as to the function or
functions for which assessed.


Thefeeassessedunderthissectionshallbedeterminedaccordingtoaschedule,
or schedules,  or other method determined by the Board to be appropriate,
which  gives  due  consideration  to  the  expenses  of  the  Administration  in
carrying out its responsibilities under this Act and to the ability of pflzgt"ng#7€ to
pay the fee.
The Board shall, among other things, determine the periods for which the fee
shall be assessed and the date or dates for the payment of the fee or increments
thereof.
All operating fees shall be for the account of the Administration and may be
expended by the Board to defray the expenses incurred in carrying out the
provisiousofthisActincludingtheexaninationandsupervisionofp¢Zztzong#72.
CHARER IV
Membership
SEC.14.Membership-Eachmembershallinvestanamountwhichrepresents
capitalcontribution,andpaytheinstallmentsthereon,asmaybeprescribedby
the Bylaws.
SEC.  15.  Membership  Field  -  The  membership  of any p¢Z#zo¢gr#  shall  be
limitedtoadefinedcommunity,whichshallbesetoutinby-laws.
SEC. 16. Additional membership eligibility - No individual shall be eligible for
membershipinap¢Zwzu¢ganonthebasisoftherelationehipoftheindividualto
another person who is eligible for membership in the p¢Zztzong##, unless the
individual is within the second degree of consanguinity of the member.


SEC.  17.  Retention of membership - Except as provided in this Act, once a
person becomes a member of a p¢Zz"¢gan in accordance with this title, that
person  or  organization  may  remain a  member  of  that p¢Z#zong¢7i  until  the
person or organization chooses to withdraw from the membership.
SEC. 18. General membership meeting - The annual meeting of each p#Z#zo¢g#7®
shall be held at such place as its bylaws shall prescribe. Special meetings may
be held in the manner indicated in the bylaws.
Unless  otherwise  provided  by  the  Articles  and  Bylaws  of the pflzz4zong#7t,  a
member shall be entitled to vote by proxy.
SEC.  19.  Expulsion of members - A member may be expelled for cause by
majority vote  of the board  of trustees,  ratified  by  majority  vote  of the  all
members of a p¢Z#zo#gr77   present at a special meeting called for the purpose,
but only after opportunity has been given to the member to be heard.
The board of trustees of a pez#zp¢g#7t may, by majority vote of a quorum of
trustees,   adopt   and   enforce   a   policy   with   respect   to   expulsion   from
membership based  on non-participation by a member in the affairs  of the
paluwagan.
In establishing its policy, the board of trustees should consider a member's
failure to vote in the p¢Zztzu¢g#ro elections, failure to obtain or pay loan from
p¢Z#zo¢g#7t, among others. If such a policy is adopted, written or digi notice of
the policy and the effective date of such policy shall be mailed to each member
of the p¢Z#ro¢gr7z at the member's current address appearing on the records of
the p¢Zt"¢g#7t within 10 days from the adoption of of such policy. In addition,
each new member shall be provided written notice of any such policy prior to
or upon applying for membership.


The  term ``cause"  under  this  section  shall  mean  a  substantial  or  repeated
violation  of  the  membership  agreement  of  the  p¢Zt"¢g#7t;  a  substantial  or
repeated   disruption,   including   dangerous   or   abusive   behavior   to   the
operations of a p¢Z#zt7¢gr7i; or fraud, attempted fraud, or other illegal conduct
that a member has been convicted of in relation to the p¢Z#zong#7t, including the
employees conducting business on behalf of the p¢Z#zong#77.
Expulsion of a member pursuant to this section shall not operate to relieve the
member from any civil or criminal liability to the p¢Z#zong#7t.
SEC. 20. Due process - If a member will, subject to the policy adopted herein,
be  subject  to  expulsion,  the  member  shall  be  notified  in  advance  of  the
expulsion,  along with the  reason for  such  expulsion.  Such notice  shall  be
provided in person, by mail to the member's address, or, if the member has
elected  to  receive  electronic  communications  from  the  pflzwzong¢7t,  may  be
provided electronically.
A member shall have 30 days from the date of receipt of such notification
requestahearingfromtheboardoftrusteesofthepflzt4rong#7i.Ifamemberdoes
not request a hearing during the 30-day period as described, the member shall
be expelled after the expiration of the 30-day period.
If a member requests a hearing during the 30-day period as described, the
board of trustees of the p¢Z#w¢g## shall provide the member with a hearing
within 30 days from receipt of request; and after such hearing, the board of
trustees of the pezc4zu¢g¢rz shall hold a vote within 15 days whether or not to
expel the member.  If a member is expelled pursuant to the decision of the
Board, the notice of the expulsion of the member shall be provided to the
memberinpersonorbymailtothemember'saddress,inwrittenformor,if the
member has elected to receive electronic corrmunicatious from the p¢Z#zo¢gr7i,
may be provided electronically.


The expulsion of a member pursuant to this Act shall be done individually, on
a case-by-case basis, and neither the Administration nor any pflzwtt7ngfl7t may
expel a class of members.
SEC. 21. Reinstatement -A member expelled under this section shall be given
an opportunity to request reinstatement of membership; and may be reinstated
by either a majority vote of a quorum of the trustees of the p¢Z#zong#7t; or a
majority vote of the members of the pflzwzong¢7t present at a meeting called for
such purpose.
CHAPTER V
Management
SEC. 22.  Management of P¢Zwzu¢gow - The management of a p¢Z#zong¢7t shall be
by a board of trustees, a supervisory corrmittee, and a credit conrmittee. The
board of trustees shall consist of an odd number of trustees, at least five in
number,  to  be  elected  annually  by  and  from  the  members  as  the  bylaws
provide.  Any vacancy occurring on the board shall be filled until the next
annual election by appointment by the remainder of the trustees.
At  their  first  board  meeting,  the  trustees  shall  appoint  corporate  officers
specified  in  the  bylaws,  which  shall  include  a  President,  Secretary,  and
Treasurer.  Corporate  officers  may be compensated  in accordance with the
industry  standard.    The  bylaws  shall  specify  the  specific  duties  of  each
corporate officer.
SEC. 23. Composition of Supervisory and Credit Committee - The Committee
members shall be appointed by the board of trustees and shall consist of not
less than three members nor more than five members.


A record of the names and addresses of the executive officers, members of the
supervisory committee, credit committee, and loan officers, shall be filed with
the Administration within ten days after their election or appointment.
SEC. 24. Compensation - No member of the board of trustees or of any other
committee shall, as such, be compensated. Per diems, health, accident, similar
insurance protection, and the reimbursement of reasonable expenses incurred
in  the  execution  of  the  duties  of  the  position  shall  not  be  considered
compensation.
SEC. 25. Meetings of the Board of Trustees- The board of trustees shall meet at
leastonceamonthandshallhavethegeneraldirectionandcontroloftheaffairs
ofthep¢Zttzong¢7t.MinutesofallmeetingsshallbekeptbytheSecretary.
Among other things, the board of trustees shall -
(1) act upon applications for membership or appoint employees from
among the members of the p¢Zctzu¢g#7i, which shall include an internal
auditor, and a loan officer;
(2)provideadequatefidelitycoverageforofficersandemployeeshaving
custody of or handling funds according to regulations issued by the
Board;
(3) fill vacancies on the board of trustees until successors elected at the
next annual meeting have qualified;
(4)  have  charge  of  investments  including  the  right  to  designate  an
investment committee of not less than two to act on its behalf;
(5) subject to any limitations of this Act, determine the interest rates on
loans,thesecurity,andthemaximumamountwhichmaybeloanedand
provided in lines of credit;
(6)  if the bylaws so provide, appoint one  or more loan officers and
delegate to these officers the power to approve or disapprove loans,
lines of credit, or advances from lines of credit;


(7) subject to the limitations of this title and the bylaws of the p¢Z#zung#7t,
provide for the hiring and compensation of officers and employees;
(8) if the bylaws so provide, appoint an executive corrmittee of not less
thanthreetrusteestoactonitsbehalfandanyothercommitteestowhich
it can delegate specific functions;
(9)  prescribe  conditions  and  lirnitatious  for  any  comlnittee  which it
appoints;
(10)  review at each monthly meeting a list of approved  or pending
applications  for  membership  received  since  the  previous  monthly
meetingtogetherwithsuchotherrelatedinformationasitorthebylaws
require;
(11) provide for the furnishing of the written reasons for any denial of a
membershipapplicationtotheapplicantuponthewrittenrequestofthe
applicant;
(12) establish and maintain a system of internal controls consistent with
the regulations of the Administration;
(13) establish lending policies; and
(14) do all other things that are necessary and proper to carry out all the
purposes and powers of the p¢Z#zong#7t, subject to regulations issued by
the Board.
CHAPTER VI
Conrfuttees
SEC. 26. Committee meetings - The committees created by the board of trustee
shallholdsuchmeetingsasthebusinessofthep¢Z#zong#7imayrequire,notless
frequently than once a month.
SEC.27.FunctionsoftheSupervisoryCommittee-Thesupervisorycommittee
shall have the following functions:


(i)        make or cause to be made an annual audit and shall submit a report of
that audit to the board of trustees and a sulnmary of the report to the
members at the next annual meeting of the p¢Z#"ng##.
(ii)       make  or  cause  to  be  made  such  supplementary  audits  as  it  deems
necessary or as may be ordered by the  Board, and submit reports of the
supplementary audits;
(iii)      by  a  unanimous  vote,  suspend  any  officer  of  the  pflz#"ng¢7t  or  any
member  of  the  credit  committee  or  of  the  board  of  trustees,  for  a
maximum  period  of  30  days  or  until  the  next  members'  meeting,
whichever comes first, at which meeting any such suspension shall be
acted upon by the members;
(iv)      call by a majority vote a special meeting of the members to consider any
violation of this Act, the charter, or the bylaws, or any practice of the
p¢Zztco¢g#7!  deemed  by  the  supervisory  committee  to  be  unsafe  or
unauthorized.
Any member of the supervisory committee may be suspended by a majority
vote of the board of trustees. The members shall decide, at a meeting held not
less  than  seven  nor  more  than  fourteen  days  after  any  such  suspension,
whether the suspended comlnittee member shall be removed from or restored
to the supervisory committee.
The  supervisory  committee  shall  cause  the passbooks  and  accounts  of the
members to be verified with the records of the treasurer from time to time, and
not less frequently than once every two years. As used in this section, the term
``passbook"  shall  include  any  book,  statement  Of  account,  or  other  record
approved by the Board for use by p¢Zc"ng¢7z.
SEC. 28. Functions of the Credit Committee -The Credit Committee shall have
the following functions:


(i)        appoint   and   delegate   to   loan   officers   the   authority   to   approve
applications;
(ii)       all applications not approved by the loan officer shall be reviewed by
the credit committee, and the approval of a majority of the members
who are present at the meeting when such review is undertaken shall be
required to reverse the loan officer's decision provided a majority of the
full conndttee is present.
CHAPTER VII
Regulation
SEC.   29.   Regulation  of  Paz%ttJng#re   -The  Board  may   prescribe   rules   and
regulations for the administration of this Act. Any duly registered p¢Zg4zt7ng¢#
shall be subject to such rules, regulations,  and  orders as  the Board  deems
appropriate  and,  except  as  otherwise  specifically  provided  in  such  rules,
regulations,  or  orders,  shall  be  vested  with  or  subject to  the  same  rights,
privileges, duties, restrictions, penalties, liabilities, conditions, and lirfutatious
that would apply to all p#Z#co¢gr7z under Act.
SEC. 30. Power to revoke and suspend - The Board may suspend or revoke the
registrationofanypflz#zong¢7z,orplacethesameininvoluntaryliquidationand
appoint an authorized liquidating agent therefor, upon its finding that the
organization is bankrupt or insolvent, or has violated any of the provisions of
its charter, its bylaws, this Act, or any regulations issued thereunder.
The  Board,  through  such  persons  as  it  shall  designate,  may  examine  any
p¢Z#co¢g#re in voluntary liquidation and, upon its finding that such voluntary
liquidation is not being conducted in an orderly or efficient manner or in the
best interests of its members, may terminate such voluntary liquidation and
place such organization in involuntary liquidation and appoint a liquidating
agent therefor.


Such liquidating agent shall have power and authority, subject to the control
andsupervisionoftheBoardandundersuchrulesandregulatiousastheBoard
may prescribe -
(i)        to receive and take possession of the books, records, assets, and
property of every description of the p¢Zztzo¢gr7t in liquidation,
(ii)       to  sell,  enforce  collection of,  and liquidate  all  such assets  and
property, to compound all bad or doubtful debts, and to sue in
hisownnameorinthenameofthep¢Zz4"¢g##inliquidation,and
defendsuchactionsasmaybebroughtagainsthinasliquidating
agent or against the p¢Zc"¢gap,.
(iii)     to  receive,  examine,  and  pass  upon  all  claims  against  the
p¢Zcf rong¢7i   in   liquidation,   including   claims   of   members   on
member accounts;
(iv)     to make distribution and payment to creditors and members as
their interests may appear; and
(v)       to execute such documents and papers and to do such other acts
and  things  which  he  may  deem  necessary  or  desirable  to
discharge his duties hereunder.
Subject to the control and supervision of the Board, and under such rules and
regulatiousastheBoardmayprescribe,theliquidatingagentofap¢Z#zu¢g¢#in
involuntaryliquidationshallcausenoticetobegiventocreditorsandmembers
to present their claims and make legal proof thereof, which notice shall be
published once a week in each of three successive weeks in a newspaper Of
general   circulation  in  the  place   in  which  the  p¢Z#zt)ng##   in  liquidation
maintained an office or branch for the transaction of business on the date it
ceased unrestricted operations.
Upon  certification  by  the  liquidating  agent  in  the  case  of  an  involuntary
liquidation,anduponsuchproofasshallbesatisfactorytotheBoardinthecase
ofavoluntaryliquidation,thatdistributionhasbeenmadeandthatliquidation
has been completed, as provided herein, the Board shall cancel the charter o£


such p¢Z#zu¢g¢7i; but the corporate existence of the p¢Z#zong#„ shall continue for
a period of three years from the date of such cancellation of its charter, during
which period the liquidating agent, or his duly appointed successor, or such
persons as the Board shall designate, may act on behalf of the p¢Z#zo¢g¢73 for the
purpose  of  paying,  satisfying,  and  discharging  any  existing  liabilities  or
obligations,  collecting  and  distributing its  assets,  and  doing  all  other  acts
required to adjust and wind up its business and affairs, and it may sue and be
sued in its corporate name.
After the expiration of five years from the date of cancellation of the charter of
a   p¢Z#zo¢g#7t,  the Board may, in its discretion, destroy any or all books and
records of such p¢Zctzo¢g#7z in its possession or under its control.
CHAPTER VIII
P¢Z#zo¢gr77 Insurance Fund
SEC.31.Pflz#zo#gr73Insurance-TheBoard,ashereinafterprovided,shallinsure
the member accounts of all pflhacong¢ro to the extent of amount as they may
determine.
ApplicatiousforsuchiusuranceshallbeinsuchformastheBoardshallprovide
and shall contain an agreement by the applicant-
(1) to pay the reasonable cost of such examinations as the Board may deem
necessaryinconnectionwithdeterminingtheeligibilityoftheapplicant
foriusurance:Provided,ThatexaminatiousrequiredunderthisActshall
besoconductedthattheinformationderivedtherefrommaybeutilized
for insurance purposes;
(2) to permit and pay the reasonable cost of such examinations as in the
judgment of the  Board may from time to time be necessary for the
protection of the fund and of other insured p¢Zttzong¢7t;


(3) to provide protection and indenmity against burglary, defalcation, and
other similar insurable losses, of the type, in the form, and in an amount
at least equal to that required by the laws under which the p¢Z#cong## is
organized and operates;
(4)tomaintainsuchspecialreservesastheBoard,byregulationorinspecial
cases, may require for protecting the interest of members or to assure
thatallinsuredp¢Zztzong¢romaintainregularreservesasmayberequired
by the Board
(5)TopaythepremiumchargesforinsuranceimposedbythisChapter;and
(6) To  comply  with  the  requirements  of  this  title  and  of  regulations
prescribed by the Board pursuant thereto.
Beforeapprovingtheapplicationofanypez#rong#Hforinsuranceofitsmember
accounts, the Board shall consider -
(A)  the history, financial condition,  and management policies  of the
applicant;
(8) the economic advisability of insuring the applicant without undue
risk of the fund;
(C)thegeneralcharacterandfitnessoftheapplicant'smanagement;
(D)  the convenience and needs  of the members to be served by the
applicant; and
(E) whether the applicant is a p¢Z#"¢g#ro organized for the purpose of
creatingasourceofcreditforentrepreneurialorproductivepurposes.
(2) The Board shall disapprove the application of any p#Z#zung#ro for insurance
of its  member accounts  if it finds  that its reserves  are  inadequate,  that its
financialconditionandpoliciesareuusafeoruusound,thatitsmanagementis
unfit, that insurance of its member accounts would otherwise involve undue
risk to the fund, or that its powers and purposes are inconsistent with the
promotion of a culture of entrepreneurship, and the creation of a source of
credit for provident or productive purposes.


Upon the approval of any application for insurance, the Board shall notify the
applicantandshallissuetoitacertificateevidencingthefactthatitis,asofthe
dateofissuanceofthecertificate,aninsuredp¢Z#zong#%undertheprovisiousof
this title.
SEC. 32. Irrsurance Premium Charges. - Each insured p¢Z%ztJng## shall, at such
times as the Board prescribes (but not more than twice in any calendar year),
pay to the Fund a premium charge for insurance in an amount determined by
the Board.
SEC.33.Paymentofinsurance.-Paymentofaninsuredatcounttoanyperson
by the Administration sham discharge the Administration of the liability of
insurance. The Administration may withhold payment Of such portion of the
insured amount of any member in a closed p¢Z#zo¢g#re as may be required to
provide for the payment of any liability to the closed pflz#zung¢re or its receiver,
which is not offset against the claim due from such p¢Z#zo¢gr7t, pending the
determination and payment of such liability by such   member or any other
person liable therefor.
SEC. 34. Prohibitions on insured p¢Zz"ngfl7t. - No insured p¢Zz4zng## may be
spousored  by  or  accept financial  support,  directly  or  indirectly,  from  any
Government-sponsored enterprise. This provision shall , not be construed as
prohibiting  any   employee   of  a   Government-spousored   enterprise  from
becomingamemberofap¢Z#"¢gr71.
SEC. 35. Reports of Condition - Each insured pez#zu¢g#ra Shall make reports of
condition to  the  Board  upon dates  which shall be  selected by  them.  Such
reports of condition shall be in such form and shall contain such information
as the Board may require.


The reporting dates selected for reports of condition shall be the same for all
insured  pflz#zo¢g#ro   except  that  when  any   of  said   reporting   dates   is   a
nonbusiness  day for any p¢Z#zong#ro the preceding business  day shall be its
reporting date.
ThetotalamountofthememberaccountsOfeachiusuredp¢Zttzng¢roasOfeach
reportingdateshallbereportedinsuchreportsofconditioninaccordancewith
regulations prescribed by the Board. Each report of condition shall contain a
declaration by the president, by a vice president, by the: treasurer, or by any
other officer designated by the board of trustees of the reporting p¢Z#zongfl# to
make such declaration, that the report is true and correct to the best Of such
officer's knowledge and belief.
UnlesssuchrequirementiswaivedbytheBoard,thecorrectnessofeachreport
of condition shall be attested by the signatures of three 'of the officers of the
reportingp¢Z#zo¢g#rowiththedeclarationthatthereporthasbeenexaminedby
them and to the best of their knowledge and belief is true and correct.
TheBoardmaycallforsuchotherreportsasitmayfromtimetotimerequire.
The Board may require reports Of condition to be published in such marmer,
not inconsistent with any applicable law, as it may direct.
Reportsrequiredunderthissectionshallbesopreparedthattheycanbeused
for insurance purposes.
SEC.36.Uusafeandunsoundpractice-IftheBoardshallfindthatanyunsafe
or unsound practice or violation specified in this Act has been established and
hasnotbeencorrectedwithinthetimeaboveprescribedbytheBoardinwhich
to make such correction, the Board may order that the insured status of the
pflJ%zo¢g#rebeterminatedonadatesubsequenttosuchfindingafterduenotice
and hearing. The Administration may publish notice of such termination and
the p¢jztzong¢71 shall give notice of such termination to each of their members at


the last address of record on the books of the p¢Zw"¢gr77, in such a manner and
at such at time as the Board may find to be necessary and may order for the
protection of the members.
The Board may treat the failure of any insured p¢Z#zong¢7t to obtain an outside,
independent audit for any fiscal year for which such audit is required as an
unsafe or unsound practice.
SEC.37.Accounting-Accountingprinciplesapplicabletoreportsorstatements
required to be filed with the Board by each insured pflz#zong¢7i shall be uniform
and corrsistent with generally accepted accounting principles.
SEC. 38. Report to Independent Auditor - Each insured paluwagan which has
engaged the services of an independent auditor to audit such institution for the
past 2 years shall transmit to such auditor a copy of the most recent report of
condition made by such paluwagan, and a copy of the most recent report of
examination received by such credit union.
SEC. 38.   Requirements governing insured paluwagan - Insured paluwagan
must meet net worth standards, lending limits, and investment restrictions to
be eligible for insurance. The Administration shall have the power to establish
and enforce these standards and restrictions.
SEC. 39. Termination of insured paluwagan status - The Board shall have the
power  to  terminate  a  paluwagan's  insured  status  if  it  fails  to  meet  the
requirements for insurance.
SEC.  40.  Special  assistance to avoid liquidation - The Board shall have the
power to provide special assistance to paluwagan in danger of insolvency to
help them avoid liquidation. The Board shall have the power to recommend
including changes in management or operations.


SEC.   41.   Nondiscriminatory   provision   -   Insured   paluwagan   must   not
discriminateintheprovisionoffinancialservicesbasedonfactorssuchasrace,
religion, national origin, sex, marital status, or age.
SEC.  42.  Board  disapproval  of  directors,  committee  members,  and  senior
executive officers of insured paluwagan. - The Board shall have the power to
disapprove  individuals  who  have  been  proposed  to  serve  as  directors,
committee members, or senj.or executive officers of insured paluwagan. It may
disapprove such individuals if they have been convicted of a crime with the
penalty of prision mayor or higher.
SEC. 43. Prompt Corrective Action - The Administration shall have the power
to take prompt corrective action to address problems of insured paluwagan
before they become insolvent. The Administration shall establish standards for
prompt corrective action, which shall include mandatory corrective actions for
paluwagan that fail to meet certain thresholds. The Administration shall also
have  the  power  to  require  additional  supervisory  actions  and/or  take
couservatorship or liquidation actions as necessary to the continued economic
viability of the paluwagan.
SEC. 44. Temporary Stabilization Fund - The Adnrinistration shall establish a
Temporary Stabilization Fund to provide assistance to insured paluwagaus in
danger of insolvency.
SEC. 45. Certified statement - For each calendar year, in the case of insured
paluwagan with total assets of not more than 50 million, and bi-armually for
insured paluwagan with more than 50 million pesos, an insured paluwagan
shall  file  with  the  Board,  at such  time  as  the  Board  prescribes,  a  certified
statement showing the total amount of insured member's contributions at the
close of the relevant period, and the amount of insurance charge due to the
Fundforthatperiod,basedontheprescribedcomputationasmaybeprovided
by the Board.


The Treasurer of the paluwagan shall certify, with respect to each statement
required to be filed with Board pursuant to this section, that to the best of his
or her knowledge and belief the statement is true, correct, complete, and in
accordance with this Act.
CHAPTER VIII
Taxation
SEC. 46. Grant of tax exemption. - Notwithstanding the provisions of any law
or  regulation  to   the   contrary,  p¢Z"zo¢g¢ro   shall   enjoy  the   following  tax
exemptions:
1.   Any p¢Zctw¢g#7t shall be exempt from payment of tax in respect to all income
it   receives,   including   interest   on   its   deposits   with   any   financial
institution: ProzJz.ded,   JiozoezJer,   That   income   derived   from   any   of   its
properties, real or personal, or any activity conducted ,for profit, regardless
of the disposition thereof, is subject to the corresponding internal revenue
taxes imposed under the National Internal Revenue Code.
Interest on member's contribution of members with any pflzwzo¢gflH as well
as the shares of its members from the net income Of the pez#zong## shall be
exempt from income tax.
2.   Any p¢Z#co¢g¢ra duly registered with the Administration shall be exempt
from the payment of value-added tax and documentary stamp taxes;
3.   Any  p¢Zwzung¢7z,  regardless  of  the  amount  of  accumulated  reserves  and
undivided net savings shall be exempt from paymeht of local taxes. Fees
and charges assessed by the cities or municipalities on the application of
mayor's or local business permits, and other licenses and approvals shall in
no case exceed php 3,000.                                                      I
CHARER IX
Confidential nature of capital contributions


SEC. 47. Prohibition against inquiry into or disclosure of contributions. - All
capital   contributions   or   all   money   deposited   with   a  pflz#zong¢7t   in   the
Philippines are hereby considered as of an absolutely confidential nature and
may not be examined, inquired or looked into by any person, government
official, bureau or office, except upon written permission of the member, or in
cases of impeachment, or upon order of a competent court in cases of bribery
orderelictionofdutyofpublicofficials,orincaseswherethemoneydeposited
or invested is the subject matter of litigation.
It shall be unlawful for any official or employee of a p¢Z#zu¢g#7t to disclose to
anypersonanyinformationconcemingsaidcapitalcontributious,exceptinthe
cases mentioned in the preceding paragraph of this Section. Any official or
employee of an Association who violates this Sec. shall be punished under
Republic Act No. 1405, as amended.
CHARER IX
Offenses
SEC.    48. Refusal  to  Make  Reports  or  Permit  Examination. -  Any  trustee,
corporate officer, or employee of any p¢Z#cong¢7i within the purview Of this Act
who, being required in writing by the Administration, willfully refuses to file
the required report or permit any lawful examination into the affairs Of such
p¢Z#zo¢gow shall be punished by a fine of not less than Fifty thousand pesos
(P50,000)  nor  more  than  One  hundred  thousand  pesos  (P100,000)  or  by
imprisonmentofnotlessthanone(1)yearnormorethanfive(5)years,orboth,
in the discretion of the court.
SEC.  49. False  Statement. -The  willful  making  of  a  'false  or  misleading
statement on material fact before the Administration or any of its authorized
representatives  shall be  punished by a fine  of not less  than One  hundred
thousand  pesos  (P100,000)  nor  more  than  Two  hundred  thousand  pesos
(P200,000),  or by imprisonment of not more than (5)  years,  or both, at the
discretion of the court.


SEC.  50. Proceedings  Upon  Violation  of  this  Act  and  Other  Laws,  Rules,
Regulations, Orders or Instructions. - Whenever a p¢Z#zo¢g#7t willfully violates
this  Act  or  any  other  order,  instruction,  rule  or  regulation  issued  by  the
Administration,  the  person  or  persons  responsible  for  such violation  shall
unless otherwise provided in this Act be punished by a fine of not less than
Fifty thousand pesos (P50,000) nor more than Five hundred thousand pesos
(P500,000) or by imprisorment of not less than two (2) years nor more than ten
(10) years, or both, at the discretion of the court.
SEC.   51.   Administrative   Sanctions. -Without  prejudice   to   the   criminal
sanctions  against  the  culpable  persons,  the  Administration  may,  at  its
discretion, impose upon any p¢Z#congq# their trustees and/or officers, for any
willful violation of its charter or by-laws, willful delay in the submission of
reports or publications thereof as required by law, rules and regulations; any
refusal to permit examination into the affairs  of the pflz#zo¢gr#,  any willful
making of a false or misleading statement to the Board or its committees or its
representatives; any willful failure or refusal to comply with, or violation of
any law, or any order, instruction or regulation issued by the Board, or any
commission  of  irregularities,  and/or  conducting  business  in  an  unsafe  or
unsound  manner  as  may  be   determined  by  the   Board,   the  following
administrative sanctions, whenever applicable:
(a)  fines  in  amounts  as  may  be  determined  by  the  Board  to  be
appropriate, but in no case to exceed one thousand pesos (P1,000) a day
for    each    violation,    taking    into    consideration    the    attendant
circumstances,  such  as  the  nature  and  gravity  of  the  violation  or
irregularity and the size of the pflz#zo¢g#7i;
(b) suspension of operations or authority to accept new contributions,
grant new loans, and make new investments;
(c) suspension of authority to enter into new contracts
(d) revocation of registration


Resignation or termination from office shall not exempt such trustee or officer
from administrative or criminal sanctions.
The Board may, whenever warranted by circumstances, preventively suspend
any trustee or officer of a p¢Z#zong## pending an investigation: Provided, That
shouldthecasebenotfinallydecidedbytheAdministrationwithinaperiodof
one hundred twenty (120) days after the date of suspension, said trustee or
officer shall be reinstated in his position:  Provided, further, That when the
delay in the disposition of the case is due to the fault, negligence or petition of
thetrusteeorofficer,theperiodofdelayshallnotbecountedincomputingthe
period of suspension herein provided.
Whether or not there is an administrative proceeding, if the institution and/or
thetrusteesand/orofficersconcemedcontinuewithorotherwisepersistinthe
commissionoftheindicatedpracticeorviolation,theBoardmayissueanorder
requiring the institution and/or the trustees and/ or officers concerned to cease
and desist from the indicated practice or violation, and may further order that
immediateactionbetakentocorrecttheconditiousresultingfromsuchpractice
or violation. The cease and desist order shall be immediately effective upon
service on the respondents.
CHAPTER VII
Capacity-building
SEC. 52. Capacity-building. -  The Board is authorized to conduct directly, or
to  make  grants  to  or  contracts  with colleges  or universities,  state  or  local
educational  agencies,  or  other  appropriate  public  or  private  non-profit
organizations to conduct, programs for the training of persons engaged, or
preparing to engage, in the operation of pflz"zu¢gfl7t, and in related couuseling
programs.
It  is  authorized  to  establish  a  program  of  experimental,  developmental,
demonstration,  and  pilot projects,  either  directly  or by  grants  to  public  or


private nonprofit organizations, or by contracts with such organizations or
other private organizations, designed to promote more effective operation of
p¢Z#zung¢7!, and related consumer counseling programs.
In carrying out its authority under this paragraph, the Board shall consult with
officials  of appropriate agencies responsible for the administration of such
programs and projects.
Additionally,  the  Board,  in  collaboration  with  public  and  private  sector
partners  as  needed,  microcredit,  financial  literacy,  and  entrepreneurship
programs to the public on a continuing basis.
CHAPTER VIII
Miscellaneous Provisions
SEC.53.Appropriations.-Theinitialamountnecessaryfortheimplementation
of this Act shall be included in the General Appropriations Act.
SEC.54.ImplementingRulesandRegulation.-Forthepurposeofcarryingthe
objectives of this Act, the Administration is authorized to require the services
and facilities of any department or instrumentality of the goverrment or any
officer or employee of any such department or instrumentality, to promulgate
the necessary rules and regulations within 60 days from the effectivity of this
Act. The rules and regulations issued pursuant to this section shall take effect
thirty (30) days after its publication in two (2) national newspapers of general
circulation.
SEC. 55. Separability clause - If any provision of this Act or the application
thereof to any persons or circumstances is held uncoustitutional, the other
provisions of this Act and the application of such provisions to other persons
and circumstances, shall not be affected thereby.


SEC.56.  Repealing clause.  -  AIl laws,  decrees, proclamations,  issuances,  or
ordinances that are contrary to or       inconsistent with the provisions of this
act are hereby amended, repealed or modified accordingly.
SEC. 57 . Effectivity. - This Act shall take effect fifteen (15) days following the
completion of its publication in the Official Gazette or in two  (2)  national
newspapers of general circulation.
Approved,