HUUSL OF REPRESENTATIVES:

Republic of the Philippines ater
HOUSE OF REPRESENTATIVES DATE:
Quezon City tt
Ne ;
17" CONGRESS, Ry: :

First Regular Session

REGISTRATION UNIT

nouse BILL No. 2865) ay om incex SERVICE

Introduced by REP. EVELINA G. ESCUDERO

EXPLANATORY NOTE

Article II, Section 17 of the Constitution also declares that the State shall give priority to
education, science and technology, arts, culture and sports to foster patriotism and rationalism,
accelerate social progress and promote total human liberation and development.

Further, it is also a Constitutional declaration that the State shall protect and promote the
right of all citizens to quality education at all levels and shall take appropriate steps to make
education accessible to all.

Pursuant to these declarations. the State should provide the mechanisms to broaden
opportunities to higher education in addition to what is already provided for in RA 7722. “The
Higher Education Act of 1994,” RA 6728 “The Government Assistance to Students and Teachers in
Private Education Act,” and RA 8392 “The Higher Education Modernization Act of 1998.”

However, due to our financial capability as a nation, our government alone cannot address
the issue of providing education for all. Therefore, there is a need to broaden opportunities and
promote education as an accessible equalizer through the partnership of Government and the
private sector.

Thus, passage of this bill is earnestly sought.

bedi)

EVELINA G. ESCUDERO



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

17" CONGRESS
First Regular Session

House BILL No, 2865

Introduced by REP. EVELINA G, ESCUDERO

AN ACT
‘STABLISHING AN EDUCATION TRUST FUND FOR GRANTEES OF GSIS AND SSS
MEMBERS AND FOR OTHER PURPOSES

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

SECTION 1. Short Title. — This Act shall be known as the “Education Trust Fund Act.”

SEC. 2. Declaration of Policy. — The Constitution provides that the State shall protect and
promote the rights of all citizens to quality education at all levels and shall take appropriate steps to
make education accessible to all. Towards this end, the State shall endeavor to extend social
security protection to provide the opportunity of making education accessible commodity to realize
the right of all citizens, particularly the under privileged, the equal opportunity to quality education
for them to contribute in a more productive and active role in social life specially in the economic
and political spheres.

SEC. 3. Definition of Terms. — The following terms shall be understood in this Act to mean:

(1) ETF = refers to the Education Trust Fund created by this Act.

(2) Government Service Insurance System (GSIS) refers to the agency entrusted to take
charge of all matters pertaining to the officials and employees, as created and established under
Commonwealth Act No. 186, as amended by Presidential Decree No. 1146, and further amended
by Republic Act No. 8291

(3) Social Security System (SSS) refers to the agency entrusted to take charge of all matters
pertaining to the benefits and insurance claims of all private employees, embodied in republic Act
No. 1161 and amended by republic Act No. 8282

(4) Optional means the voluntary act of qualified members of GSIS or SSS to be included in
the pre-need education trust fund coverage for their grantee, deductible to their salaries and / or
payable to the system concerned in a form of equal number of monthly contributions as determined
in the policy contract.

(5) Education Trust Fund (ETF) refers to the accumulated amount of money deducted from
GSIS and SSS members and / or paid by the members to the system concerned for the use in the
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education of their grantee to be paid directly to universities or colleges for a baccalaureate degree
and / or institutions for a vocational / technical program to be determined as provided for in the
policy contract.

(6) Planholder refers to a member of the GSIS and the SSS who avails of ETF Plans for the
education of this grantee according to his desired vocational / technical and / or baccalaureate
education program.

(7) Plan agreement refers to the policy contract issued by either the GSIS or the SSS to the
provisions of the planholders’ benefits and responsibilities.

(8) Grantee refers to the child designated by the planholder regardless of relationship to
avail of the ETF benefits according to the education program determined in the policy contract,

(9) Monthly contributions refer to the amount of money to be deducted out of the salaries of
the qualified member and / or paid directly to the system concerned as specified in the policy
contract to be determined by the Education Trust Fund Board.

(10) Education Trust Fund (ETF Board refers to the governing body which shall formulate
policies, implementing, rules and regulations, guidelines, and other related matter pertaining to the
operation and management of the ETF created under this Act.

SEC. 4. Education Trust Fund (ETF) Plans. — There is hereby established in the GSIS and the
SSS a special education trust fund to be known as the “GSIS/SSS Education Trust Fund (ETF)
Plans” through enrollment in any desired education program to ensure the education of the grantee
of members for both systems respe\

SEC. 5. Management and Supervision. ~ (a) To carry out the purposes of this Act, the ETF
Board is created, hereinafter referred to as the “ETF Board”, a governing body which shall
formulate policies, implementing rules and regulations, guidelines and other related matter to
oversee, manage and supervise the operation of ETF with principal place of business in Metro
Manila, Philippines.

(b) The ETF Board composed of nine (9) members shall be comprised of one (1) member
for the Government Service Insurance System (GSIS); one (1) member from the Social Security
System (SSS); one (1) member from the Senate Committee on Government Corporations and
Public Enterprises: one (1) member from the House of Representatives Committee on Higher and
Technical Education; one (1) member from the House of Representatives Committee on higher and
Technical Education and Skills (TESDA); and one (1) Independent Pre-need Resource Person with
adequate knowledge and a minimum of ten (10) years experience in pre-need marketing and
industry exposure which shall be appointed upon recommendation by the majority members of the
proposed Board. The term of the appointive members shall be six (6) years. The members of the
Board shall receive at least Two Thousand Five Hundred Pesos (P2,500.00) per diem for each
meeting actually attended by them, but not to exceed Ten Thousand Pesos (P10,000.00) a month:
Provided, further, That said members of the Board shall also receive reasonable transportation and
representation allowances as may be fixed by the ETF Board, but not to exceed Ten Thousand
Pesos (P10,000.00) a month.

(c) The ETF Board upon the recommendation of the GSIS and the SSS, shall appoint an

actuary and such other personnel as may be deemed necessary; fix their reasonable compensation,

allowance and other benefits; prescribe their duties and establish such guidelines and procedures as

may be necessary to ensure the efficient, honest and economical administration of the provision and
2



purposes of this Act.

(d) The GSIS and the SSS shall create an Education Trust Fund (ETF) Department
respectively, to manage the general conduct of the operation and management functions: Provided,
however, That all personnel of the ETF Department shall be appointed by the President of the
GSIS/ SSS, as the case may be, subject to the confirmation of the ETF Board: Provided, further,
That the personnel of the ETF Department in both the GSIS and the SSS shall be selected only
from Civil Service eligible and be subjected to civil service rules and regulations.

(c) The ETF Board shall be responsible for the formulation and implementation of the
Implementing Rules and Regulations (IRR) of this Act, to ensure the effectiveness and viability of
the ETF for a self sustaining operation, including its budgetary support, operating capital and other
related expenditures, monitoring and categorizing of schools according to the cost of its existing
tuition fees and other related school fees and charges, monitoring of rate schedules according to the
age, terms of payment, number of years before availment and other related matters to safeguard the
implementation and operation of this Act.

SEC. 6, Education Trust Fund (ETF) Plans Agreement. - For the attainment of its main
objectives, the general provisions of a plan agreement shall be issued by both the GSIS and th
respectively, to all availing members as planholders which shall govern the terms and conditions in
the implementation of premium payments and benefits inclusive of the plan cash value which shall
be determined by the ETF Board.

rust Fund Management. - The ETF must be separated from the general funds of
the system concemed and must be self sustaining to be invested according to the provisions and
guidelines of the Social Security Fund in the case of the SSS; Investment of Funds in the case of
the GSIS, except on members loans for a greater yield investment. No amount of money from the
ETF Plans shall be loaned to the members and/or planholders of system concerned.

SEC. 8. Grantee. - For purposes of this Act the term “grantee” shall include legitimate,
legitimated, legally adopted or illegitimate child: grandchild and/or whoever be the child to be
assigned by the member regardless of relationship. A grantee is a duly appointed and registered
grantee on or before enrollment to avail of the ETF benefits. A member may apply for a deferred
plan if he does not have a child and or grantee.

SEC. 9. Optional Coverage. - Subject to the rules and regulations prescribed by the ETF
Board, all GSIS and SSS members, regardless of civil status, with or without a child and/or grantee,
may opt to participate under this ETF plans program.

SEC. 10. Premium Payments. - The amount of premiums to be paid to the ETF by the
member shall be in accordance with the schedule of payments to be prescribed by the ETF Board
taking into consideration the fallowing criteria:

(a) The interval of the time between the effectivity of the coverage and the estimated time
of enrollment of the grantee in any desired education level for a vocational/ technical or
a baccalaureate program;

(b) The number of monthly contributions to be made to complete the contracted price
stipulated in the plan agreement or policy contract;

(c) ‘The benefits to be availed of, as provided in Section 12 of this Act;

a



(d) the amount of tuition and the other standard fees charged by the institutions, colleges,
and / or universities according to the school category for a vocation/technical or a
baccalaureate education level; and

(e) Such other factors as may be determined by the ETF Board.

SEC. 11. Reinsurance. - The GSIS or the SSS may reinsure any of its interest wholly or in
part thereof with any private company or reinsurer whether domestic or foreign: Provided, That the
System concerned shall submit an annual report on its reinsurance operation to, the Insurance
Commission through the ETF Board.

SEC. 12. Education Benefits. - only members who have completed the payment of the
contract price stipulated in the plan agreement or policy contract before enrollment of the grantee
shall be entitled to avail of the benefits provided for under this Act.

The benefits shall include the payment of ETF by the System concerned of:

(a) Such school fees as may be required for enrollment, for completion of a vocational /
technical or a baccalaureate program which shall include tuition fees for all subjects
officially prescribed by the institution, colleges and/or universities and part of a regular
curriculum as requisite for graduation and other standard fees such as science and
speech laboratory, audio-visual, medical and dental, library# athletics, counseling,
registration, matriculation, official school publication and other fees may further be
approved by the CHED and the TESDA; and

(b)

Any other benefits to be provided form as stipulated in the policy contract as determined
and approved by the ETF Board.

The payment shall be made by the ETF of the System concerned directly to the institution,
college and/or university prior or upon enrollment as the case may be, an open-ended education
trust fund benefit that pays all Schools expenses as stipulated in the policy contract regardless of
whatever cost of a designated education program during the availment period, for a
vocational/technical and/or a baccalaureate education program on a semestral or trimestral bas
The ETF Board shall provide for safeguards to ensure the prompt payment of benefits.

SEC, 13. Incentives. - In appreciation of excellent performance of the grantee and for future
use of the planholder, an incentive is hereby provided:

(a) Should the grantee earn any acceleration or scholarship award in any education program
desired, all amounts due and payable to the institution, college and/or university or its
equivalent amount, shall be awarded to the availing grantee of the phanholder; and

(b) Any other incentives and/or benefits to be determined by the ETF Board as provided for
in the plan agreement or policy contract issued by the System concerned.

SEC. 14. Transferability of Benefits. ~The benefits for in this Act may be transferred to any
active member of both System and may be assigned to another grantee at the option of the
planholder.

SEC. 1. Cash Value. ~ In cases of inability of the planholder to continue the payment of
his/her premium due to financial reasons and/or any other reasons as the case may be, the ETF

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Board shall determine the cash value of the Education Trust Fund Plans which shall form part of
the general responsibility of the solvency of the ETF.

SEC. 16. Death or Diability of the Planholder. — The death or total and permanent
disability of the planholder shall not preclude the grantee from availment of the benefits provided,
in application of Section 11 as stipulated in this Act.

SEC. 17. Government Guarantee. ~ The benefits prescribed in this Act shall not be
diminished and to guarantee said benefits, the Government of the Republic of the Philippines
accepts general responsibility for the solvency of the ETF.

SEC. 18. Exemption from Tax, Legal Process and Lien. ~The actuarial solvency of funds
for the ETF shall be preserved and maintained at all times and that contribution rates necessary to
sustain the benefits under this Act shall be kept as low as possible in order not to burden the
member of both the GSIS and the SSS. Notwithstanding any laws to the contrary, the ETF, its
assets and properties, all proceeds from collections, income or investment earnings therefrom, all
supplies, papers or documents, all accruals thereto and benefits paid shall be exempt from all taxes,
assessments, fees, charges, or duties of all kinds such as customs or import duties, these exemptions
shall be irrevocable and any assessment against the ETF as of the approval of this Act are hereby
considered paid. Consequently, all laws, ordinances, regulations, issuances, opinions or
jurisprudence contrary to or in derogation to this provision are hereby deemed repealed, superseded
‘and rendered ineffective and without legal force and effect.

Moreover, these exemptions shalll not be aflected by subsequent laws to the contrary unless
this section is expressly, specifically and categorically revoked or repealed by law and a provision
is enacted to substitute or replace the exemption referred to herein as an essential factor to maintain
or protect the solvency of the fund, notwithstanding and independently of the guarantee of the
national Government to secure such solvency of the liability: Provided, That all securities of the
ETF must be registered with the Securities and Exchange Commission (SEC) and transaction tax
must be imposed hereto to safeguard the viability and transparency of investment for a self
sustaining ETF,

‘The funds and / or properties referred to herein as well as the benefits, sums or monies
corresponding to the benefits under this Act shall be exempt from attachment, gamishment,
execution, levy or other process issued by the courts, quasi-judicial agencies, or administrative
bodies including the Commission on Audit (COA) disallowances and from all financial obligati
of both the GSIS and the SSS members, including his pecuniary accountabilities arising from or
caused or occasioned by his exercise or performance of his official functions or duties, or incurred
relative to or in connection with his position or work except when his monetary liability,
contractual or otherwise, is in favor of the Education Trust Fund (ETE).

SEC. 19. Supplementary Clause. ~ In case of insufficiency of a provision of this Act, ETE
Board Resolutions shall apply in a suppletory manner to safeguard the interest of the ETF
operations towards a self-sustaining implementation of this Act.

SEC. 20. Implementing Rules and Regulation (IRR). ~ The ETF Board shall promulgate the
necessary rules and regulations for the effective implementation of this Act within ninety (90) days
following its approval, to be embodied in the Implementing Rules and Regulations (IRR) duly
confirmed and approved by the majority members of the ETF Board, which should prescribe under
the active participation of the Senate committee on Education, Arts and Culture; the Senate
Committee on Government Corporations and Public Enterprises; the House of Representatives
Committee on Higher and Technical Education; the House of Representatives Committee on

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Government Enterprises and Privatization; the Commission on Higher Education (CHED) and an
Independent Private Pre-need Resource Person.

EC. 21. Separability Clause. — If, for any reason, any section of this Act shall be held to
be unconstitutional or invalid, the other sections or provisions of this Act shall not be affected
thereby as they are separable from the invalid ones and shall remain in force and effect.

SEC. 22. Repealing Clause. ~ All laws, executive orders, decrees, instructions, rules and
regulations in contrary or inconsistent with any provision of this Act are hereby repealed or
modified accordingly.

SEC. 23. Effectivity Clause. — This Act shall take effect fifteen (15) days after its
publication in the Official Gazente or in two (2) national newspaper of general circulation
whichever comes earlier

Approved,