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(NAR) VOL. 10 NO. 2 / APRIL - JUNE 1999
[ , December 23, 1998 ]
RULES AND REGULATIONS IMPLEMENTING THE SOCIAL REFORM AND POVERTY ALLEVIATION ACT OF 1998
Policy And Application
Article 1. Title.— These Rules shall be known and cited as the Rules and Regulations Implementing the Social Reform and Poverty Alleviation Act of 1998.
Article 2. Purpose. — These Rules are promulgated to prescribe the procedures and guidelines for the implementation of the Social Reform and Poverty Alleviation Act in order to facilitate compliance therewith and achieve the objectives thereof.
Article 3. Declaration of Policy. — It is the policy of the State to:
(a) Adopt an area-based, sectoral and focused intervention to poverty alleviation wherein every poor Filipino family shall be empowered to meet its minimum basic needs of health, food and nutrition, water and environmental sanitation, income security, shelter and decent housing, peace and order, education and functional literacy, participation in governance, and family care and psycho-social integrity;
(b) Actively pursue asset reform or redistribution of productive economic resources to the basic sectors including the adoption of a system of public spending which is targeted towards the poor;
(c) Institutionalize and enhance the Social Reform Agenda, hereinafter known as the SRA, which embodies the results of the series of consultations and summits on poverty alleviation;
(d) Adopt and operationalize the following principles and strategies as constituting the national framework integrating various structural reforms and anti-poverty initiatives;
Article 4. Definition of Terms. — As used in these Rules, the following terms shall mean:
(a) "Artisanal fisherfolk" — Refers to municipal, small-scale of subsistence fishermen who use fishing gear which do not require boats or which only require boats below three (3) tons,
(b) "Basic sectors" — Refer to the disadvantaged sectors of Philippine society, namely: farmer-peasant, artisanal fisherfolk, workers in the formal sector and migrant workers, workers in the informal sector, indigenous peoples and cultural communities, women, differently-abled persons, senior citizens, victims of calamities and disasters, youth and students, children, and urban poor;
(c) "Cooperative" — Refers to a duly registered association of at least fifteen (15) persons, majority of which are poor, having a common bond of interest, who voluntarily join together to achieve a lawful common social and economic end. It is organized by the members who equitably contribute the required share capital and accept a fair share of the risks and benefits of their undertaking in accordance with the universally accepted corporate principles and practices;
(d) "Capability-building" — Refers to the process of enhancing the viability and sustainability of microfinance institutions through activities that include training in microfinance technologies, upgrading of accounting and auditing systems, technical assistance for the installation or improvement of management information systems, monitoring of loans and other related activities. The term capability building shall in no way refer to the provision of equity investments, seed funding, partnership's seed funds, equity participation, start-up funds or any such activity that connotes the infusion of capital or funds from the government or from 'the people's development trust fund to microfinance institution as defined in these Rules. Capability building precludes the grant of any loan or equity funds to the microfinance institution;
(e) "Collateral-free arrangement" — A financial arrangement wherein a loan is contracted by the debtor without the conventional loan security of a real estate or chattel mortgage in favor of the creditor. In lieu of these conventional securities, alternative arrangements to secure the loans and ensure repayment are offered and accepted;
(f) "Group character loan" — A loan contracted by a member and guaranteed by a group of persons for its repayment. The creditor can collect from any of the members of the group which guaranteed the said loan, without prejudice to the right of reimbursement of the member or members of the group who had advanced the payment in favor of the actual debtor;
(g) "Indigenous cultural communities/indigenous peoples" — As defined in Republic Act No. 8371, otherwise known as "The Indigenous Peoples Rights Act of 1997;"
(h) "Migrant workers" — As defined in Republic Act No. 8042, otherwise known as the "Migrant Workers and Overseas Filipino Act of 1995;"
(i) "Micro-enterprise" — Any economic enterprise with a capital of One Hundred Fifty Thousand Pesos (P150,000.00) and below. This amount is subject to periodic determination of the Department of Trade and Industry to reflect economic changes;
(j) "Microfinance" — A credit and savings mobilization program exclusively for the poor to improve the asset base of households and expand the access to savings of the poor. It involves the use of viable alternative credit schemes and savings programs including the extension of small loans, simplified loan application procedures, group character loans, collateral-free arrangements, alternative loan repayments, minimum requirements for savings, and small denominated savers' instruments;
(k) "Minimum basic needs" — Refers to the needs of a Filipino family pertaining to survival (food and nutrition; health; water and sanitation; clothing), security (shelter; peace and order; public safety; income and livelihood) and enabling services (basic education and literacy; participation in community development; family and psycho-social care);
(l) "Human development index" — Refers to the measure of how well a country has performed, based on social indicators of people's ability to lead a long and healthy life, to acquire knowledge and skills, and to have access to the resources needed to afford a decent standard of living. This index looks at a minimum of three outcomes of development: the state of health (measured by life expectancy at birth), the level of knowledge and skill (measured by a weighted average of adult literacy and enrollment rates), and the level of real income per capita, adjusted for poverty considerations;
(m) "Non-governmental organizations" — Refers to duly registered non-stock, non-profit organizations focusing on the upliftment of the basic or disadvantaged sectors of society by providing advocacy, training, community organizing, research, access to resources, and other similar activities;
(n) "People's organization" — Refers to a self-help group belonging to the basic sectors and/or disadvantaged groups composed of members having a common bond of interest who voluntarily join together to achieve a lawful common social or economic end;
(o) "Poor" — Refers to individuals and families whose income fall below the poverty threshold as defined by the National Economic Development Authority and/or cannot afford in a sustained manner to provide their minimum basic needs of food, health, education, housing and other essential amenities of life;
(p) "Poverty alleviation" — Refers to the reduction of absolute poverty and relative poverty;
(q) "Absolute poverty" — Refers to the condition of the household below the food threshold level;
(r) "Relative poverty" — Refers to the gap between the rich and poor;
(s) "Social reform" — Refers to the continuing process of addressing the basic inequities in Filipino society through a systematic, unified and coordinated delivery of socioeconomic programs or packages'
(t) "Small Savers Instrument (SSI)" — Refers to an evidence of indebtedness of the Government of the Republic of the Philippines which shall be in small denominations and sold at a discount from its redemption value, payable to bearer and redeemable on demand according to a schedule printed on the instrument, with a discount lower than the full stated rate if not held to maturity. The resources generated under this scheme shall be used primarily for micro-credit for the poor. SSIs are not eligible as legal reserve of banks and legal reserves prescribed of insurance companies operating in the Philippines;
(u) "Urban poor" — Refers to individuals or families residing in urban centers and urbanizing areas whose income or combined household income falls below the poverty threshold as defined by the NEDA and/or cannot afford in a sustained manner to provide their minimum basic needs of food, health, education, housing and other essential amenities of life;
(v) "Workers in the formal sector" — Refers to workers in registered business enterprises who sell their services in exchange for wages and other forms of compensation;
(w) "Workers in the informal sector" — Refers to poor individuals who operate businesses that are very small in scale and are not registered with any national government agency, and to the workers in such enterprises who sell their services in exchange for subsistence level wages or other forms of compensation; and
(x) "Youth" — Refers to persons fifteen (15) to thirty (30) years old.
Article 5. Adoption and Integration of the Social Reform Agenda in the National Anti- Poverty Action Agenda. — The National Anti-Poverty Action Agenda shall principally include the core principles and programs of the SRA. The SRA shall have a multi-dimensional approach to poverty consisting of the following reforms:
(a) Social dimension access to quality basic services. — These are reforms which refer to equitable control and access to social services and facilities such as education, health, housing, and other basic services which enable the citizens to meet their basic human needs and to live decent lives;
(b) Economic dimension asset reform and access to economic opportunities. — Reforms which address the existing inequities in the ownership, distribution, management and control over natural and man-made resources from which they earn a living or increase the fruits of their labor;
(c) Ecological dimension sustainable development of productive resources. — Reforms which ensure the effective and sustainable utilization of the natural and ecological resource base, thus assuring greater social acceptability and increased participation of the basic sectors in environmental and natural resources conservation, management and development;
(d) Governance dimension democratizing the decision-making and management processes. — Reforms which enable the basic sectors to effectively participate in decision-making and management processes that affect their rights, interests and welfare.
The SRA shall focus on the following sector-specific flagship programs:
1) For farmers and landless rural workers — agricultural development and agrarian reform,
2) For the fisherfolk — fisheries and aquatic resources conservation, management and development, and coastal resources management that are community-based;
3) For the indigenous peoples and indigenous communities — respect, protection and management of the ancestral domains that uphold their integrity as a people;
4) For workers in the informal sector — workers' welfare and protection;
5) For the urban poor — socialized housing and urban development consistent with Habitat II;
6) For members of other disadvantaged groups such as the women, children, youth, persons with disabilities, the elderly, and victims of natural and man-made calamities — the Comprehensive Integrated Delivery of Social Services (CIDSS).
Additionally, to support the sectoral flagship programs, the following cross-sectoral flagships shall likewise be instituted:
a) Institution-building and effective participation in governance;
b) Livelihood programs;
c) Expansion of micro-credit/microfinance services and capability building; and
d) Infrastructure buildup and development.
The National Anti-Poverty Action Agenda shall abide by the principles of social justice and squarely address the uncertainty faced by the poor brought about by peace and order problems. Poverty eradication shall be pursued, as much as possible, within the framework of sustainable integrated area development.
Rule II
National Anti-Poverty Commission
Article 6. The National Anti-Poverty Commission. — To support the above-stated policy, the National Anti-Poverty Commission (NAPC) is hereby created under the Office of the President. It shall serve as the coordinating and advisory body for the implementation of the SRA. The Presidential Commission to Fight Poverty (PCFP), the Social Reform Council (SRC), and the Presidential Council for Countryside Development (PCCD) are hereby abolished and the NAPC shall exercise the powers and functions of these agencies. The NAPC shall be the successor-in-interest of the three (3) abolished commissions/councils.
Article 7. Principles Governing the NAPC. — The NAPC shall be governed by the following principles:
a) Incorporation of the SRA into the formulation of development plans at the national, regional, sub-regional and local levels;
b) Efficiency in the implementation of the anti-poverty programs by strengthening and/or streamlining present poverty alleviation processes and mechanisms, and reducing the duplication of functions and activities among various government agencies;
c) Coordination and synchronization of social reform and poverty alleviation programs of national government agencies;
d) Exercise of policy oversight responsibilities to ensure the attainment of social reform and poverty alleviation goals;
e) Strengthening of local government units to more effectively operationalize the SRA in local development efforts;
f) Institutionalization of basic sectoral and NGO participation in effective planning, decision-making, implementation, monitoring and evaluation of the SRA at all levels;
g) Ensuring adequate, efficient and prompt delivery of basic services to the poor; and
h) Enjoining government financial institutions to open credit and savings windows for the poor, and advocating the creation of such windows for the poor among private banking institutions.
Article 8. Composition of the NAPC. — The President of the Republic of the Philippines shall serve as the Chairperson of the NAPC. The President shall appoint the Lead Convenor of the NAPC, either from the government or private sector, who shall likewise serve as the head of the NAPC Secretariat, and shall have the rank of a Cabinet Secretary. In case of the inability of the Lead Convenor to perform his/her responsibilities for any period of time, the President shall appoint an Officer-in-Charge for the said period.
There shall be a Vice-Chairperson for the Government Sector and a Vice-Chairperson for the Basic Sectors; the former to be designated by the President, and the latter to be elected among the basic sector representatives of the NAPC through their simple majority vote. The elected Vice-Chairperson for the Basic Sectors shall be confirmed as such by the President.
The members of the NAPC are as follows:
Article 9. Sectoral Councils. — Sectoral councils shall be formed through direct nomination of qualified individuals by organized groups belonging to the sector, to the Office of the President within a definite period of time unless a different procedure has been agreed upon by the sector concerned and the Head of the coordinating government department, agency or office. Upon receipt of the nominations, a shortlist of twenty-five (25) names shall be submitted to the President. After the lapse of one week from the deadline set for the submission of names for the sectoral councils, the President shall appoint fifteen (15) members for each of the fourteen (14) sectoral councils, taking into consideration geographical and sectoral concerns.
The Sectoral Councils thus formed shall determine the criteria for the selection of their respective sectoral representatives and nominate three (3) candidates in accordance therewith. However, if the nominees to the sectoral councils already nominate three (3) candidates on the basis of an agreed criteria to the President, the same shall already be considered by the President without prejudice to the subsequent appointment of the final fifteen (15) members of the sectoral council. In which case, the remaining task of the sectoral council is to monitor the performance of the sectoral representative, alternates and/or substitutes and initiate the recall process and/or exact accountability, when necessary.
The Sectoral Council shall exact accountability from the Sectoral Representative and has the power of recall for loss of confidence on its respective Sectoral Representative. The recall process shall be initiated by the Sectoral Council upon majority vote of its total members in a special meeting called for the purpose, and a vote of 2/3 of the total members of the Sectoral Council shall be sufficient to recall the said Sectoral Representative.
However, the Sectoral Councils may choose a different process other than the process mentioned in the previous paragraph, in which case, each Sectoral Council shall submit the recall procedures and such other mechanisms to ensure accountability of the Sectoral Representative, to the President for approval within thirty (30) days after the council members are appointed and the council duly constituted. If the President does not comment on the submitted recall process within thirty (30) days from receipt thereof, the same shall be considered to have been approved.
Article 10. Sectoral Representatives. — Sectoral Councils, formed by and among the members of each sector in accordance with the previous articles, shall respectively nominate three (3) nominees from each sector within six (6) months after the effectivity of the implementing rules and regulations of this Act, and every three (3) years thereafter and in case of vacancy. The President of the Republic of the Philippines, shall, within thirty (30) days after the submission of the list of nominees appoint the representatives from the submitted list. Sectoral representatives shall serve for a term of three (3) years without reappointment. Appointment to any vacancy for basic sector representatives shall be only for the unexpired term of the predecessor.
Article 11. Powers and Functions of the NAPC. — The NAPC shall exercise the following powers and functions:
1) Coordinate with different national and local government agencies and the private sector to assure full implementation of all social reform and poverty alleviation programs;
2) Coordinate with local government units in the formulation of social reform and poverty alleviation programs for their respective areas in conformity with the National Anti-Poverty Action Agenda;
3) Recommend policy and other measures to ensure the responsive implementation of the commitments under the SRA;
4) Ensure meaningful representation and active participation of the basic sectors;
5) Oversee, monitor and recommend measures to ensure the effective formulation implementation and evaluation of policies, programs and resource allocation and management of social reform and poverty alleviation programs;
6) Advocate for the mobilization of funds by the national and local governments to finance social reform and poverty alleviation programs and capability building activities of people's organizations;
7) Provide financial and non-financial incentives to local government units with counterpart resources for the implementation of social reform and poverty alleviation programs; and
8) Submit an annual report to Congress including, but not limited to, all aspects of its operations and programs and project implementation, financial status and other relevant data as reflected by the basic reform indicator.
Article 12. The NAPC Secretariat. — The NAPC shall be supported by a Secretariat, which shall be headed by the Lead Convenor referred to under ART. 8 hereof. The Secretariat shall provide technical and administrative support to the NAPC. It shall be formed from the unification of the secretariats of the following bodies: Presidential Commission to Fight Poverty (PCFP), Social Reform Council (SRC), and the Presidential Council for Countryside Development (PCCD).
The Office of the President shall finalize the organizational plan for the NAPC, including the plantilla for the NAPC Secretariat. Personnel who cannot be absorbed by the NAPC Secretariat shall be entitled to a separation pay of one-and-a-half (1 1/2) months for every year of service and other benefits under existing retirement laws, at the option of the personnel concerned. The years of service referred to herein shall cover only those under the three abolished commissions/councils.
Article 13. The People's Development Trust Fund. — The People's Development Trust Fund (PDTF) is hereby established, which shall be monitored by the NAPC.
The Trust Fund in the amount of Four Billion and Five Hundred Million Pesos (P 4,500,000,000.00) shall be funded from the earnings of the PAGCOR in addition to appropriations by Congress, voluntary contributions, grants, gifts from both local and foreign sources as may be accepted or decided on by the NAPC. Any additional amount to the Trust Fund shall form part of the corpus of the Trust Fund, unless the donor, contributor or grantor expressly provides as a condition that the amount be included in the disbursible portion of the Trust Fund.
The President of the Philippines shall assign to any existing government department or agency the administration of the Trust Fund, based on the expertise, organizational capability, and orientation or focus of the department of agency. The NAPC shall be limited to the function of monitoring the utilization of the PDTF, while the government departments or agencies designated by the President shall directly administer the utilization of the earnings of the PDTF.
Only the fruits of the PDTF shall be used for the purposes provided in this Rule. Any undisbursed fruits for the preceding year shall form part of the disbursible portion of the PDTF in the following year.
For the purpose of monitoring the earnings of the PDTF, the NAPC shall:
1) Source funds for the establishment of and augmentation to the Trust Fund;
2) Recommend to the appropriate government department or agency the accreditation of organizations and institutions that shall act as resource partners in conducting institutional development and capability building activities for accredited organizations and beneficiaries of microfinance and micro-enterprise programs;
3) Ensure that validation and monitoring activities are conducted for funded institutional development and capability building projects/programs beneficiaries; and
4) Promote research and development work on livelihood and microfinance technology and publications/communications programs that assist the poor beneficiaries.
Article 14. Purposes of the People's Development Trust Fund (PDTF). — The earnings of the PDTF shall be utilized for the following purposes:
1) Consultancy and training services for microfinance institutions and their beneficiaries on the establishment of the necessary support services, social and financial preparation of beneficiaries, preparation of plans and programs including fund sourcing and assistance, establishment of credit and savings monitoring and evaluation mechanisms;
2) Scholarships or training grants for microfinance staff and officers, and selected beneficiaries;
3) Community organizing for microfinance, livelihood and micro-enterprise training services;
4) Livelihood/micro-enterprise project/program feasibility studies and researches;
5) Savings mobilization and incentive programs, and other similar activities;
6) Information and communication systems such as baseline surveys, development monitoring systems, socioeconomic mapping surveys, organizational assessments, and other similar activities;
7) Legal and other management support services such as registration, documentation contract review and enforcement, financial audit and operational assessment;
8) Information dissemination of microfinance technology; and
9) Other activities to support microfinance as approved by the designated agency administering the PDTF.
The PDTF may be accessed by the following:
(a) Registered microfinance organizations engaged in providing micro-enterprise programs to their constituents: Provided, That the PDTF shall not be used by the LGUs for personal services and maintenance and other operating expenses; and
(b) Local government units undertaking self-help projects where at least twenty-five percent (25%) of the total earnings of the PDTF shall be used exclusively for the provision of materials and technical services.
Article 15. The Role of Local Government Units (LGUs). — The local government units, through the local development councils of the province, city, municipality, or barangay shall be responsible for the formulation, implementation, monitoring and evaluation of the National Anti- Poverty Action Agenda in their respective jurisdictions. The LGUs shall:—
(a) Identify the poor in their respective areas based on indicators such as the minimum basic needs approach and the human development index, their location, occupation, nature of employment, and their primary resource base and formulate a provincial/city/municipal anti-poverty action agenda;
(b) Identify and source funding for specific social reform and poverty alleviation projects;
(c) Coordinate, monitor and evaluate efforts of LGUs with the private sector on planning and implementation of the local action program for social reform and poverty alleviation; and
(d) Coordinate and submit progress reports to the NAPC regarding their local action programs.
Nothing in this Rule shall be construed as diminishing the powers granted to the LGUs under the Local Government Code.
Rule III
Microfinance Services For The Poor
Article 16. Microfinance Program. — The programs and implementing mechanisms of the SRA's Flagship Program on Credit shall be integrated, adopted and further enhanced to effectively support the objectives of this Act along the following thrusts:
(a) Development of a policy environment, especially in the area of savings generation, supportive of basic sector initiatives dedicated to serving the needs of the poor in terms of microfinance services;
(b) Rationalization of existing government programs for credit and guarantee;
(c) Utilization of existing government financial entities for the provision of microfinance products and services for the poor; and
(d) Promotion of mechanisms necessary for the implementation of microfinance services, including indigenous microfinance practices.
Article 17. People's Credit and Finance Corporation (PCFC). The People's Credit and Finance Corporation (PCFC), a government-controlled corporation registered with the Securities and Exchange Commission and created in accordance with Administrative Order No. 148 and Memorandum Order No. 261, shall be the vehicle for the delivery of microfinance services for the exclusive use of the poor. As a government-owned and controlled corporation, it shall be the lead government entity specifically tasked to mobilize financial resources from both local and international funding sources for microfinance services for the exclusive use of the poor.
Article 18. Increase in the Capitalization of PCFC. — To facilitate the increase in the capitalization of the PCFC, the President of the Republic of the Philippines shall take measures to enable the amendment of the Articles of Incorporation of the PCFC such that:
(a) The authorized capital stock of the PCFC may be increased from One Hundred Million Pesos (P 100,000,000.00) to Two Billion Pesos (P 2,000,000,000.00) divided into twenty million common shares with a par value of One Hundred Pesos (P 100.00) per share;
(b) The subscribed capital stock may be increased from One Hundred Million Pesos (P 100,000,000.00) to Six Hundred Million Pesos (P 600,000,000.00) and the National Government may subscribe the difference of Five Hundred Million Pesos (P500,000,000.00);
(c) The initial paid-up capital may be increased from One Hundred Million Pesos (P 100,000,000.00) to Two Hundred Fifty Million Pesos (P 250,000,000.00) to be increased subsequently to a total of Six Hundred Million Pesos (P 600,000,000.00), such that at the end of a period of four (4) years, the subscribed capital shall be fully paid up in the following manner:
For the initial increase in paid-up capital during the first year, the difference of One Hundred Fifty Million Pesos (P 150,000,000.00) shall be paid and appropriated for by government; for the second year, One Hundred Fifty Million Pesos (P 150,000,000.00); for the third year, One Hundred Million Pesos (P 100,000,000.00); and for the fourth year, One Hundred Million Pesos (P 100,000,000.00).
The appropriations for the additional paid-up capital shall be sourced from the share of the National Government in the earnings of PAGCOR, in the manner provided for under Article 21, which provides for appropriations under this Rule.
Article 19. Special Credit Windows in Existing Government Financing Institutions (GFIs). — The existing government financial institutions shall provide for the savings and credit needs of the poor. The GFIs such as the Land Bank of the Philippines, Philippine Postal Bank, Al Amanah Bank, and the Development Bank of the Philippines are hereby mandated to coordinate with NAPC and PCFC in setting up special credit windows and other arrangements, such as the servicing of Small Savers Instruments (SSIs), that will promote the microfinance program of this Rule.
The private financing institutions may also provide the savings and credit requirements of the poor by setting up similar credit windows and other arrangements to promote the savings component of the microfinance program of this Rule.
Special credit windows for the poor shall, as far as practicable, include an allocation for the basic sectors, as defined in this Rule, particularly those living in the rural areas, agrarian reform communities, and women in the countryside.
Article 20. PCFC Privatization. — In the event that the ownership of the majority of the issued voting stocks of PCFC shall have passed to private investors (exclusively qualified non- governmental organizations, people's organizations and cooperatives), the stockholders shall cause the registration with the Securities and Exchange Commission of the revised Articles of Incorporation and By-laws. The PCFC shall thereafter be considered as a privately owned entity subject to the laws and regulations generally applied to private corporations.
The chairman of the PCFC may still be a member of the NAPC upon privatization of the PCFC; Provided, That the PCFC will continue its main purpose of providing for the savings and credit needs of the poor.
Rule IV
Appropriations For The NAPC And The PDTF
Article 21. Appropriations. — To carry out the provisions of this Rule, the following amounts are appropriated as follows:
1) The sum of One Hundred Million Pesos (P 100,000,000.00) is hereby appropriated as the initial operating fund in addition to the unutilized funds of the rationalized commission and councils. The sum shall be sourced from the President's Contingent Fund. In subsequent years, the amount necessary to implement this Act shall be included in the annual appropriations. The said amounts shall be under the management of the NAPC .
2) The aggregate sum of Four Billion and Five Hundred Million Pesos (P 4,500,000,000.00) for ten (10) years is hereby appropriated for the establishment of the People's Development Trust Fund (PDTF) from the share of the National Government in the earnings of the PAGCOR, in the following manner: on the first year, Three Hundred Fifty Million Pesos (P 350,000,000.00); on the second year, Three Hundred Fifty Million Pesos (P 350,000,000.00), on the third year, Four Hundred Million Pesos (P 400,000,000.00); on the fourth year, Four Hundred Million Pesos (P 400,000,000.00); on the fifth year and every year thereafter until the tenth-year, Five Hundred Million Pesos (P 500,000,000.00) annually.
3) The aggregate sum of Five Hundred Million Pesos (P500,000,000.00) for four years shall be appropriated for the increase in the capitalization of the PCFC, from the share of the National Government in the earnings of the PAGCOR, at such time that the increase in the capitalization of the PCFC, in the manner provided for under Section 15 of this Act, shall have been effected. The appropriation shall be made in the following manner: on the first year, One Hundred Fifty Million Pesos (P150,000,000.00); on the second year, One Hundred Fifty Million Pesos (P150,000,000.00); on the third year, One Hundred Million Pesos (P100,000,000.00); and on the fourth year, One Hundred Million Pesos (P100,000,000.00).
Rule V
Miscellaneous And Final Provisions
Article 22. Transitory Provision. — The Social Reform Council (SRC) and the representatives therein shall, in temporary capacity, exercise the powers and assume the duties of the NAPC until such time that the members of NAPC shall have been duly appointed or designated. In the event that some members of the NAPC have not been appointed or designated, the members who have been appointed or designated shall already function as the NAPC, Provided, that the appointed or designated members constitute more than one-half (1/2) of the total membership of the NAPC.
Article 23. Transfer of Assets and Liabilities. — The assets and liabilities of the PCFP, SRC, and PCCD are hereby transferred to the NAPC.
Article 24. Implementing Rules and Regulations. — The implementing rules and regulations shall be issued, modified and/or revoked by the Office of the President in consultation with the NAPC.
Article 25. Repealing Clause. — All laws, executive orders, rules and regulations, or parts thereof, inconsistent with the provisions of the Social Reform and Poverty Alleviation Act are hereby repealed, amended or modified unless expressly provided in subsequent general or special laws. All previous Administrative Orders referring to the NAPC are hereby modified accordingly.
Article 26. Separability Clause. — If any provision of these Implementing Rules and Regulations are held unconstitutional or invalid, other parts or provisions thereof which are not affected thereby shall continue to be in full force and effect.
Article 27. Effectivity. — These Rules shall take effect upon publication thereof in a newspaper of general circulation.
The foregoing Implementing Rules and Regulations of the Social Reform and Poverty Alleviation Act are being issued in compliance with sec. 19 of the said Act.
Adopted: 23 Dec. 1998
(SGD.) JOSEPH E. ESTRADA
President
By the President:
(SGD.) RONALDO B. ZAMORA
Executive Secretary
Article 2. Purpose. — These Rules are promulgated to prescribe the procedures and guidelines for the implementation of the Social Reform and Poverty Alleviation Act in order to facilitate compliance therewith and achieve the objectives thereof.
Article 3. Declaration of Policy. — It is the policy of the State to:
(a) Adopt an area-based, sectoral and focused intervention to poverty alleviation wherein every poor Filipino family shall be empowered to meet its minimum basic needs of health, food and nutrition, water and environmental sanitation, income security, shelter and decent housing, peace and order, education and functional literacy, participation in governance, and family care and psycho-social integrity;
(b) Actively pursue asset reform or redistribution of productive economic resources to the basic sectors including the adoption of a system of public spending which is targeted towards the poor;
(c) Institutionalize and enhance the Social Reform Agenda, hereinafter known as the SRA, which embodies the results of the series of consultations and summits on poverty alleviation;
(d) Adopt and operationalize the following principles and strategies as constituting the national framework integrating various structural reforms and anti-poverty initiatives;
| 1) | Social reform shall be a continuing process that addresses the basic inequities in Philippine society through a systematic package of social interventions; |
| 2) | The SRA shall be enhanced by government in equal partnership with the different basic sectors through appropriate and meaningful consultations and participation in governance; |
| 3) | Policy programs and resource commitments from both government and the basic sectors shall be clearly defined to ensure accountability and transparency in the implementation of the Social Reform Agenda; |
| 4) | A policy environment conducive to sustainable social reform shall be pursued; |
| 5) | The SRA shall address the fight against poverty through a multi-dimensional and cross-sectoral approach which recognizes and respects the core values, cultural integrity, and spiritual diversity of target sectors and communities; |
| 6) | The SRA shall pursue a gender-responsive approach to fight poverty; |
| 7) | The SRA shall promote ecological balance in the different ecosystems, in a way that gives the basic sectors a major stake, in the use, management, conservation and protection of productive resources; |
| 8) | The SRA shall take into account the principle and interrelationship of population and development in the planning and implementation of social reform programs thereby promoting self-help and self-reliance; and, |
| 9) | The SRA implementation shall be focused on specific target areas and basic sectors. |
Article 4. Definition of Terms. — As used in these Rules, the following terms shall mean:
(a) "Artisanal fisherfolk" — Refers to municipal, small-scale of subsistence fishermen who use fishing gear which do not require boats or which only require boats below three (3) tons,
(b) "Basic sectors" — Refer to the disadvantaged sectors of Philippine society, namely: farmer-peasant, artisanal fisherfolk, workers in the formal sector and migrant workers, workers in the informal sector, indigenous peoples and cultural communities, women, differently-abled persons, senior citizens, victims of calamities and disasters, youth and students, children, and urban poor;
(c) "Cooperative" — Refers to a duly registered association of at least fifteen (15) persons, majority of which are poor, having a common bond of interest, who voluntarily join together to achieve a lawful common social and economic end. It is organized by the members who equitably contribute the required share capital and accept a fair share of the risks and benefits of their undertaking in accordance with the universally accepted corporate principles and practices;
(d) "Capability-building" — Refers to the process of enhancing the viability and sustainability of microfinance institutions through activities that include training in microfinance technologies, upgrading of accounting and auditing systems, technical assistance for the installation or improvement of management information systems, monitoring of loans and other related activities. The term capability building shall in no way refer to the provision of equity investments, seed funding, partnership's seed funds, equity participation, start-up funds or any such activity that connotes the infusion of capital or funds from the government or from 'the people's development trust fund to microfinance institution as defined in these Rules. Capability building precludes the grant of any loan or equity funds to the microfinance institution;
(e) "Collateral-free arrangement" — A financial arrangement wherein a loan is contracted by the debtor without the conventional loan security of a real estate or chattel mortgage in favor of the creditor. In lieu of these conventional securities, alternative arrangements to secure the loans and ensure repayment are offered and accepted;
(f) "Group character loan" — A loan contracted by a member and guaranteed by a group of persons for its repayment. The creditor can collect from any of the members of the group which guaranteed the said loan, without prejudice to the right of reimbursement of the member or members of the group who had advanced the payment in favor of the actual debtor;
(g) "Indigenous cultural communities/indigenous peoples" — As defined in Republic Act No. 8371, otherwise known as "The Indigenous Peoples Rights Act of 1997;"
(h) "Migrant workers" — As defined in Republic Act No. 8042, otherwise known as the "Migrant Workers and Overseas Filipino Act of 1995;"
(i) "Micro-enterprise" — Any economic enterprise with a capital of One Hundred Fifty Thousand Pesos (P150,000.00) and below. This amount is subject to periodic determination of the Department of Trade and Industry to reflect economic changes;
(j) "Microfinance" — A credit and savings mobilization program exclusively for the poor to improve the asset base of households and expand the access to savings of the poor. It involves the use of viable alternative credit schemes and savings programs including the extension of small loans, simplified loan application procedures, group character loans, collateral-free arrangements, alternative loan repayments, minimum requirements for savings, and small denominated savers' instruments;
(k) "Minimum basic needs" — Refers to the needs of a Filipino family pertaining to survival (food and nutrition; health; water and sanitation; clothing), security (shelter; peace and order; public safety; income and livelihood) and enabling services (basic education and literacy; participation in community development; family and psycho-social care);
(l) "Human development index" — Refers to the measure of how well a country has performed, based on social indicators of people's ability to lead a long and healthy life, to acquire knowledge and skills, and to have access to the resources needed to afford a decent standard of living. This index looks at a minimum of three outcomes of development: the state of health (measured by life expectancy at birth), the level of knowledge and skill (measured by a weighted average of adult literacy and enrollment rates), and the level of real income per capita, adjusted for poverty considerations;
(m) "Non-governmental organizations" — Refers to duly registered non-stock, non-profit organizations focusing on the upliftment of the basic or disadvantaged sectors of society by providing advocacy, training, community organizing, research, access to resources, and other similar activities;
(n) "People's organization" — Refers to a self-help group belonging to the basic sectors and/or disadvantaged groups composed of members having a common bond of interest who voluntarily join together to achieve a lawful common social or economic end;
(o) "Poor" — Refers to individuals and families whose income fall below the poverty threshold as defined by the National Economic Development Authority and/or cannot afford in a sustained manner to provide their minimum basic needs of food, health, education, housing and other essential amenities of life;
(p) "Poverty alleviation" — Refers to the reduction of absolute poverty and relative poverty;
(q) "Absolute poverty" — Refers to the condition of the household below the food threshold level;
(r) "Relative poverty" — Refers to the gap between the rich and poor;
(s) "Social reform" — Refers to the continuing process of addressing the basic inequities in Filipino society through a systematic, unified and coordinated delivery of socioeconomic programs or packages'
(t) "Small Savers Instrument (SSI)" — Refers to an evidence of indebtedness of the Government of the Republic of the Philippines which shall be in small denominations and sold at a discount from its redemption value, payable to bearer and redeemable on demand according to a schedule printed on the instrument, with a discount lower than the full stated rate if not held to maturity. The resources generated under this scheme shall be used primarily for micro-credit for the poor. SSIs are not eligible as legal reserve of banks and legal reserves prescribed of insurance companies operating in the Philippines;
(u) "Urban poor" — Refers to individuals or families residing in urban centers and urbanizing areas whose income or combined household income falls below the poverty threshold as defined by the NEDA and/or cannot afford in a sustained manner to provide their minimum basic needs of food, health, education, housing and other essential amenities of life;
(v) "Workers in the formal sector" — Refers to workers in registered business enterprises who sell their services in exchange for wages and other forms of compensation;
(w) "Workers in the informal sector" — Refers to poor individuals who operate businesses that are very small in scale and are not registered with any national government agency, and to the workers in such enterprises who sell their services in exchange for subsistence level wages or other forms of compensation; and
(x) "Youth" — Refers to persons fifteen (15) to thirty (30) years old.
Article 5. Adoption and Integration of the Social Reform Agenda in the National Anti- Poverty Action Agenda. — The National Anti-Poverty Action Agenda shall principally include the core principles and programs of the SRA. The SRA shall have a multi-dimensional approach to poverty consisting of the following reforms:
(a) Social dimension access to quality basic services. — These are reforms which refer to equitable control and access to social services and facilities such as education, health, housing, and other basic services which enable the citizens to meet their basic human needs and to live decent lives;
(b) Economic dimension asset reform and access to economic opportunities. — Reforms which address the existing inequities in the ownership, distribution, management and control over natural and man-made resources from which they earn a living or increase the fruits of their labor;
(c) Ecological dimension sustainable development of productive resources. — Reforms which ensure the effective and sustainable utilization of the natural and ecological resource base, thus assuring greater social acceptability and increased participation of the basic sectors in environmental and natural resources conservation, management and development;
(d) Governance dimension democratizing the decision-making and management processes. — Reforms which enable the basic sectors to effectively participate in decision-making and management processes that affect their rights, interests and welfare.
The SRA shall focus on the following sector-specific flagship programs:
1) For farmers and landless rural workers — agricultural development and agrarian reform,
2) For the fisherfolk — fisheries and aquatic resources conservation, management and development, and coastal resources management that are community-based;
3) For the indigenous peoples and indigenous communities — respect, protection and management of the ancestral domains that uphold their integrity as a people;
4) For workers in the informal sector — workers' welfare and protection;
5) For the urban poor — socialized housing and urban development consistent with Habitat II;
6) For members of other disadvantaged groups such as the women, children, youth, persons with disabilities, the elderly, and victims of natural and man-made calamities — the Comprehensive Integrated Delivery of Social Services (CIDSS).
Additionally, to support the sectoral flagship programs, the following cross-sectoral flagships shall likewise be instituted:
a) Institution-building and effective participation in governance;
b) Livelihood programs;
c) Expansion of micro-credit/microfinance services and capability building; and
d) Infrastructure buildup and development.
The National Anti-Poverty Action Agenda shall abide by the principles of social justice and squarely address the uncertainty faced by the poor brought about by peace and order problems. Poverty eradication shall be pursued, as much as possible, within the framework of sustainable integrated area development.
National Anti-Poverty Commission
Article 6. The National Anti-Poverty Commission. — To support the above-stated policy, the National Anti-Poverty Commission (NAPC) is hereby created under the Office of the President. It shall serve as the coordinating and advisory body for the implementation of the SRA. The Presidential Commission to Fight Poverty (PCFP), the Social Reform Council (SRC), and the Presidential Council for Countryside Development (PCCD) are hereby abolished and the NAPC shall exercise the powers and functions of these agencies. The NAPC shall be the successor-in-interest of the three (3) abolished commissions/councils.
Article 7. Principles Governing the NAPC. — The NAPC shall be governed by the following principles:
a) Incorporation of the SRA into the formulation of development plans at the national, regional, sub-regional and local levels;
b) Efficiency in the implementation of the anti-poverty programs by strengthening and/or streamlining present poverty alleviation processes and mechanisms, and reducing the duplication of functions and activities among various government agencies;
c) Coordination and synchronization of social reform and poverty alleviation programs of national government agencies;
d) Exercise of policy oversight responsibilities to ensure the attainment of social reform and poverty alleviation goals;
e) Strengthening of local government units to more effectively operationalize the SRA in local development efforts;
f) Institutionalization of basic sectoral and NGO participation in effective planning, decision-making, implementation, monitoring and evaluation of the SRA at all levels;
g) Ensuring adequate, efficient and prompt delivery of basic services to the poor; and
h) Enjoining government financial institutions to open credit and savings windows for the poor, and advocating the creation of such windows for the poor among private banking institutions.
Article 8. Composition of the NAPC. — The President of the Republic of the Philippines shall serve as the Chairperson of the NAPC. The President shall appoint the Lead Convenor of the NAPC, either from the government or private sector, who shall likewise serve as the head of the NAPC Secretariat, and shall have the rank of a Cabinet Secretary. In case of the inability of the Lead Convenor to perform his/her responsibilities for any period of time, the President shall appoint an Officer-in-Charge for the said period.
There shall be a Vice-Chairperson for the Government Sector and a Vice-Chairperson for the Basic Sectors; the former to be designated by the President, and the latter to be elected among the basic sector representatives of the NAPC through their simple majority vote. The elected Vice-Chairperson for the Basic Sectors shall be confirmed as such by the President.
The members of the NAPC are as follows:
| 1) | Secretary, Department-of Agrarian Reform (DAR); |
| 2) | Secretary, Department of Agriculture (DA); |
| 3) | Secretary, Department of Labor and Employment (DOLE); |
| 4) | Secretary, Department of Budget and Management (DBM); |
| 5) | Secretary, Department of Social Welfare and Development (DSWD); |
| 6) | Secretary, Department of Health (DOH); |
| 7) | Secretary, Department of Education, Culture and Sports (DECS); |
| 8) | Secretary, Department of the Interior and Local Government (DILG); |
| 9) | Secretary, Department of Environment and Natural Resources (DENR); |
| 10) | Secretary, Department of Finance (DOF); |
| 11) | Director-General, National Economic Development Authority (NEDA); |
| 12) | Chairperson of the Board, People's Credit and Finance Corporation (PCFC); |
| 13) | Chairperson, Presidential Commission for the Urban Poor (PCUP); |
| 14) | President, League of Provinces; |
| 15) | President, League of Cities; |
| 16) | President, League of Municipalities; |
| 17) | President, Liga ng mga Barangay; |
| 18) | Representative, Farmers and landless rural workers; |
| 19) | Representative, Artisanal fisherfolk; |
| 20) | Representative, Urban Poor; |
| 21) | Representative, Indigenous cultural communities/indigenous peoples; |
| 22) | Representative, Workers in the formal sector and migrant workers; |
| 23) | Representative, Workers in the informal sector; |
| 24) | Representative, Women; |
| 25) | Representative, Youth and students; |
| 26) | Representative, Persons with disabilities; |
| 27) | Representative, Victims of disasters and calamities; |
| 28) | Representative, Senior citizens; |
| 29) | Representative, Non-governmental organizations (NGOs); |
| 30) | Representative, Children; and |
| 31) | Representative, Cooperatives. |
Article 9. Sectoral Councils. — Sectoral councils shall be formed through direct nomination of qualified individuals by organized groups belonging to the sector, to the Office of the President within a definite period of time unless a different procedure has been agreed upon by the sector concerned and the Head of the coordinating government department, agency or office. Upon receipt of the nominations, a shortlist of twenty-five (25) names shall be submitted to the President. After the lapse of one week from the deadline set for the submission of names for the sectoral councils, the President shall appoint fifteen (15) members for each of the fourteen (14) sectoral councils, taking into consideration geographical and sectoral concerns.
The Sectoral Councils thus formed shall determine the criteria for the selection of their respective sectoral representatives and nominate three (3) candidates in accordance therewith. However, if the nominees to the sectoral councils already nominate three (3) candidates on the basis of an agreed criteria to the President, the same shall already be considered by the President without prejudice to the subsequent appointment of the final fifteen (15) members of the sectoral council. In which case, the remaining task of the sectoral council is to monitor the performance of the sectoral representative, alternates and/or substitutes and initiate the recall process and/or exact accountability, when necessary.
The Sectoral Council shall exact accountability from the Sectoral Representative and has the power of recall for loss of confidence on its respective Sectoral Representative. The recall process shall be initiated by the Sectoral Council upon majority vote of its total members in a special meeting called for the purpose, and a vote of 2/3 of the total members of the Sectoral Council shall be sufficient to recall the said Sectoral Representative.
However, the Sectoral Councils may choose a different process other than the process mentioned in the previous paragraph, in which case, each Sectoral Council shall submit the recall procedures and such other mechanisms to ensure accountability of the Sectoral Representative, to the President for approval within thirty (30) days after the council members are appointed and the council duly constituted. If the President does not comment on the submitted recall process within thirty (30) days from receipt thereof, the same shall be considered to have been approved.
Article 10. Sectoral Representatives. — Sectoral Councils, formed by and among the members of each sector in accordance with the previous articles, shall respectively nominate three (3) nominees from each sector within six (6) months after the effectivity of the implementing rules and regulations of this Act, and every three (3) years thereafter and in case of vacancy. The President of the Republic of the Philippines, shall, within thirty (30) days after the submission of the list of nominees appoint the representatives from the submitted list. Sectoral representatives shall serve for a term of three (3) years without reappointment. Appointment to any vacancy for basic sector representatives shall be only for the unexpired term of the predecessor.
Article 11. Powers and Functions of the NAPC. — The NAPC shall exercise the following powers and functions:
1) Coordinate with different national and local government agencies and the private sector to assure full implementation of all social reform and poverty alleviation programs;
2) Coordinate with local government units in the formulation of social reform and poverty alleviation programs for their respective areas in conformity with the National Anti-Poverty Action Agenda;
3) Recommend policy and other measures to ensure the responsive implementation of the commitments under the SRA;
4) Ensure meaningful representation and active participation of the basic sectors;
5) Oversee, monitor and recommend measures to ensure the effective formulation implementation and evaluation of policies, programs and resource allocation and management of social reform and poverty alleviation programs;
6) Advocate for the mobilization of funds by the national and local governments to finance social reform and poverty alleviation programs and capability building activities of people's organizations;
7) Provide financial and non-financial incentives to local government units with counterpart resources for the implementation of social reform and poverty alleviation programs; and
8) Submit an annual report to Congress including, but not limited to, all aspects of its operations and programs and project implementation, financial status and other relevant data as reflected by the basic reform indicator.
Article 12. The NAPC Secretariat. — The NAPC shall be supported by a Secretariat, which shall be headed by the Lead Convenor referred to under ART. 8 hereof. The Secretariat shall provide technical and administrative support to the NAPC. It shall be formed from the unification of the secretariats of the following bodies: Presidential Commission to Fight Poverty (PCFP), Social Reform Council (SRC), and the Presidential Council for Countryside Development (PCCD).
The Office of the President shall finalize the organizational plan for the NAPC, including the plantilla for the NAPC Secretariat. Personnel who cannot be absorbed by the NAPC Secretariat shall be entitled to a separation pay of one-and-a-half (1 1/2) months for every year of service and other benefits under existing retirement laws, at the option of the personnel concerned. The years of service referred to herein shall cover only those under the three abolished commissions/councils.
Article 13. The People's Development Trust Fund. — The People's Development Trust Fund (PDTF) is hereby established, which shall be monitored by the NAPC.
The Trust Fund in the amount of Four Billion and Five Hundred Million Pesos (P 4,500,000,000.00) shall be funded from the earnings of the PAGCOR in addition to appropriations by Congress, voluntary contributions, grants, gifts from both local and foreign sources as may be accepted or decided on by the NAPC. Any additional amount to the Trust Fund shall form part of the corpus of the Trust Fund, unless the donor, contributor or grantor expressly provides as a condition that the amount be included in the disbursible portion of the Trust Fund.
The President of the Philippines shall assign to any existing government department or agency the administration of the Trust Fund, based on the expertise, organizational capability, and orientation or focus of the department of agency. The NAPC shall be limited to the function of monitoring the utilization of the PDTF, while the government departments or agencies designated by the President shall directly administer the utilization of the earnings of the PDTF.
Only the fruits of the PDTF shall be used for the purposes provided in this Rule. Any undisbursed fruits for the preceding year shall form part of the disbursible portion of the PDTF in the following year.
For the purpose of monitoring the earnings of the PDTF, the NAPC shall:
1) Source funds for the establishment of and augmentation to the Trust Fund;
2) Recommend to the appropriate government department or agency the accreditation of organizations and institutions that shall act as resource partners in conducting institutional development and capability building activities for accredited organizations and beneficiaries of microfinance and micro-enterprise programs;
3) Ensure that validation and monitoring activities are conducted for funded institutional development and capability building projects/programs beneficiaries; and
4) Promote research and development work on livelihood and microfinance technology and publications/communications programs that assist the poor beneficiaries.
Article 14. Purposes of the People's Development Trust Fund (PDTF). — The earnings of the PDTF shall be utilized for the following purposes:
1) Consultancy and training services for microfinance institutions and their beneficiaries on the establishment of the necessary support services, social and financial preparation of beneficiaries, preparation of plans and programs including fund sourcing and assistance, establishment of credit and savings monitoring and evaluation mechanisms;
2) Scholarships or training grants for microfinance staff and officers, and selected beneficiaries;
3) Community organizing for microfinance, livelihood and micro-enterprise training services;
4) Livelihood/micro-enterprise project/program feasibility studies and researches;
5) Savings mobilization and incentive programs, and other similar activities;
6) Information and communication systems such as baseline surveys, development monitoring systems, socioeconomic mapping surveys, organizational assessments, and other similar activities;
7) Legal and other management support services such as registration, documentation contract review and enforcement, financial audit and operational assessment;
8) Information dissemination of microfinance technology; and
9) Other activities to support microfinance as approved by the designated agency administering the PDTF.
The PDTF may be accessed by the following:
(a) Registered microfinance organizations engaged in providing micro-enterprise programs to their constituents: Provided, That the PDTF shall not be used by the LGUs for personal services and maintenance and other operating expenses; and
(b) Local government units undertaking self-help projects where at least twenty-five percent (25%) of the total earnings of the PDTF shall be used exclusively for the provision of materials and technical services.
Article 15. The Role of Local Government Units (LGUs). — The local government units, through the local development councils of the province, city, municipality, or barangay shall be responsible for the formulation, implementation, monitoring and evaluation of the National Anti- Poverty Action Agenda in their respective jurisdictions. The LGUs shall:—
(a) Identify the poor in their respective areas based on indicators such as the minimum basic needs approach and the human development index, their location, occupation, nature of employment, and their primary resource base and formulate a provincial/city/municipal anti-poverty action agenda;
(b) Identify and source funding for specific social reform and poverty alleviation projects;
(c) Coordinate, monitor and evaluate efforts of LGUs with the private sector on planning and implementation of the local action program for social reform and poverty alleviation; and
(d) Coordinate and submit progress reports to the NAPC regarding their local action programs.
Nothing in this Rule shall be construed as diminishing the powers granted to the LGUs under the Local Government Code.
Microfinance Services For The Poor
Article 16. Microfinance Program. — The programs and implementing mechanisms of the SRA's Flagship Program on Credit shall be integrated, adopted and further enhanced to effectively support the objectives of this Act along the following thrusts:
(a) Development of a policy environment, especially in the area of savings generation, supportive of basic sector initiatives dedicated to serving the needs of the poor in terms of microfinance services;
(b) Rationalization of existing government programs for credit and guarantee;
(c) Utilization of existing government financial entities for the provision of microfinance products and services for the poor; and
(d) Promotion of mechanisms necessary for the implementation of microfinance services, including indigenous microfinance practices.
Article 17. People's Credit and Finance Corporation (PCFC). The People's Credit and Finance Corporation (PCFC), a government-controlled corporation registered with the Securities and Exchange Commission and created in accordance with Administrative Order No. 148 and Memorandum Order No. 261, shall be the vehicle for the delivery of microfinance services for the exclusive use of the poor. As a government-owned and controlled corporation, it shall be the lead government entity specifically tasked to mobilize financial resources from both local and international funding sources for microfinance services for the exclusive use of the poor.
Article 18. Increase in the Capitalization of PCFC. — To facilitate the increase in the capitalization of the PCFC, the President of the Republic of the Philippines shall take measures to enable the amendment of the Articles of Incorporation of the PCFC such that:
(a) The authorized capital stock of the PCFC may be increased from One Hundred Million Pesos (P 100,000,000.00) to Two Billion Pesos (P 2,000,000,000.00) divided into twenty million common shares with a par value of One Hundred Pesos (P 100.00) per share;
(b) The subscribed capital stock may be increased from One Hundred Million Pesos (P 100,000,000.00) to Six Hundred Million Pesos (P 600,000,000.00) and the National Government may subscribe the difference of Five Hundred Million Pesos (P500,000,000.00);
(c) The initial paid-up capital may be increased from One Hundred Million Pesos (P 100,000,000.00) to Two Hundred Fifty Million Pesos (P 250,000,000.00) to be increased subsequently to a total of Six Hundred Million Pesos (P 600,000,000.00), such that at the end of a period of four (4) years, the subscribed capital shall be fully paid up in the following manner:
For the initial increase in paid-up capital during the first year, the difference of One Hundred Fifty Million Pesos (P 150,000,000.00) shall be paid and appropriated for by government; for the second year, One Hundred Fifty Million Pesos (P 150,000,000.00); for the third year, One Hundred Million Pesos (P 100,000,000.00); and for the fourth year, One Hundred Million Pesos (P 100,000,000.00).
The appropriations for the additional paid-up capital shall be sourced from the share of the National Government in the earnings of PAGCOR, in the manner provided for under Article 21, which provides for appropriations under this Rule.
Article 19. Special Credit Windows in Existing Government Financing Institutions (GFIs). — The existing government financial institutions shall provide for the savings and credit needs of the poor. The GFIs such as the Land Bank of the Philippines, Philippine Postal Bank, Al Amanah Bank, and the Development Bank of the Philippines are hereby mandated to coordinate with NAPC and PCFC in setting up special credit windows and other arrangements, such as the servicing of Small Savers Instruments (SSIs), that will promote the microfinance program of this Rule.
The private financing institutions may also provide the savings and credit requirements of the poor by setting up similar credit windows and other arrangements to promote the savings component of the microfinance program of this Rule.
Special credit windows for the poor shall, as far as practicable, include an allocation for the basic sectors, as defined in this Rule, particularly those living in the rural areas, agrarian reform communities, and women in the countryside.
Article 20. PCFC Privatization. — In the event that the ownership of the majority of the issued voting stocks of PCFC shall have passed to private investors (exclusively qualified non- governmental organizations, people's organizations and cooperatives), the stockholders shall cause the registration with the Securities and Exchange Commission of the revised Articles of Incorporation and By-laws. The PCFC shall thereafter be considered as a privately owned entity subject to the laws and regulations generally applied to private corporations.
The chairman of the PCFC may still be a member of the NAPC upon privatization of the PCFC; Provided, That the PCFC will continue its main purpose of providing for the savings and credit needs of the poor.
Appropriations For The NAPC And The PDTF
Article 21. Appropriations. — To carry out the provisions of this Rule, the following amounts are appropriated as follows:
1) The sum of One Hundred Million Pesos (P 100,000,000.00) is hereby appropriated as the initial operating fund in addition to the unutilized funds of the rationalized commission and councils. The sum shall be sourced from the President's Contingent Fund. In subsequent years, the amount necessary to implement this Act shall be included in the annual appropriations. The said amounts shall be under the management of the NAPC .
2) The aggregate sum of Four Billion and Five Hundred Million Pesos (P 4,500,000,000.00) for ten (10) years is hereby appropriated for the establishment of the People's Development Trust Fund (PDTF) from the share of the National Government in the earnings of the PAGCOR, in the following manner: on the first year, Three Hundred Fifty Million Pesos (P 350,000,000.00); on the second year, Three Hundred Fifty Million Pesos (P 350,000,000.00), on the third year, Four Hundred Million Pesos (P 400,000,000.00); on the fourth year, Four Hundred Million Pesos (P 400,000,000.00); on the fifth year and every year thereafter until the tenth-year, Five Hundred Million Pesos (P 500,000,000.00) annually.
3) The aggregate sum of Five Hundred Million Pesos (P500,000,000.00) for four years shall be appropriated for the increase in the capitalization of the PCFC, from the share of the National Government in the earnings of the PAGCOR, at such time that the increase in the capitalization of the PCFC, in the manner provided for under Section 15 of this Act, shall have been effected. The appropriation shall be made in the following manner: on the first year, One Hundred Fifty Million Pesos (P150,000,000.00); on the second year, One Hundred Fifty Million Pesos (P150,000,000.00); on the third year, One Hundred Million Pesos (P100,000,000.00); and on the fourth year, One Hundred Million Pesos (P100,000,000.00).
Miscellaneous And Final Provisions
Article 22. Transitory Provision. — The Social Reform Council (SRC) and the representatives therein shall, in temporary capacity, exercise the powers and assume the duties of the NAPC until such time that the members of NAPC shall have been duly appointed or designated. In the event that some members of the NAPC have not been appointed or designated, the members who have been appointed or designated shall already function as the NAPC, Provided, that the appointed or designated members constitute more than one-half (1/2) of the total membership of the NAPC.
Article 23. Transfer of Assets and Liabilities. — The assets and liabilities of the PCFP, SRC, and PCCD are hereby transferred to the NAPC.
Article 24. Implementing Rules and Regulations. — The implementing rules and regulations shall be issued, modified and/or revoked by the Office of the President in consultation with the NAPC.
Article 25. Repealing Clause. — All laws, executive orders, rules and regulations, or parts thereof, inconsistent with the provisions of the Social Reform and Poverty Alleviation Act are hereby repealed, amended or modified unless expressly provided in subsequent general or special laws. All previous Administrative Orders referring to the NAPC are hereby modified accordingly.
Article 26. Separability Clause. — If any provision of these Implementing Rules and Regulations are held unconstitutional or invalid, other parts or provisions thereof which are not affected thereby shall continue to be in full force and effect.
Article 27. Effectivity. — These Rules shall take effect upon publication thereof in a newspaper of general circulation.
The foregoing Implementing Rules and Regulations of the Social Reform and Poverty Alleviation Act are being issued in compliance with sec. 19 of the said Act.
Adopted: 23 Dec. 1998
President
By the President:
(SGD.) RONALDO B. ZAMORA
Executive Secretary