RA 9679

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Republic Act No. 9679 is known as Home Development Mutual Fund Law (HDMF) of 2009, otherwise known as Pag-IBIG (Pagtutulungan sa kinabukasan, Ikaw, Bangko, Industriya at Gobyerno) Fund mandates the compulsory membership of all employees regardless of employment status. It is an Act Further Strengthening the Home Development Mutual Fund, and for other purposes.


General provision

The following shall be mandatory members of Pag-IBIG Fund, whether permanent, temporary or provisional:

  1. Self-employed persons, regardless of trade, business or occupation with an income or salary of at least P1,000.00.
  2. Filipinos employed by foreign-based employers whether deployed here or abroad.
  3. Voluntary coverage for persons who are at least 18 years old and are not subject to mandatory coverage.

Covered employees and employers contribute to PAG-IBIG Fund based on the monthly compensation:

  1. Employees earning not more than PhP1,500 per month – one percent
  2. Employees earning more than PhP1,500 per month – two percent
  3. All employers – two percent of the monthly compensation of all covered employees

It should be noted that the employers’ contribution shall not be deducted, directly and indirectly, from the compensation of its employees. The employers’ contribution should be on top of the employees' contribution to HDMF. The maximum monthly compensation to be used in computing employee and employer contribution shall not be more than PhP5,000. But this amount may be fixed from time to time by the Board of Trustees.

Employers, including corporations and government entities who will fail comply with the mandatory membership of their employees to Pag-IBIG Fund will be punished by a fine of not less than, but not more than twice the amount involved or imprisonment of not more than six years, or both such fine and imprisonment, in the discretion of the court, apart from the civil liabilities and/or obligations of the offender or delinquent.

The increase in member’s contribution is expected to result in more funds for Pag-IBIG, which they may use to provide affordable housing needs and loan assistance to more members.

Rationale of RA No. 9679

To establish, develop, promote and integrate a nationwide sound and viable tax-exempt mutual provident savings system suitable to the needs of the employed and other earning groups; and to motivate them to better plan and provide for their housing needs by membership in the HDMF, with mandatory contributory support of the employers in the spirit of social justice and the pursuit of national development.

Objectives of HDMF

  1. To improve the quality of life of its citizens by providing them with sufficient shelter;
  2. To provide for an integrated nationwide provident savings system; and
  3. To provide housing through mobilization of funds for shelter finance.

Definition of terms

Fund coverage. The coverage in the Fund shall be mandatory upon: (a) all employees covered by the SSS and GSIS, and their respective employers, notwithstanding any waiver from: (a) the Armed Forces of the Philippines, Bureau of Fire Protection, Bureau of Jail Management and Penology and Philippine National Police; (b) Filipinos employed by foreign-based employers; (c) spouses who devote full-time managing the household and family affairs, unless also engage in another vocation or employment, may be covered by HDMF on a voluntary basis.

Membership term. Membership in the Fund shall be for a period of 20 years, except when earlier terminated because of retirement, disability, insanity, death, departure from the country or other causes provided for by the Board of Trustees. Cases of resignation, lay off or suspension from employment may not necessarily constitute a ground for membership termination, except for suspension of contributions. Members may withdraw the total accumulated value of their contributions to the Fund after the 15th year of continuous membership.

Members may withdraw their contributions if they have no outstanding housing loans with the Fund.

Members shall not be prejudiced in continuing its membership in the Fund. Coverage and payment of the HDMF may be waived or suspended by reasons of nature of employment, condition of business, ability to make contributions and other reasonable considerations.

Provident character. -- The Fund, created under this Act, shall implement the provisions of the RA No. 9679. The Fund is private in character as it is wholly owned by the members, administered in trust and applied exclusively for their benefit. As members, they shall earn dividends.

The amount of contribution shall constitute the provident fund of each member, which is accounted for individually and transferable in case of change of employment. The said amount shall be paid to the member, his/her estate or beneficiaries upon termination of membership, or from which peripheral benefits for the member may be drawn.

All the personal and employer contributions shall be fully credited to each member

Housing features. A member of good standing shall be eligible to apply for housing loans with terms and conditions as may be authorized by the Board of Trustees, taking into account ability to pay. The Board of Trustees shall institute policies to ensure that lower-income members obtain such housing loans.

Powers and functions of Fund. The Fund shall have the powers and functions specified in RA No. 9679 and the usual corporate powers:

  1. To formulate, adopt, amend and/or rescind such rules and regulations as may be necessary to carry out the provisions and purposes of this Act, as well as the effective exercise of the powers and functions, and the discharge of duties and responsibilities of the Fund, its officers and employees;
  2. To adopt or approve the annual and supplemental budget of receipts and expenditures including salaries and allowances of HDMF personnel, to authorize such capital and operating expenditures and disbursements of HDMF as may be necessary and proper for the effective management and operation of HDMF;
  3. To submit to the President an annual report of its activities and state of HDMF during the preceding year, with information and recommendations for the development and improvement of HDMF not later than March 15.
  4. To invest not less than 70 percent of its investible funds to housing, in accordance with RA No. 9679;
  5. To acquire, utilize, or dispose of, in any manner recognized by law, real or personal properties to carry out the purposes of this Act;
  6. To set up its own accounting and computer systems; to conduct continuing actuarial and statistical studies and valuations to determine the financial viability of HDMF and its project; to require reports, compilations and analysis of statistical and economic data, as well as make such other studies and surveys as may be needed for the proper administration and development of HDMF;
  7. To have the power of succession; to sue and be sued; to adopt and use a corporate seal;
  8. To enter into and carry out contracts of every kind and description with any person, firm or association or corporation, domestic or foreign;
  9. To borrow funds from any source, private or government, foreign or domestic;
  10. To invest, own or otherwise participate in equity in any establishment, firm or entity; to form, organize, invest in or establish and maintain a subsidiary or subsidiaries in relation to any of its purposes;
  11. To approve appointments in HDMF except appointments to positions which are policy determining, primarily confidential or highly technical in nature according to the civil service rules and regulations, based on a compensation that is comparable with the private sector and position classification system and qualification standards approved by HDMF's Board of Trustees;
  12. To maintain a provident fund, which shall consist of contributions made by both HDMF and its officers and employees and their earnings, for the payment of benefits to such officials and employees or their heirs under such terms and conditions as it may prescribe;
  13. To design and adopt an early retirement incentive plan (ERIP) for its own personnel;
  14. To establish field offices and to conduct its business and exercise its powers in these places;
  15. To approve restructuring proposal for the payment of due but unremitted contributions and unpaid loan amortizations under such terms and conditions as the Board of Trustees may prescribe;
  16. To determine, fix and impose interest and penalties upon unpaid contributions due from employers and employees;
  17. To ensure the collection and recovery of all indebtedness, liabilities and/or accountabilities, including unpaid contributions in favor of HDMF; and
  18. To design and implement other programs that will further promote and mobilize savings and provide additional resources for the mutual benefit of the members with appropriate returns on the savings/investments.

Board of Trustees. - The corporate powers and functions of the Fund shall be vested in and exercised by the Board of Trustees appointed by the President of the Philippines, composed of the following:

  1. The Chairperson of the Housing and Urban Development and Coordinating Council, as the ex officio/Chairman;
  2. The Secretary of the Department of Finance, as the ex officio Vice Chairman;
  3. The Secretary of the Department of Labor and Employment or his/her duly designated undersecretary, as ex officio member;
  4. The Secretary of the Department of Budget and Management or his/her duly designated undersecretary, as ex officio member;
  5. The Secretary of the Department of Trade and Industry, or his/her duly designated undersecretary, as ex officio member;
  6. The Chief Executive Officer of the Fund, as member; and
  7. Five appointive members, two representatives of private employees, two representatives of private employers and one representative of government employees.

The four private sector representatives shall each be appointed by the President of the Philippines for a term of two years, provided, however, that of the first to be appointed, one representative of the employers shall have a term of only one year. The representative of the government employees shall be appointed by the President of the Philippines for a term of two years.

Exemption from Tax, Legal Process and Lien. – The Fund and all its assets and properties, all contributions collected and all accruals and income or investment earnings, as well as all supplies, equipment, papers or documents shall be exempt from any tax, assessment, fee, charge, or customs or import duty; and all benefit payments made by the Pag-IBIG Fund shall likewise be exempt from all kinds of taxes, fees or charges, and shall not be liable to attachments, garnishments, levy or seizure by or under any legal or equitable process whatsoever, either before or after receipt by the entitled person or persons, except to pay any debt of the member to the Fund.

No tax measure of whatever nature enacted shall apply to the Fund, unless it expressly revokes the declared policy of the State in Section 2 granting tax exemption to the Fund. Any tax assessment against the Fund shall be null and void.

Government Guarantee. The government of the Republic of the Philippines accepts general responsibility for the solvency of the Fund.

Remittance of Contributions. The employer, private or public, shall set aside and remit the contributions required under this Act; and be liable for their payment (nonpayment shall further subject the employer to a penalty of three percent per month of the amounts payable from the date the contributions fall due until paid). Given that, the employer shall immediately report to the Fund the names, ages, civil status, occupations, salaries and dependents of its covered employees.

The setting aside and remittances of contributions shall be mandatory and compulsory for all government entities.

Penal sanctions shall be imposed upon employers who will fail to include the payment of contributions on time, or delay the remittance of the required contributions to the Fund.

The right to institute the necessary action against the employer may be commenced within 20 years from the time delinquency is known or the assessment is made by the Fund, or from the time the benefit accrues, as the case may be.

Penal Provisions. - Refusal or failure without lawful cause or with fraudulent intent to comply with the provisions of this Act, as well as the implementing rules and regulations shall constitute an offense punishable by a fine of not less than, but not more than twice the amount involved or imprisonment of not more than six years, or both such fine and imprisonment, in the discretion of the court, apart from the civil liabilities and/or obligations of the offender or delinquent.

When the offender is a corporation, the penalty shall be imposed upon the members of the governing board and the president or general manager, without prejudice to the prosecution of related offenses under the Revised Penal Code and other laws, revocation and denial of operating rights and privileges in the Philippines, and deportation when the offender is a foreigner.

In case of government entities, the treasurer, finance officer, cashier, disbursing officer, budget officer or other official or employee who fails to include in the annual budget the amount corresponding to the employers' contributions, or who fails or refuses or delays by more than 30 days from the time such amount becomes due and demandable or to deduct the monthly contributions of the employee shall, be subject the same aforementioned sanctions.

Existing coverage. Membership under the Fund established under Presidential Decree No. 1752, together with amounts and benefits already accrued to the members, including employers' counterparts, as well as covering records documents, shall be transferred, continued and/or integrated into the new Fund hereby established, subject henceforth to policies and rules adopted.

Visitorial and enforcement powers. The Fund or its duly authorized representatives is empowered to inspect the premises, books of accounts and records of any person or entity covered by this Act; require it to submit its reports regularly; and act on violations of any provisions of this Act. Particular aspects of the Fund's administration may be subject to supervision, visitation or verification by appropriate agencies of the government as may be designated and authorized by the President of the Philippines.

Repealing clause. All other laws, decrees, executive orders, or rules and regulations, or parts thereof inconsistent with or contrary to the provisions of this Act or its purposes are hereby amended or modified accordingly.

  1. Presidential Decree No. 1530, as amended by Executive Order Nos. 527 (series of 1979) and 538 (series of 1979);
  2. Presidential Decree No. 1752, as amended by Executive Order Nos. 35 (series of 1986) and 90 (series of 1986); and
  3. Republic Act No. 8501 are hereby repealed. Section 6 of Republic Act No. 7742 is hereby amended accordingly.




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