RepublicofthePhilippines CongressofthePhilippines MetroManila TenthCongress ThirdRegularSession Begun and held in Metro Manila, on Monday, the twentyeighth day of July,

y of July, nineteenhundredandninetyseven.

REPUBLICACTNO.8425
ANACTINSTITUTIONALIZINGTHESOCIALREFORMANDPOVERTYALLEVIATION PROGRAM, CREATING FOR THE PURPOSE THE NATIONAL ANTIPOVERTY COMMISSION, DEFINING ITS POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congressassembled: SECTION 1. Title. This act shall be known as the "Social Reform and Poverty AlleviationAct." SEC.2.DeclarationofPolicy.ItisthepolicyoftheStateto: 1) Adopt an areabased sectoral and focused intervention to poverty alleviation wherein every poor Filipino family shall be empowered to meet its minimum basicneedsofhealth,foodandnutrition,waterandenvironmentalsanitation, incomesecurity,shelteranddecenthousing,peaceandorder,educationand functional literacy, participation in governance, and family care and psycho socialintegrity; 2) Activelypursueassetreformorredistributionofproductiveeconomicresources tothebasicsectorsincludingtheadoptionofasystemofpublicspendingwhich istargetedtowardsthepoor; 3) InstitutionalizeandenhancetheSocialReformAgendahereinafterknownasthe SRA,whichembodiestheresultsoftheseriesofconsultationsandsummitson povertyalleviation; 4) Adoptandoperationalizethefollowingprinciplesandstrategiesasconstituting thenationalframeworkintegratingvariousstructuralreformsandantipoverty initiatives: a) Social reform shall be a continuing process that addresses the basic inequities in Philippine society through a systematic package of social interventions; TheSRAshallbeenhancedbygovernmentinequalpartnershipwiththe differentbasicsectorsthroughappropriateandmeaningfulconsultations andparticipationingovernance;

b)

c)

Policy, programs and resource commitments from both government and the basic sectors shall be clearly defined to ensure accountability and transparencyintheimplementationoftheSocialReformAgenda; A policy environment conducive to sustainable social reform shall be pursued; TheSRAshalladdressthefightagainstpovertythroughmultidimensional and crosssectoral approach which recognizes and respects the core values, cultural integrity and spiritual diversity of target sectors and communities; TheSRAshallpursueagenderresponsiveapproachtofightpoverty; TheSRAshallpromoteecologicalbalanceinthedifferentecosystems,ina waythatgivesthebasicsectorsamajorstakeintheuse,management, conservationandprotectionofproductiveresources; The SRA shall take into account the principle and interrelationship of populationanddevelopmentintheplanningandimplementationofsocial reformprogramstherebypromotingselfhelpandselfreliance;and The SRA implementation shall be focused on specific target areas and basicsectors.

d) e)

f) g)

h)

i)

SEC.3.DefinitionofTerms.AsusedinthisAct,thefollowingtermsshallmean: a) Artisanalfisherfolk referstomunicipal,smallscaleorsubsistencefishermen whousefishinggearwhichdonotrequireboatsorwhichonlyrequireboats belowthree(3)tons; b) BasicsectorsRefertothedisadvantagedsectorsofPhilippinessociety,namely: farmerpeasant,artisanalfisherfolk,workersintheformalsectorandmigrant workers, workers in the informal sector, indigenous peoples and cultural communities, women, differentlyabled persons, senior citizens, victims of calamitiesanddisasters,youthandstudents,childrenandurbanpoor; c) Cooperative Refers to a duly registered association of at least fifteen (15) persons,majorityofwhicharepoor,havingacommonbondofinterest,who voluntarilyjointogethertoachievealawfulcommonsocialandeconomicend.It isorganizedbythememberswhoequiblycontributetherequiredsharecapital and accept a fair share of the risks and benefits of their undertaking in accordancewiththeuniversallyacceptedcorporateprinciplesandpractices; 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.Thetermcapabilitybuildingshallinnowayrefertotheprovisionof equityinvestments,seedfunding,partnership'sseedfunds,equityparticipation, startupfundsoranysuchactivitythatconnotestheinfusionofcapitalorfunds

fromthegovernmentorfromthepeople'sdevelopmenttrustbuildingprecludes thegrantofanyloanorequityfundstothemicrofinanceinstitution; e) Collateralfree arrangement A financial arrangement wherein a loan is contractedbythedebtorwithouttheconventionalloansecurityofarealestate or chattel mortgage in favor of the creditor, On lieu of these conventional securities,alternativearrangementstosecuretheloanandensurerepayment areofferedandaccepted; 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 membersofthegroupwhohadadvancedthepaymentinfavoroftheactual debtor;

g) Indigenousculturalcommunities/indigenouspeoplesAsdefinedinRepublicAct No.8371,otherwiseknownas"TheIndigenousPeoplesRightsActof1997"; h) MigrantworkersAsdefinedinRepublicActNo.8042otherwiseknownasthe "MigrantWorkersandOverseasFilipinoActof1995"; i) Microenterprise AnyeconomicenterprisewithacapitalofOnehundredfifty 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; MicrofinanceAcreditandsavingsmobilizationprogramexclusivelyforthepoor toimprovetheassetbaseofhouseholdsandexpandtheaccesstosavingsofthe poor. It involves the use of viable alternative credit schemes and savings programs including the extension of small loans, simplifies loan application procedures,groupcharacterloans,collateralfreearrangements,alternativeloan repayments,minimumrequirementsforsavings,andsmalldenominatedsave instruments.

j)

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 (basiceducationandliteracy;participationincommunitydevelopment;family andpsychosocialcare); l) Humandevelopmentindex Referstothemeasureofhowwellacountryhas performed, based on social indicators or people's ability to lead a long and healthylife,toacquireknowledgeandskills,andtohaveaccesstotheresources neededtoaffordadecentstandardofliving.Thisindexlooksataminimumof threeoutcomesofdevelopment:thestateofhealth(measuredbylifeexpectancy atbirth),thelevelofknowledgeandskill(measuredbyaweightedaverageof adult literacy and enrolment rates), and the level of real income per capita adjustedforpovertyconsiderations;

m) Nongovernment organizations Refers to duly registered nonstock, nonprofit organizationsfocusingontheupliftmentofthebasicordisadvantagedsectorsof society and providing advocacy, training, community organizing, research, accesstoresources,andothersimilaractivities;

n) People'sorganizationReferstoaselfhelpgroupbelongingtothebasicsectors and/ordisadvantagedgroupscomposedofmembershavingacommonbondof interestwhichvoluntarilyjointogethertoachievealawfulcommonsocialand economicend; o) Poor Referstoindividualsandfamilieswhoseincomefallbelowthepoverty threshold as defined by the National Economic and Development Authority and/orcannotaffordinasustainedmannertoprovidetheirminimumbasic needsoffood,health,education,housingandotheressentialamenitiesoflife; p) Poverty alleviation Refers to the reduction of absolute power and relative poverty; q) Absolute poverty Refers to the condition of the household below the food thresholdlevel; r) RelativepovertyReferstothegapbetweentherichandthepoor;

s) Social Reform Refers to the continuing process of addressing the basic inequities in Filipino society through a systematic, unified and coordinated deliveryofsocioeconomicprogramsorpackages; 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 denominationsandsoldatadiscountfromitsredemptionvalue,payabletothe 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.Theresourcesgeneratedunderthisschemeshallbeusedprimarilyfor microcreditforthepoor.SSIsarenoteligibleaslegalreserveofbanksandlegal reservesprescribedofinsurancecompaniesoperatinginthePhilippines;

u) Urban poor Refers to individuals or families residing in urban centers and urbanizingareaswhoseincomeorcombinedhouseholdincomefallsbelowthe poverty threshold as defined by the National Economic and Development Authorityand/orcannotaffordinasustainedmannertoprovidetheirminimum basicneedsoffood,health,education,housingandotheressentialamenitiesof 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 businessesthatareverysmallinscaleandarenotregisteredwithanynational government agency and to the workers in such enterprises who sell their services in exchange for subsistence level wages and other forms of compensation;and x) YouthReferstopersonsfifteen(15)tothirty(30)yearsold. SEC. 4. Adoption and Integration of Social Reform Agenda (SRA) in the National AntiPoverty Action Agenda. The National AntiPoverty Action Agenda shallprincipallyincludethecoreprinciplesandprogramsoftheSocialReformAgenda

(SRA).The SRAshallhaveamultidimensionalapproachtopovertyconsistingofthe followingreforms: 1) 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,andotherbasicserviceswhichenablethecitizensto meettheirbasichumanneedsandtolivedecentlives; 2) Economic dimension asset reform and access to economic opportunities. Reforms whichaddress theexisting inequitiesin theownership, distribution, managementandcontrolovernaturalandmanmaderesourcesfromwhichthey earnalivingorincreasethefruitsoftheirlabor; 3) Ecological dimension sustainable development of productive resources. Reforms which ensure the effective and sustainable utilization of the natural and ecological resources base, thus assuring greater social acceptability and increase participation of the basic sectors in environmental and natural resourcesconservation,managementanddevelopment; 4) Governancedimensiondemocratizingthedecisionmakingprocesses.Reforms whichenablethebasicsectorstoeffectivelyparticipateindecisionmakingand managementprocessesthataffecttheirrights,interestsandwelfare. TheSRAshallfocusonthefollowingsectorspecificflagshipprograms: 1) Forfarmersandlandlessruralworkersagriculturaldevelopment; 2) Forthefisherfolkfisheriesandaquaticresourcesconservation,management anddevelopment; 3) Fortheindigenouspeoplesandindigenouscommunitiesrespect,protection andmanagementoftheancestraldomain; 4) Forworkersintheinformalsectorworker'swelfareandprotection; 5) Fortheurbanpoorsocializedhousing;and 6) Formembersoftheotherdisadvantagedgroupssuchasthewomen,children, youth, persons with disabilities, the elderly and victims of natural and man made calamities the Comprehensive Integrated Delivery of Social Services (CIDSS). Additionally,tosupportthesectoralflagshipprograms,thefollowingcrosssectoral flagshipsshalllikewisebeinstituted: 1) Institutionbuildingandeffectiveparticipationingovernance; 2) Livelihoodprograms; 3) Expansionofmicrocredit/microfinanceservicesandcapabilitybuilding;and 4) Infrastructurebuildupanddevelopment. TITLEI NATIONALANTIPOVERTYCOMMISSION

SEC.5. TheNationalAntiPovertyCommission. Tosupporttheabovestated policy,theNationalAntiPovertyCommissionhereinafterreferredtoastheNAPC,is herebycreatedundertheOfficeofthePresident,whichshallserveasthecoordinating andadvisorybodyfortheimplementationoftheSRA.ThePresidentialCommissionto FightPoverty(PCFP),theSocialReformCouncil(SRC),andthePresidentialCouncilfor Countryside Development (PCCD) are hereby abolished and the NAPC shall be the successorininterestofthethree(3)abolishedcommissionsandcouncils. ThecreationandoperationalizationoftheNAPCshallbeguidedbythefollowing principles: 1) IncorporationoftheSocialReformAgendaintotheformulationofdevelopment plansatthenational,regional,subregionalandlocallevels; 2) Efficiencyintheimplementationoftheantipovertyprogramsbystrengthening and/orstreamliningpresentpovertyalleviationprocessesandmechanisms,and reducingtheduplicationoffunctionsandactivitiesamongvariousgovernment agencies; 3) Coordination and synchronization of social reform and poverty alleviation programsofnationalgovernmentagencies; 4) Exerciseofpolicyoversightresponsibilitiestoensuretheattainmentofsocial reformandpovertyalleviationgoals; 5) Strengthening oflocal governmentunits tomore effectivelyoperationalize the SRAinlocaldevelopmentefforts; 6) InstitutionalizationofbasicsectoralandNGOparticipationineffectiveplanning, decisionmaking,implementation,monitoringandevaluationoftheSRAatall levels; 7) Ensuringadequate,efficientandpromptdeliveryofbasicservicestothepoor; and 7) Enjoininggovernmentfinancialinstitutionstoopencreditandsavingswindow forthepoor,andadvocatingthecreationofsuchwindowsforthepooramong privatebankinginstitutions. SEC. 6. Composition of the NAPC. The President of the Republic of the PhilippinesshallserveasChairpersonoftheNAPC.ThePresidentshallappointthe LeadConvenoroftheNAPC,eitherfromthegovernmentorprivatesector,whoshall likewiseserveasheadoftheNationalAntiPovertyCommissionSecretariat,andshall have the rank of a Cabinet Secretary. There shall be a vicechairperson for the government sector and a vicechairperson for the basic sectors; the former to be designated by the President, and the latter to be elected among the basic sector representativesoftheNAPCasvicechairpersonforthebasicsector;andthefollowing asmembers: 1) Headsofthefollowinggovernmentbodies: a) b) DepartmentofAgrarianReform(DAR); DepartmentofAgriculture(DA);

c) d) e) f) g) h) i) j) k) l) m) a) b) c) d) a) b) c) d) e) f) g) h) i) j) k) l) m) n)

DepartmentofLaborandEmployment(DOLE); DepartmentofBudgetandManagement(DBM); DepartmentofSocialWelfareandDevelopment(DSWD); DepartmentofHealth(DOH); DepartmentofEducation,CultureandSports(DECS); DepartmentoftheInteriorandLocalGovernment(DILG); DepartmentofEnvironmentandNaturalResources(DENR); DepartmentofFinance(DOF); NationalEconomicandDevelopmentAuthority(NEDA); People'sCreditandFinanceCorporation(PCFC).subjecttoSection17of thisAct;and PresidentialCommissiononUrbanPoor(PCUP). LeagueofProvinces; LeagueoCities; LeagueofMunicipalities; LigangmgaBarangay Farmersandlandlessruralworkers; Artisanalfisherfolk; UrbanPoor; Indigenousculturalcommunities/indigenouspeoples; Workersintheformalsectorandmigrantworkers; Workersintheinformalsector; Women; Youthandstudents; Personswithdisabilities; Victimsofdisastersandcalamities; Seniorcitizens; Nongovernmentorganizations(NGOs); Children;and Cooperatives.

2) PresidentsoftheLeaguesofLocalGovernmentUnits:

3) Representativesfromeachofthefollowingbasicsectors:

Sectoral councils formed by and among the members of each sector shall respectivelynominatethree(3)nomineesfromeachsectorwithinsix(6)monthsafter theeffectivityoftheimplementingrulesandregulationsofthisAct,andeverythree(3) yearsthereafterandincaseofvacancy.ThePresidentoftheRepublicofthePhilippines shall,withinthirty(30)daysafterthesubmissionofthelistofnominees,appointthe representativesfromthesubmittedlist.Sectoralrepresentativesshallserveforaterm ofthree(3)yearswithoutreappointment.appointmenttoanyvacancyforbasicsector representativesshallbeonlyfortheunexpiredtermofthepredecessor.

Theimplementingrulesandregulations(IRR)ofthisActshallcontaintheguidelines fortheformulationofsectoralcouncils,thenominationprocess,recallproceduresand suchothermechanismstoensureaccountabilityofthesectoralrepresentatives. SEC.7.PowersandFunctions.TheNAPCshallexercisethefollowingpowersand functions: 1) Coordinate with different national and local government agencies and private sectortoassurefullimplementationofallsocialreformandpovertyalleviation programs; 2) Coordinatewithlocalgovernmentunitsintheformulationofsocialreformand poverty alleviation programs for their respective areas in conformity with the nationalPovertyActionAgenda; 3) Recommendpolicyandothermeasurestoensuretheresponsiveimplementation ofthecommitmentsundertheSRA; 4) Ensuremeaningfulrepresentationandactiveparticipationofthebasicsectors; 5) Oversee,monitorandrecommendmeasurestoensuretheeffectiveformulation, implementation and evaluation of policies, programs and resource allocation andmanagementofsocialreformandpovertyalleviationprograms; 6) Advocateforthemobilizationoffundsbythenationalandlocalgovernmentsto financesocialreformandpovertyalleviationprogramsandcapabilitybuilding activitiesofpeople'sorganizations; 7) Provide financial and nonfinancial incentives to local government units with counterpart resources for the implementation of social reform and poverty alleviationprograms;and 8) SubmitanannualreporttoCongressincludingbutnotlimitedtoallaspectsof itsoperationsandprogramsandprojectimplementation,financialstatusand otherrelevantdataasreflectedbythebasicreformindicator. SEC.8. PrincipalOffice. TheNAPCshallestablishitsprincipalofficeinMetro Manila and may establish such branches within the Philippines as may be deemed necessarybythePresidentofthePhilippinestocarryoutthepowersandfunctionsof theNAPC. SEC.9. TheNAPCSecretariat. TheNAPCshallbesupportedbyaSecretariat, whichshallbeheadedbytheLeadConvenorreferredtounderSection6hereof.The SecretariatshallprovidetechnicalandadministrativesupporttotheNAPC.Itshallbe formedfromtheunificationofthesecretariatsofthefollowingbodies: 1) PresidentialCommissiontoFightPoverty(PCFP); 2) SocialReformCouncil(SRC);and 3) PresidentialCouncilforCountrysideDevelopment(PCCD). Withinthree(3)monthsfromtheeffectivityofthisAct,theOfficeofthePresident shallfinalizetheorganizationalplanfortheNAPC.

Toprovidethecontinuityofexistingsocialreformandpovertyalleviationrelated programs, all accredited organizations under the three (3) unified councils and commissionsshallbeautomaticallyaccreditedundertheNAPCuntilsuchtimethat additionalaccreditationrequirementsmaybeprovidedbytheNAPC. The Trust Fund in the amount of Four billion and five hundred million pesos (P4,500,000,000.00)shallbefundedfromtheearningsofthePAGCORinadditionto appropriationsbyCongress,voluntarycontributions,grants,giftsfrombothlocaland foreignsourcesasmaybeacceptedordecidedonbytheNAPC.Anyadditionalamount totheTrustFundshallformpartofthecorpusoftheTrustFund,unlessthedonor, contributororgrantorexpresslyprovidesasaconditionthattheamountbeincludedin thedisbursibleportionoftheTrustFund. ThePresidentofthePhilippinesshallassigntoanyexistinggovernmentdepartment oragencytheadministrationoftheTrustFund,basedontheexpertise,organizational capabilityandorientationorfocusofthedepartmentoragency.TheNAPCshallbe limitedtothefunctionofmonitoringtheutilizationofthePDTF,whilethegovernment departments or agencies designated by the President shall directly administer the utilizationoftheearningsofthePDTF. OnlythefruitsofthePDTFshallbeusedforthepurposesprovidedinthisAct.Any undisbursedfruitsfortheprecedingyearshallformpartofthedisbursibleportionof thePDTFinthefollowingyear. ForthepurposeofmonitoringtheearningsofthePDTF,theNAPCshall: 1) SourcefundsfortheestablishmentofandaugmentationtotheTrustFund; 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 microenterpriseprograms; 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. SEC. 11. Purposes of the People's Development Trust Fund (PDTF). The earningsofthePDTFshallbeutilizedforthefollowingpurposes: 1) Consultancy and training services for microfinance institutions and their beneficiariesontheestablishmentofthenecessarysupportservices,socialand financial preparation of beneficiaries, preparation of plans and programs including fund sourcing and assistance, establishment of credit and savings monitoringandevaluationmechanisms;

2) Scholarshipsortraininggrantsformicrofinancestaffandofficers,andselected beneficiaries; 3) Community organizing for microfinance, livelihood and microenterprises trainingservices; 4) Livelihood/microenterpriseproject/programfeasibilitystudiesandresearches; 5) Savingsmobilizationandincentiveprograms,andothersimilarfacilities; 6) Informationandcommunicationsystemssuchasbaselinesurveys,development monitoring systems, socioeconomic mapping surveys, organizational assessments,andothersimilaractivities; 7) Legal and other management support services such as registration, documentation, contract review and enforcement, financial audit and operationalassessment; 8) Informationdisseminationofmicrofinancetechnology;and 9) Otheractivitiestosupportmicrofinanceasapprovedbythedesignatedagency administeringthePDTF. ThePDTFmaybeassessedbythefollowing: a) Registered microfinance organizations engaged in providing microenterprise servicesforthepoortoenablethemtobecomeviableandsustainable; b) Localgovernmentunitsprovidingmicrofinanceandmicroenterpriseprograms totheirconstituents:Provided,ThatthePDTFshallnotbeusedbytheLGU'sfor personalservicesandmaintenanceandotheroperatingexpenses;and c) Localgovernmentunitsundertakingselfhelpprojectswhereatleasttwentyfive percent(25%)ofthetotalearningsofthePDTFshallbeusedexclusivelyforthe provisionofmaterialsandtechnicalservices. SEC.12. TheRoleofLocalGovernmentUnits(LGUs). Thelocalgovernment units, through the local development councils of the province, city, municipality, or barangay shall be responsible for the formulation, implementation, monitoring and evaluationoftheNationalAntiPovertyActionAgendaintheirrespectivejurisdictions. TheLGUsshall: 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 andformulateaprovincial/city/municipalityantipovertyactionagenda; b) Identify and source funding for specific social reform and poverty alleviation projects; c) Coordinate,monitorandevaluatetheeffortsoflocalgovernmentunitswiththe privatesectoronplanningandimplementationofthelocalactionprogramfor socialreformandpovertyalleviation;and d) Coordinate and submit progress reports to the National AntiPoverty Commissionregardingtheirlocalactionprograms.

NothinginthisActshallbeconstruedasdiminishingthepowersgrantedtothe localgovernmentunitsundertheLocalGovernmentCode. TITLEII MICROFINANCESERVICESFORTHEPOOR SEC.13. Microfinanceprogram. Theprogramsandimplementingmechanisms oftheSocialReformAgenda'sFlagshipProgramonCreditshallbeintegrated,adopted andfurtherenhancedtoeffectivelysupporttheobjectivesofthisActalongthefollowing thrusts: 1) Development of a policy environment, especially in the area of savings generation,supportiveofbasicsectorinitiativesdedicatedtoservingtheneeds ofthepoorintermsofmicrofinanceservices; 2) Rationalizationofexistinggovernmentprogramsforcreditandguarantee; 3) Utilization of existing government financial entities for the provision of microfinanceproductsandservicesforthepoor;and 4) Promotion of mechanisms necessary for the implementation of microfinance services,includingindigenousmicrofinancepractices. SEC.14.People'sCreditandFinanceCorporation(PCFC).ThePeople'sCredit andFinanceCorporation(PCFC),agovernmentcontrolledcorporationregisteredwith the Securities and Exchange commission and created in accordance with AdministrativeOrderNo.148andMemorandumOrderNo.261shallbethevehiclefor thedeliveryofmicrofinanceservicesfortheexclusiveuseofthepoor.Asagovernment ownedandcontrolledcorporation,itshallbetheleadgovernmententityspecifically taskedtomobilizefinancialresourcesfrombothlocalandinternationalfundingsources formicrofinanceservicesfortheexclusiveuseofthepoor. SEC.15. IncreaseintheCapitalizationofPCFC. Tofacilitatetheincreasein thecapitalizationofthePCFC,thePresidentoftheRepublicofthePhilippinesshall takemeasurestoenabletheamendmentoftheArticlesofIncorporationofthePCFC suchthat: a) TheauthorizedcapitalstockofthePCFCmaybeincreasedfromOnehundred million pesos (P100,000,000.00) to Two billion pesos (P2,000,000,000.00) dividedintotwentymillioncommonshareswithaparvalueofOnehundred pesos(P100.00)pershare; b) ThesubscribedcapitalstockofthePCFCmaybeincreasedfromOnehundred millionpesos(P100,000,000.00)toSixhundredmillionpesos(P600,000,000.00) and the national government may subscribe the difference of Five hundred millionpesos(P500,000,000.00); c) TheinitialpaidupcapitalmaybeincreasedfromOnehundredmillionpesos (P100,000,000.00)totwohundredfiftymillionpesos(P250,000,000.00),tobe increased subsequently to a total of Six hundred million pesos (P600,000,000.00), such that at the end of a period of four (4) years the subscribedcapitalshallbefullypaidup,inthefollowingmanner:

For the initial increase in paidup capital during the first year, the differenceofOnehundredfiftymillionpesos(P150,000,000.00)shallbe paid and appropriated for by government; for the second year, One hundred fifty million pesos (P150,000,000.00); for the third year, One hundred million pesos (P100,000,000.00); and for the fourth year, One hundredmillionpesos(P100,000,000.00). The appropriations for the additional paidup capital shall be sourced from the share of the national government in the earnings of the PAGCOR, in the manner providedforunderSection18,whichprovidesfortheappropriationsunderthisAct. SEC. 16. Special Credit Windows in Existing government Financing Institutions(GFI's). Theexistinggovernmentfinancialinstitutionsshallprovidefor the savings and credit needs of the poor. The GFI's such as the Land Bank of the Philippines,PhilippinePostalBank,AlAmanahBank,andtheDevelopmentBankofthe Philippines are hereby mandated to coordinate with NAPC and PCFC in setting up specialcreditwindowsandotherarrangements,suchastheservicingofSmallSavers Instruments(SSIs),thatwillpromotethemicrofinanceprograminthisAct. The private financing institutions may also provide the savings and credit requirementsofthepoorbysettingupsimilarcreditwindowsandotherarrangements topromotethesavingscomponentofthemicrofinanceprogramofthisAct. Specialcreditwindowsforthepoorshall,asfaraspracticable,includeanallocation forthebasicsectors,asdefinedinthisAct,particularlythoselivinginruralareas, agrarianreformcommunities,andthewomeninthecountryside. SEC.17.PCFCPrivatization.Intheeventthattheownershipofthemajorityof the issued voting stocks of PCFC shall have passed to private investors (exclusively qualifiednongovernmentorganizations,people'sorganizationsandcooperatives),the stockholdersshallcausetheregistrationwiththeSecuritiesandExchangecommission (SEC)oftherevisedArticlesofIncorporationandByLaws.ThePCFCshallthereafterbe consideredasaprivatelyorganizedentitysubjecttothelawsandregulationsgenerally appliedtoprivatecorporations. The chairman of the PCFC may still be a member of the National AntiPoverty Commission(NAPC)upontheprivatizationofthePCFC: Provided, ThatthePCFCwill continueitsmainpurposeofprovidingforthesavingsandcreditneedsofthepoor. TITLEIII APPROPRIATIONSFOR THENATIONALANTIPOVERTYCOMMISSION(NAPC) ANDTHEPEOPLE'SDEVELOPMENTTRUSTFUND(PDTF) SEC.18. Appropriations. TocarryouttheprovisionsofthisAct,thefollowing amountsareappropriatedasfollows: 1) The sum of One hundred million pesos (P100,000,000.00) is hereby appropriatedastheinitialoperatingfundinadditiontotheunutilizedfundsof therationalizedcommissionandcouncils.Thesumshallbesourcedfromthe

President's Contingent Fund. In subsequent years, the amount necessary to implement this Act shall be included in the annual appropriations. The said amountsshallbeunderthemanagementoftheNAPC. 2) The aggregate sum of Four billion and five hundred million pesos (P4,500,000,000.00) for ten (10) years is hereby appropriated for the establishmentofthePeople'sDevelopmentTrustFund(PDTF)fromtheshareof the national government in the earnings of the Philippine Amusement and GamingCorporation(PAGCOR),inthefollowingmanner:onthefirstyear,Three hundred fifty million pesos (P350,000,000.00); on the second year, Three hundredfiftymillionpesos(P350,000,000.00);onthethirdyear,Fourhundred millionpesos(P400,000,000.00);onthefourthyear,Fourhundredmillionpesos (P400,000,000.00);onthefifthyearandeveryyearthereafteruntilthetenth year,fivehundredmillionpesos(P500,000,000.00)annually. 3) The aggregate sum of Five hundred million pesos (P500,000,000.00) for four yearsshallbeappropriatedfortheincreaseinthecapitalizationofthePCFC fromtheshareofthenationalgovernmentintheearningsofthePAGCOR,at suchtimethattheincreaseinthecapitalizationofthePCFC,inthemanner 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 hundredfiftymillionpesos(P150,000,000.00);onthethirdyear,Onehundred millionpesos(P100,000,000.00);andonthefourthyear,Onehundredmillion pesos(P100,000,000.00) SEC. 19. Transitory Provision. The Social Reform Council (SRC) and the representativesthereinshall,intemporarycapacity,exercisethepowersandassume thedutiesoftheNAPCuntilsuchtimethatthemembersoftheNAPCshallhavebeen dulyappointedordesignated. TheOfficeofthePresidentshallformulatetheimplementingrulesandregulations (IRR)ofthisActwithinsix(6)monthsafteritseffectivity. Theassets,liabilitiesandpersonnelofPCFP,SRCandPCCDareherebytransferred to the NAPC. Personnel who cannot be absorbed by NAPC shall be entitled to a separation payof oneandahalf(1 1/2)months forevery yearof serviceand other benefitsunderexistingretirementlaws,attheoptionofthepersonnelconcerned. SEC.20.RepealingClause.Alllaws,executiveorders,rulesandregulations,or partsthereof,inconsistentwiththisActareherebyrepealed,amended,ormodified accordingly. The provisions of this Act shall not be repealed, amended or modified unlessexpresslyprovidedinsubsequentgeneralorspeciallaws. SEC.21.SeparabilityClause.IfanyprovisionofthisActshallbeheldinvalidor unconstitutional,theremainingprovisionsthereofnotaffectedtherebyshallremainin fullandeffect. SEC.22.EffectivityClause.ThisActshallbeeffectiveJune30,1998.

Approved,

(Sgd)ErnestoM.Maceda PresidentoftheSenate

(Sgd)JoseDeVenecia,Jr. SpeakeroftheHouse ofRepresentatives

ThisAct,whichisaconsolidationofHouseBillNo.9360andSenateBillNo.1731, wasfinallypassedbytheHouseofRepresentativesandtheSenateonDecember8, 1997. (Sgd)LorenzoE.Leynes,Jr. SecretaryoftheSenate (Sgd)RobertoP.Nazareno SecretaryGeneral HouseofRepresentatives

Approved:11December1997 (Sgd)FidelV.Ramos PresidentofthePhilippines