Amending The Act Creating The Home Development Mutual Fund

Case Overview and Summary

Summary of Presidential Decree No. 1752 (Home Development Mutual Fund Law of 1980)

Policy and Purpose (Section 2):
- Motivate employed and earning groups to plan and provide for their housing needs through an integrated nationwide savings system.
- Supported by contributory support from employers, in the spirit of social justice and national development.

Fund System (Section 3):
- Establishes the Home Development Mutual Fund (the "Fund") as a provident savings system for employees.
- The Fund is a body corporate with its principal office in Metro Manila.
- Replaces the previous Home Development Mutual Fund established under Presidential Decree No. 1530.

Fund Coverage (Section 4):
- Mandatory coverage for all employees covered by the Social Security System and the Government Service Insurance System, and their respective employers.
- Coverage may be extended to other working groups, with or without employer contributions, as determined by the Board of Trustees.

Fund Generation (Section 5):
- The Fund is generated by employee contributions and equal employer contributions, based on the following graduated percentages of basic monthly pay (capped at P3,000):
    - 1% in 1981
    - 2% in 1982
    - 3% in 1983 onward

Membership Term (Section 6):
- Membership in the Fund is for a period of 20 years, unless terminated earlier due to retirement, disability, insanity, death, departure from the country, or other causes determined by the Board of Trustees.
- Resignation, lay-off, or suspension from employment may not necessarily terminate membership, but may suspend contributions.

Waiver or Suspension of Coverage (Section 7):
- Coverage and/or payment of monthly contributions may be waived or suspended by the Board of Trustees due to nature of employment, condition of business, ability to make contributions, and other reasonable considerations.

Provident Character (Section 8):
- The Fund is private in character, owned wholly by the members, administered in trust, and applied exclusively for their benefit.
- All contributions are fully credited to each member, accounted for individually, and transferable in case of change of employment.
- Contributions earn dividends as provided in the implementing rules.
- The amounts constitute the provident fund of each member, to be paid upon termination of membership or used for peripheral benefits.

Housing Features (Section 9):
- A member in good standing is eligible to apply for a housing loan, with terms authorized by the Board of Trustees, considering ability to pay.

Corporate Powers (Section 10):
- The Fund has various corporate powers, including:
    - Making policies, guidelines, rules, and regulations
    - Submitting annual reports to the President
    - Investing funds
    - Acquiring and disposing of properties
    - Setting up accounting and computer systems
    - Conducting actuarial and statistical studies
    - Borrowing funds
    - Investing in or establishing subsidiaries
    - Exercising necessary powers to carry out the Act's provisions

Board of Trustees (Section 11):
- The Fund is governed by a Board of Trustees composed of various government officials and representatives from private employees, private employers, and government employees.
- The private sector representatives are appointed by the President for a term of two years.
- The President of the National Home Mortgage Finance Corporation is the Chief Executive Officer of the Fund, unless another person is appointed by the President.

Powers of the Board (Section 12):
- The Board has the power to:
    - Formulate policies, rules, and regulations
    - Direct the operations and administration of the Fund
    - Authorize expenditures and adopt budgets
    - Approve appointments of personnel
    - Exercise necessary powers to carry out the Fund's purposes

Rule-Making Power (Section 13):
- The Board of Trustees is authorized to make and change rules and regulations for various matters, including:
    - Administration, custody, development, utilization, and disposition of the Fund
    - Extension of Fund coverage to other working groups
    - Grounds for and effects of termination of membership
    - Fund earnings and their distribution, investment, and/or plowing back
    - Interim disbursements to members
    - Housing and other loan assistance programs for members
    - Adjudication and settlement of claims and disputes
    - Phased implementation based on classifications of employers and/or employee groups
    - Other matters requiring implementation by policies, rules, and regulations

Powers and Duties of Chief Executive Officer (Section 14):
- The Chief Executive Officer executes and administers the policies and resolutions approved by the Board of Trustees.
- Prepares the Board's agenda and directs and supervises the operations and management of the Fund.
- Appoints, assigns, removes, suspends, or disciplines personnel, subject to the Board's approval.

Money Investments (Section 15):
- Moneys of the Fund not needed for current administrative and operational requirements shall be invested with due and prudent regard for safety, growth, and liquidity needs.

Tax and Guarantee Benefits (Section 16):
- The Fund, its assets, collections, receivables, increments, and distributions are exempt from all forms of taxes, assessments, and other charges.
- Provident payments are not liable to attachment, garnishment, levy, or seizure, except to pay any debt of the covered member to the Fund.
- The Government of the Philippines guarantees the payment of employee and employer contributions and dividends to members when due.

Administration Costs (Section 17):
- The Fund bears the costs of its administration and development, not exceeding 2% of the net Fund assets of the previous year.
- Initial operation expenses may be provided by the National Home Mortgage Finance Corporation as advances or subsidies.

Audit (Section 18):
- The Chairman of the Commission on Audit acts as the ex-officio auditor of the Fund and may appoint personnel to perform audit duties.
- The Board of Trustees may contract for additional independent audit services.

Existing Provident/Housing Plans (Section 19):
- Employers and/or employee groups with existing provident and/or employee-housing plans at the time of the Decree's effectivity may:
    - Register for annual certification of waiver or suspension from Fund coverage if their plans are superior to the Fund.
    - Register for integration with the Fund, either fully or partially.
- Establishing a separate plan after the Decree's effectivity is not a ground for waiver of Fund coverage.

Existing Coverage (Section 20):
- Membership under the previous Fund established under Presidential Decree No. 1530, along with accrued amounts and benefits, shall be transferred, continued, and/or integrated into the new Fund.

Substitute Retirement Plan (Section 21):
- A private employer has the option to treat the Fund coverage as a retirement plan for the employee, subject to any existing collective bargaining agreement.

Remittance of Contributions (Section 22):
- Employers must set aside and remit contributions through the Social Security System, Government Service Insurance System, or a mechanism determined by the Board of Trustees.
- Non-payment subjects the employer to a penalty of 3% per month of the amounts payable from the due date until paid.

Penal Provisions (Section 23):
- Refusal or failure without lawful cause or with fraudulent intent to comply with the Decree, rules, and regulations, particularly regarding registration of employees, collection and remittance of contributions, or correct amounts due, is punishable by:
    - A fine of not less than, but not more than twice, the amount involved
    - Imprisonment of not more than 6 years
    - Or both fine and imprisonment, at the court's discretion
- Additional penalties may apply for corporations and foreigners.

Fund Supervision (Section 24):
- Particular aspects of the Fund's administration may be subject to supervision, visitation, or verification by appropriate government agencies designated and authorized by the President.

Repealing Clause (Section 25):
- Any provisions of law, decree, executive order, rule, or regulation in conflict or inconsistent with the provisions and/or purposes of this Decree are repealed, amended, or modified.

Effectivity (Section 26):
- This Decree takes effect immediately.