HOME DEVELOPMENT MUTUAL FUND LAW

OF 1980
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PRESIDENTIAL DECREE NO. 1752, AS AMENDED

AMENDING THE ACT CREATING THE HOME DEVELOPMENT MUTUAL
FUND

A. Brief History
The Home Development Mutual Fund (HDMF), popularly known as PagIBIG Fund (Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at
Gobyerno), was created by virtue of Presidential Decree No. 1530 on June 11,
1978. To provide its members with adequate housing through an effective
savings scheme, Pag-IBIG Fund harnesses these four sectors of Philippine
society: financial institutions, the industrial sector, the government, and the
Filipino people. The Fund was created to address two of the nation's basic
concerns: (a) the generation of savings and (b) providing shelter for Filipino
workers.
Under the presidential decree, two (2) agencies administered the Fund. These
were the Social Security System (SSS), which handles funds of private
employees, and the Government Service Insurance System (GSIS), which
handles funds of government workers. By virtue of Executive Order No. 527, the
administration of the Fund was transferred to the National Home Mortgage
Finance Corporation (NHMFC) on March 1, 1979. To further strengthen the
stability and viability of the two funds, Executive Order No. 538 was issued
by President Ferdinand E. Marcos on June 4, 1979 merging the two funds into
what is now known as the Pag-IBIG Fund. Months after the assumption to power
of President Corazon C. Aquino, Pag-IBIG contributions were suspended from May
to July 1986. But on August 1, 1986, Pres. Aquino "directed" the resumption of
Pag-IBIG membership under Executive Order No. 35. Membership was still on a
mandatory basis but under more liberal terms. Then, on June 17, 1994, President
Fidel V. Ramos signed Republic Act 7742 which reverted the nature of Pag-IBIG
membership to mandatory effective January 1, 1995.

B. What is the Home Development Mutual Fund

It is a Philippine government owned and controlled corporation under
the Housing and Urban Development Coordinating Council responsible for the
administration of the national savings program and affordable shelter financing
for Filipinos employed by local and foreign-based employers as well as voluntary

and self-employed members. It offers its members short-term loans and access
to housing programs.

C. Who can be members

a. Membership to the fund is exclusive to all Filipino citizens who are or
ought to be covered by the Social Security System (SSS), provided that
actual membership in the SSS shall not be a condition precedent to the
mandatory coverage in the fund. It shall include, but are not limited to:

A private employee, whether permanent, temporary, or provisional who is not

over sixty (60) years old;

A household helper earning at least 1,000 a month. A household helper is

any person who renders domestic services exclusively to a household such as a
driver, gardener, cook, governess, and other similar occupations;

A Filipino seafarer upon the signing of the standard contract of employment

between the seafarer and the manning agency, which together with the foreign
ship owner, acts as the employer;

A self-employed person regardless of trade, business or occupation, with an

income of at least 1,000.00 a month and not over sixty (60) years old;

An expatriate who is not more than sixty (60) years old and is compulsorily
covered by the Social Security System (SSS), regardless of citizenship, nature
and duration of employment, and the manner by which the compensation is
paid. In the absence of an explicit exemption from SSS coverage, the said
expatriate, upon assumption of office, shall be covered by the Fund.

An expatriate shall refer to a citizen of another country who is living and

working in the Philippines.

All employees who are subject to mandatory coverage by the Government

Service Insurance System (GSIS), regardless of their status of appointment,
including members of the judiciary and constitutional commissions;

Uniformed members of the Armed Forces of the Philippines, the Bureau of Fire
Protection, the Bureau of Jail Management and Penology, and the Philippine
National Police;

Filipinos employed by foreign-based employers, whether they are deployed

locally or abroad or a combination thereof.
b. Membership is also extended to individuals of at least 18 years old but not
more than 65 years old under their voluntary membership program.
However, the said individual shall be required to comply with the set of
rules and regulations for Pag-IBIG members including the amount of
contribution and schedule of payment. In addition, they shall be subject to
the eligibility requirements in the event of availment of loans and other
programs/benefits offered by the Fund.

The following shall be allowed to apply for voluntary membership:

Non-working spouses who devote full-time to managing the household and

family affairs, unless they also engage in another vocation or employment which
is subject to mandatory coverage, provided the employed spouse is a registered
Pag-IBIG member and consents to the Fund membership of the non-working
spouse;

Filipino employees of foreign government or international organization, or

their wholly owned instrumentality based in the Philippines, in the absence of an
administrative agreement with the Fund;

Employees of an employer who is granted a waiver or suspension of coverage

by the Fund under RA 9679;

Leaders and members of religious groups;

A member separated from employment, local or abroad, or ceased to be selfemployed but would like to continue paying his/her personal contribution. Such
member may be a pensioner, investor, or any other individual with passive
income or allowances;

Public officials or employees who are not covered by the GSIS such as
Barangay Officials, including Barangay Chairmen, Barangay Council Members,
Chairmen of the Barangay Sangguniang Kabataan, and Barangay Secretaries
and Treasurers;

Such other earning individuals/groups as may be determined by the Board by

rules and regulations.

D. How to be a member
Pag-IBIG Fund allows dream homes to be possible through housing loans. It is
a good thing that employers in the Philippines are required to provide this benefit to
their workers. However, this program is not only limited to employees. Even
unemployed individuals can also be a member of the Pag-IBIG Fund. They can fall
into the Voluntary Member category. Moreover, anyone can be a volunteer member
of Pag-IBIG, even those who are employed.
a. Requirements
1.

Self-paying Employees the members may be employed by a company, but

they pay their Pag-IBIG contributions on their own. Here are the requirements:

Company ID

Certificate of Employment and Compensation

Latest Pay Slip

2. Self-employed small business owners, professionals, freelances, and

consultants belong to this group. Here are their requirements:

Latest Income Tax Return with a CPA-certified Financial Statement from the
previous year

Two (2) 11 ID photos

Certificate of Remittance or ESAV (this for old members)

Mayors Permit or Business Permit

DTI or SEC Registration (under the persons name)

3. Self-employed professionals- government licensed professionals who are

practicing in their field.

PRC or BAR License

Latest ITR from the previous year

Certificate of Remittance or ESAV (this is for old members)

Two (2) 11 ID photos

4. Overseas Filipino Workers (OFWs) these are reactivating members.

Valid and latest Contract of Employment (has original POEA stamp)

POEA License, passport, or any valid ID

Certificate of Remittance or ESAV

Two (2) 11 ID photos

Special Power of Attorney if a representative will submit the requirements

and pay the contributions.

5. Unemployed Spouse for those who are unemployed, but whose spouse is
employed and an active Pag-IBIG member.

Affidavit of Unemployment

Certificate of Employment and Compensation of the member-spouse

Written consent from the member-spouse

6. Franchise Holders or Operators- those who are in franchising business.

Latest ITR from the previous year

Franchise Permit (under the persons name)

Car Registration or Official Receipt (under the persons name)

Certificate of Remittance or ESAV

Two (2) 11 ID photos

7. Member-Spouse with Business this is same to no. 5, but here, the memberspouse has a business.

DTI or SEC Registration

Mayors Permit or Business Permit

Affidavit of Unemployment

Latest ITR (from the previous year)

Certificate of Employment and Compensation of the member-spouse (must

be notarized)

Written consent from the member-spouse

Two (2) 11 ID photos

8. Unemployed (reactivating members)- Those who are basically unemployed.

Affidavit of Unemployment
b. How to be a voluntary member

1.

Submit two copies of MDF and other supporting requirements to the

Marketing and Enforcement Division of the local Pag-IBIG branch. The original
documents should also be brought for authentication.

2.

Get a Payment Order Form (POF) from the said office, and go to the Cash
Division to pay for Membership Contribution.

3.

Present stamped or verified documents to the Marketing and Enforcement

Division.

4.

Secure a POF before going to the Cash Division for the contribution payment.

E. Benefits of the fund and being a member

a. Housing Loan
The most popular program benefit of the Pag-IBIG Fund offers assistance to its
members by providing cheap financing for their housing needs. HDMF accomplishes
this by working in partnership with the local Real Estate Developers and arranging
affordable loans to real estate buyers (Pag-IBIG members).
The loan had a lower interest rate compared to the prevailing rate in the market and
payable in longer terms. Pag-IBIG Fund offers a home loan at a low interest rate of
6% (for 400,000 loan) with a loan term of up to 30 years. A qualified member can
get a maximum loan amount of up to 3 Million.

b. Short Term Loan

Similar to the Government Service Insurance System (GSIS) and Social Security
System, the HDMF also offers financial assistance to qualified member by granting
short term loan. There are two types of loans members are qualified to avail:

c. Multi-Purpose Short Term Loan

This program aims to provide financial assistance to members for house repair,
minor home improvement, home enhancement, tuition or educational expenses,
health and wellness, livelihood; or other purposes. To avail the program, a member
must made at least twenty-four (24) month membership contributions and must five
(5) contributions for the last six (6) months as of month prior to date of loan
application.
For members who have withdrawn their contributions due to membership maturity,
the reckoning date of the updated 24 contributions shall be the first contribution

following the month the member qualified to withdraw his MS due to membership
maturity. If a member has an existing Pag-IBIG Housing Loan, the account must not
be in default as of date of application. Should a member have an existing multipurpose and/or calamity loan, the account/s must not be in default as of date of
application.

d. Calamity Loan
For members affected by unforeseen calamity like flood, fire, tropical cyclones/
typhoons, volcanic eruption and other similar cases. Members can borrow up to 80%
of their Total Accumulated Value (TAV) subject to the terms and conditions of the
program. Calamity Loan Interest rate is 5.95% per annum. The loan is amortized
over 24 months, with a grace period of 3 months. Paying period begins on the 4th
month following their check date.

e. Provident Savings
Membership contributions to the Pag-IBIG fund is a member's individual savings,
which a member can withdraw at the maturity date. Pag-IBIG Fund makes clear that
members' contributions, plus that their employer will earn dividend. All that money,
called Total Accumulated Value (contributions plus dividend) will be available when
it reaches maturity. Unlike the money in a bank regular savings where the interest
rate is given, member's earnings in the fund is not readily foreseen ahead of time. It
essentially participating in an investment and membership earnings will depend on
the overall performance of that investment.