No ex-deal: Cebu City to ban use of 4Ps cash cards as loan collateral

CEBU CITY, Philippines — Beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps) would be barred from using their cash cards as collateral for loans under a proposed ordinance that seeks to curb what its author described as the growing exploitation of poor households by informal lenders.

The measure, authored by Cebu City Councilor Pancrasio “Francis” Esparis, would prohibit any individual or entity from accepting or requiring 4Ps cash cards as security for loans and impose penalties on violators if approved by the Cebu City Council.

Addressing alleged exploitation

In the explanatory note, Esparis said the Pantawid Pamilyang Pilipino Program, established under Republic Act No. 11310, was designed to provide financial assistance to poor households for their health, nutrition, and education needs.

However, he said reports from Department of Social Welfare and Development (DSWD) field monitors and social welfare officers in Central Visayas indicate that some beneficiaries have been pawning or surrendering their 4Ps cash cards to informal lenders and loan sharks as collateral for credit.

According to the proposal, the practice has allegedly trapped beneficiaries in debt cycles, with lenders directly taking control of their monthly cash grants. It also noted that some beneficiaries reportedly travel across local government boundaries, including to Cebu City, to enter into such transactions.

Esparis said the arrangement undermines the purpose of the government’s conditional cash transfer program by diverting financial assistance intended for beneficiaries’ basic needs toward the payment of high-interest loans.

Who would be covered

The proposed ordinance would apply to active 4Ps beneficiaries, family members or third parties in possession of their cash cards, as well as all credit providers, lenders, financial institutions, private individuals, and their employees or representatives who engage in transactions involving 4Ps cash cards within Cebu City.

Under the proposal, it would become unlawful to offer loans that require a 4Ps cash card as collateral or to require or accept the card as security for a loan or as payment for financial obligations, including those arising from gambling activities or other services.

Proposed penalties

Violators would face escalating penalties under the ordinance.

A first offense would carry a fine of ₱2,000 per loan transaction, imprisonment of up to three months, or both, at the discretion of the court. A second offense would be punishable by a ₱3,500 fine, imprisonment of up to six months, or both. Third and succeeding offenses would carry a ₱5,000 fine, imprisonment of up to one year, or both.

The proposal also stipulates that financial institutions, lending organizations, and private individuals found liable may face administrative sanctions, including the suspension or cancellation of their business permits, where applicable.

Implementation if approved

If enacted, the Cebu City Legal Office would be tasked with drafting the ordinance’s implementing rules and regulations in coordination with the Department of Social Welfare Services within 60 days from its effectivity.

The proposed ordinance would take effect 15 days after complying with posting or publication requirements, but only after securing approval from the Cebu City Council and completing the legislative process.

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