Understanding Paluwagan
Paluwagan is an informal system of “savings and/or lending” based on the trust of each member of the group, usually among co-workers, friends, and other closely-knit groups.
Legal Perspective on Paluwagan
The Supreme Court has clarified that engaging in paluwagan is not prohibited under the law. It is not considered a form of gambling or lottery, but rather a system where members agree to put their money in a common fund, with each member receiving the total amount collected at a specified time.
Supreme Court Cases
- In the case of Dinna Castillo v. Zenaida C. Buencillo, the Court emphasized that paluwagan is not illegal and does not violate any laws.
- Similarly, in Samuel Barangan v. Court of Appeals and Leovino Jose, the Court ruled that while paluwagan itself is not illegal, it can become unlawful if used as a means to deceive investors.
Conclusion
Paluwagan, as a system to save money among trusted individuals, is not inherently illegal. However, it can cross into unlawful territory if it is exploited to attract investments under false pretenses, leading to potential criminal and civil liabilities for the operator.
We hope this information clarifies your concerns regarding the legality of paluwagan.