SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Third Regular Session 
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) 
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SENATE 
S.B.No. 2909 
(In Substitution of SB No. 2218) 
Ti 
[lUG 19 P 3 :~)9 
PREPARED BY THE COMMITTEE ON TRADE, COMMERCE & ENTREPRENEURSHIP JOINT WITH THE 
COMMITTEES ON BANKS, FINANCIAL INSTITUTIONS AND CURRENCIES; & WAYS AND 
MEANS WITH SENATOR AQUINO IV AS AUTHOR THEREOF 
, 
AN ACT 
PROVIDING FOR THE CREATION AND ORGANIZATION OF CREDIT SURETY 
FUND COOPERATIVES TO MANAGE AND ADMINISTER CREDIT SURETY FUNDS 
TO.,.ENHA~E THE ACCESSIBILITY OF MICRO, SMALL AND MEDIUM 
. y()( ENTih'&RENEURS, COOPERATIVES AND NON-GOVERNMENT 
ORGANIZATIONS TO THE CREDIT FACILITY OF BANKS AND FOR OTHER 
PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
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SECTION 1. Title. -
This Act shall be known as the "Credit Surety Fund Cooperative 
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Act of2015". 
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SEC. 2. Declaration of Policy. - The State hereby recognizes the need to foster national 
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development, promote inclusive growth, and reduce poverty by promoting the growth of micro, 
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small and medium enterprises (MSMEs) that facilitate local job creation, production and trade in 
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the country. Moreover, the State affirms its declarcd policy to foster the creation and growth of 
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cooperatives as a practical vehicle for promoting self-reliance for the attainment of economic 
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development and social justice. Further, it is the State's policy to strengthen the cooperative 
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movement in the Philippines by empowering the Cooperative Development Authority and 
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providing it with the necessary powers and resources to fulfill its mandatc. 
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To attain these objectives, the State shall encourage and assist in the creation and 
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organization of special cooperatives to be known as Credit Surety Fund Cooperative (CSF 
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Cooperative) which shall be primarily tasked with administering their respective Credit Surety 
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Fund (CSF). The CSF is designed to provide MSMEs, cooperatives, and non-government 
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organizations (NGOs) with more inclusive access to bank credit, thereby enhancing their 
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sustainabilityand growth. 
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SEC. 3. Statement of Objectives . - The purposes of this Act are as follows: 
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(a) 
(b) 
(c) 
(d) 
(e) 
(f) 
Encourage, promote and assist in the creation and organization of a special 
cooperative, the CSF Cooperative, which shall be vested with juridical personality 
and enjoy all the rights and privileges of cooperatives under Republic Act No. 
9520, otherwise known as the Cooperative Code of 2008. 
Enhance the credit worthiness ofmember-MSMEs, cooperatives, and NGOs, and 
broaden their access to the credit facilities of banks. 
Sustain the continuous flow of credit in the countryside through the establishment 
of well and prudently managed CSFs which shall serve as surety covers. 
Build up the capability of cooperatives and NGOs in the areas of credit 
evaluation, loan and risk management, and good governance principles. 
Generate more employment and contribute to the poverty alleviation program of 
the government through increased investments and economic activities. 
Strengthen the Cooperative Development Authority by providing it with powers 
and resources to enable it to effectively regulate cooperatives, including CSF 
Cooperatives. 
SEC. 4. Definition of Terms. - As used in this Act: 
(a) 
(b) 
Articles of Cooperation shall refer to the articles of cooperation registered with 
the CDA and includes any registered amendment thereof. 
Bangko Selltral -
the Ballgko Sentral ng Pilipinas with powers and 
responsibilities as defined under Republic Act No. 7653, also known as the New 
Central Bank Act. 
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(c) 
(d) 
(e) 
(f) 
(g) 
Board of Directors - the governing body of the CSF Cooperative. It is entrusted 
with the sound and prudent administration of the CSF Cooperative pursuant 
to this Act, its implcmenting rules and regulations, its articles of cooperation and 
by-laws. 
Its members consist of the elected representatives of member-
cooperatives, and 
the authorized representative/s of NGOs, GFIs and LGUs as 
Independent Directors with voting rights. 
By-laws - the by-laws registered with the CDA and include any registered 
amendment thereof. 
Cooperative - an autonomous and duly registered association of persons, with a 
common bond of interest, who have voluntarily joined together to achieve their 
social, economic and cultural needs and aspirations by making equitable 
contributions to the capital required, patronizing their products and services and 
by accepting a fair share of the risks and benefits of the undertaking in accordance 
with universally accepted cooperative principles. 
(1) 
(2) 
A cooperative as used in this Act, may either be: 
Primary -
the members of which are natural persons; 
Secondary -
the members of which are primaries; and 
(3) 
Tertiary -
the members of which are secondary cooperatives 
Cooperative Development Authority (CDA) -
the lead government agency 
implementing this Act and which is responsible for the registration, regulation, 
monitoring and supervision of CSF Cooperatives. 
Credit Surety Fund (CSF) - a fund generated from the contributions of well-
capitalized and well-managed member-cooperatives, qualified NGOs, GFIs and 
LGUs. The CSF shall serve as security for the loans that will be obtained by 
qualified borrowers from lending banks by way of a surety cover issued by the 
Board of Directors of the CSF Cooperative in lieu of hard collaterals. 
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(h) 
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(i) 
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(j) 
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(k) 
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Credit Surety Fund Cooperative or CSF Cooperative - a special cooperative 
comprised of well-capitalized and well-managed member-cooperatives that meet 
the criteria and qualifications prescribed by the CDA, qualified NGOs, GFls and 
LGUs, all of which shall make contributions to the CSF as defined and prescribed 
by this Act. 
A CSF Cooperative shall be established for the primary and exclusive 
purpose of administering the CSF as provided for in this Act and by its 
implementing rules and regulations. 
Endorsers - entities, which attest to the CSF Cooperative the creditworthiness of 
its 
member-borrowers and assures that such are eligible to avail of a loan 
covered by 
its CSF. On account of the Surety Agreement, endorsers obligate 
themselves to be jointly and severally liable with the borrower in the event of the 
latter's default. They are the following: 
(I) 
A primary cooperative, which is a member of the CSF Cooperative, 
endorsing for this purpose its MSME member; and 
(2) 
A secondary or tertiary cooperative, which is a member of the CSF 
Cooperative, endorsing for this purpose its primary or secondary member-
cooperatives. 
Government Financial Institutions (GFIs) -
financial institutions or 
corporations in which the government directly or indirectly owns majority of the 
capital stock and which are registered with or directly supervised by the Bangko 
Sentral. For purposes of this Act these are, but not limited to, the Development 
Bank of the Philippines, Land Bank of the Philippines and the Industrial 
Guarantee and Loan Fund (IGLF). GFls may contribute funds to the CSF either in 
the form of investment or special contribution, thus, they shall be considered as 
members ofthe CSF Cooperative. 
Investments - the contributions of the cooperatives and NGOs to the CSF 
Cooperative, which shall share in the earnings/losses of the CSF in proportion to 
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(I) 
(m) 
(n) 
(0) 
their contributions. It also includes contributions of the LGUs or GFls that want 
their contributions to be treated as investments. 
Lending Bank - any authorized banking institution with a rediscounting line with 
the Bangko Sentral and other banking institutions. 
Local Government Unit (LGU) - the provincial or city govermnent that is 
authorized under this Act to contribute to the CSF established by the CSF 
Cooperative in their locality either in the fonn of investment or special 
contribution, in an amount at least equal to the total contribution of the member-
cooperatives and NGOs. 
Provided, that a municipality may also contribute to a CSF which is 
administered and managed by a provincial CSF Cooperative, which contribution 
shall be deemed as part of the contribution of the province. 
Members of the CSF Coop -
cooperatives, NGOs, GFls and LGUs that 
contributed to the CSF and who, adhering to the principles set forth in the 
Cooperative Code of 2008 and in the articles of cooperation, have been admitted 
by the CSF Cooperative as its members. 
Micro, Small and Medium Enterprise (MSME) - any business activity or 
enterprise engaged in industry, agri-business andlor services, whether a single 
proprietorship, cooperative, or partnership whose total assets, inclusive of those 
arising from loans but exclusive of the land on which the particular business 
entity's office, plant and equipment are situated, must have value falling under the 
following categories: 
Category 
Asset 
Micro 
Not more than P3,000,000 
Small 
P3,000,001 - PI5,000,000 
Medium 
P 15,000,001 - P 100,000,000 
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(p) 
(q) 
(r) 
(s) 
(t) 
The classification shall be subject to review and adjustment by the Micro, 
Small and Medium Enterprises Development (MSMED) Council under Section 6 
of Republic Act No. 6977, as amended, otherwise known as "The Magna Carta 
for Small Enterprises" or upon recommendation of sectoral organizations 
concerned, taking into account inflation and other economic indicators. 
The 
MSMED Council may use other variables such as the number of employees, 
equity capital and assets size. 
Non-Government Organization (NGO) - non-stock, non-profit organizations 
duly registered with the Securities and Exchange Commission (SEC), focusing on 
the upliftment of the basic or disadvantaged sectors of society by providing 
advocacy, training, community organizing, research, access to resources, 
provision of micro finance programs and services, or other similar activities. 
Qualified Borrowers - refer to the following: 
(I) 
(2) 
(3) 
An MSME-member of a cooperative-member of the CSF Cooperative; 
A cooperative that is a member ofthe CSF Cooperative; and 
A NGO that is a member of the CSF Cooperative. 
Registration - the operative act of granting juridical personality to a proposed 
CSF Cooperative and is evidenced by a certificate of registration. 
Special Contribution - contributions of LGUs and GFls given to the CSF as 
grant. This shall not share in the earnings of the fund but the residual value shall 
be returned once the CSF is dissolved. 
Surety Agreement - the agreement executed by the proper parties as defined by 
this Act and its implementing rules and regulations, in favor of the lending bank, 
whereby the surety obligates itself to be jointly and severally liable with a 
qualified borrower in the event that the latter defaults; Provided, that a surety 
agreement shall not be deemed to be an insurance contract and the issuance 
thereof pursuant to this Act, and those previously issued and to be issued by the 
Oversight Committees of existing Credit Surety Funds, shall not be considered as 
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(u) 
doing an insurance business under Republic Act No. 10607, or any applicable 
law. 
A Surety Agreement, for purposes of this Act, shall be endorsed by the 
endorser to the CSF Cooperative. However, in cases where a cooperative has no 
Endorser, the CSF Cooperative, subject to the implementing rules and regulations, 
may solely execute a Surety Agreement in favor of the lending banle 
Trustee Bankls -the bankls designated by the Board of Directors to manage the 
CSF. Such bankls must be authorized by the Bangko Sentral to engage in trust 
and other fiduciary business under Republic Act No. 8791, otherwise 
known as 
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the General Banking Law of 2000. The implementing rules and regulations shall 
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also provide additional eligibility requirements for trustee banks. 
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SEC. 5. Credit Surety Fund Cooperative or CSF Cooperative. - The CSF Cooperative 
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shall be organized as a special cooperative in accordance with the Cooperative Code of 2008 and 
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the implementing rules and regulations to be promulgated by the CDA. 
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A CSF Cooperative may bc established in a province or in a city. 
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SEC. 6. Articles of Cooperation. - A CSF Cooperative shall file its articles of 
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cooperation and by-laws for registration, and any amendments of the same, with the CDA. Its 
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articles of cooperation shall be signed by the shareholders acknowledged by them before a notary 
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public. 
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The articles of cooperation shall sct forth the Items required by the implementing rules 
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and regulations. 
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SEC. 7. By-laws. - A CSF Cooperative formed and organized under this Act shall adopt 
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by-laws not 
inconsistent with the provisions of this Act and its implementing rules and 
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regulations. The by-laws shall be filed at the same time as the articles of cooperation and shall 
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contain items required by the implementing rules and regulations. 
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SEC. 8. Registration. - A CSF Cooperative formed and organized under this Act acquires 
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juridical personality from the moment the CDA issues a certificate of registration under its 
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official seal. A certificate of registration issued by the CDA under its official seal shall be 
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conclusive evidence that the CSF Cooperative is duly registered unless it is proven that the 
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registration thereof has been cancelled. 
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Upon registration with the CDA, a CSF Cooperative shall enJoy all the rights and 
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privileges of cooperatives as provided for by the Cooperative Code of 2008. 
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SEC. 9. Board of Directors. - The members of the Board of Directors shall consist of the 
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representatives of the member-cooperatives duly elected in the general assembly in such number 
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and in such manner as may be agreed therein, provided that it will not contravene with the 
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implementing rules and regulations as may hereafter be formulated. 
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It shall also include the authorized representatives from the LGUs, NGOs, and GFls as 
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Independent Directors with voting rights. 
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Each member shall be entitled to only one (1) vote, regardless of the amount of its 
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respective contribution. 
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SEC. 10. Powers and Responsibilities of the Board of Directors. - The Board of 
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Directors shall have the following powers and responsibilities: 
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(a) 
(b) 
(c) 
Detennine and formulate the general policies and !,'1lidelines on the proper 
administration of the CSF Cooperative; 
Act as Manager of the CSF until such time that trustee banks is/are designated or 
appointed as manager; 
Designate bankls duly licensed by the Bangko Sentral to perform trust and other 
fiduciary functions as trustee bankls or investment manager/s, which will, among 
others, manage the investment, reinvestment and disposition of the fund as 
provided under Republic Act No. 8791, otherwise known as the General Banking 
Law of2000; 
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(d) 
Promulgate such rules and guidclines governmg the infusion of additional 
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contributions to the CSF, admission of new members and acceptance of additional 
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contributions, in the form of investments or special contributions; 
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(e) 
Enter into contracts and transactions involving, affecting or relating to the CSF, 
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including but not limited to the issuance of the Surety Agreement in favor of 
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lending banks; 
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(t) 
Sue and be sued in behalf of the CSF in all transactions to which the CSF is 
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involved; 
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(g) 
Periodically review the CSFs and be responsible for taking appropriate action on 
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the audit of the financial condition and operations of the CSF; 
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(h) 
Create committees and appoint other officers subject to the qualifications 
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provided by the CSF Cooperative's Board of Directors and by-laws; 
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(i) 
Delegate to the Chairman, Vice-Chairman, or any member of the Board of 
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Directors, any of its powers whenever deemed necessary for the best interest of 
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the CSF and as allowed by law; 
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Exercise general supervision of all the affairs of the CSF Cooperatives including 
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the issuance of policies, rules and regulations governing the operations of the CSF 
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and be directly accountable to the general membership of the CSF Cooperatives; 
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(k) 
Issue the Surety Agreement jointly and severally with the endorsing entity in 
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favor of the lending bank to secure the loans of qualified borrowers; and 
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(1) 
Perform such acts and exercise such powers and duties as may be necessary and 
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proper in order to achieve the purpose for which the CSF was created or for any 
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purpose which will redound to the benefit of the members of the CSF 
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Cooperatives. 
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SEC. 11. Authorized, Subscribed and Paid-Up Capital of CSF Cooperatives. -
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Notwithstanding the provisions of Republic Act No. 9250, at least twenty-five percent (25%) of 
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the authorized capital share as stated in the articles of cooperation must be subscribed at the time 
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of registration, and at least twenty-five percent (25%) of the total subscription must be paid upon 
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subscription. In no case shall the paid-up capital share be less than five thousand pesos 
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(Php5,000.00). Provided, also, that the required paid-up share capital for CSF Cooperatives may 
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be increased every five (5) years, when necessary, upon determination by the CDA. 
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For purposes of this Act, the CSF shall not be deemed as part of the authorized capital 
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stock. 
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SEC. 12. Establishment of a Credit Surety Fund (CSF). - A CSF Cooperative shall set 
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up one CSF, which shall be created to provide alternative means of collateral cover for the loans 
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or credit accommodations obtained by qualified borrowers from lending banks. The initial 
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contributions to the CSF shall come from participating member-cooperatives, NOOs and MFIs in 
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a province andlor city. 
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Pursuant to the Cooperative Code of 2008, which provides that the government and all its 
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branches, subdivisions, instrumentalities and agencies shall ensure the provision of technical 
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guidance, financial assistance and other services to enable cooperatives to develop into viable 
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and responsive economic enterprises, an LOU may contribute to the CSF in the fonn of an 
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investment or special contribution, in an amount at least equal to the total contributions of the 
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member cooperatives and NOOs. Contributions from LOUs shall be exempted from the 
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provisions of Republic Act. No. 7656 or the Dividend Law. 
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OFIs may also contribute to the CSF in the fonn of investment or special contribution, 
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which mayor may not be equal to the total contributions of the member cooperatives and NOOs. 
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Contributions from OFIs to the CSF Cooperative shall likewise be exempted from the provisions 
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ofRA 7656 or the Dividend Law. 
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SEC. 13. Compositioll oftlte CSF. -
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(a) 
(b) 
The CSF shall primarily consist of contributions of the member-cooperatives and 
NGOs in each province andlor city. 
It includes the counterpart contribution of the LOU in an amount at least equal to 
the initial total contributions of the member-cooperatives and NGOs. 
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(c) 
It also includes the contribution of the GFIs which mayor may not be equal to the 
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total contributions oftbe member-cooperatives and NGOs. 
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Any increase in the contribution of existing or new member-cooperatives, NGOs, LGUs, 
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GFIs and other qualified investors or donors shall likewise form part of the CSF. 
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SEC. 14. Usage of the Fund. - The contributions pooled from the abovementioned 
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parties shall constitute the CSF, to be used as surety for the loans of qualified borrowers from 
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lending banks. The CSF shall be deposited in trustee bank/s as herein defined, and shall only be 
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invested or placed in safe and high-yielding instruments such as government securities. 
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SEC. 15. Administration of the Fund. - The CSF operation shall be administered by the 
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CSF Cooperatives, which is governed by the Board of Directors. The Board of Directors shall 
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designate bankls, authorized by the Bangko Sentral to engage in trust and other fiduciary 
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business under Republic Act No. 8791, otherwise known as the General Banking Law of 2000, 
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to act as trustee bankls and manage the CSF subject to additional eligibility requirements as may 
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be provided for in the implementing rules and regulations. 
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SEC. 16. Withdrawal of Contributions. - Subject to the procedure and requirements 
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stated in the implementing rules and regulations, a member-cooperative or NGO may withdraw 
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all or part of its contributions provided that it has no outstanding obligation on account of the 
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surety agreements issued and subject to such reasonable terms and conditions such as, among 
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others, the liquidity of the Fund. 
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SEC. 17. Cooperative Development Authority. - Pursuant to its constitutional mandate 
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to promote the viability and growth of cooperatives as instruments of equity, social justice and 
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economic development under Republic Act No. 6939 otherwise known as the Act Creating the 
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Cooperative Development Authority, the CDA shall be the government entity in charge of 
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registration, regulation and supervision of CSF Cooperatives. In order to implement the 
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provisions of this Act, authority is hereby granted for CDA to re-organize itself including, but 
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not limited to, creating an additional department specifically designated for CSF Cooperatives. 
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(a) 
(b) 
REGULATION 
(1) CDA shall fonnulate policies on the registration of CSF Cooperatives, 
including the setting of criteria and qualifications for cooperatives and NGOs 
that are interested to join the CSF; and 
(2) CDA shall issue, with the assistance of the Bangko Sentral, the Implementing 
Rules and Regulations implementing the provisions of this Act. 
SUPERVISION and MONITORING 
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The CDA shall enforce and monitor compliance of CSF Cooperatives to this Act 
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and its Implementing Rules and Regulations to promote the stability and sustainability of 
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the Fund. Thus, the CDA shall: 
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(l) Supervise the activities ofthe CSF to ensure compliance with this Act. 
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(2) Investigate and impose sanctions, including the suspension of operations of 
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erring CSF Cooperatives, for violation ofiaws, rules and orders. 
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(3) Require the annual, semi-annual or quarterly submission, as the case may be, 
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of reports, financial statements, board resolutions and such other documents as 
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may be deemed by CDA as necessary to ensure compliance with this Act, 
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Implementing Rules and Regulations and other rules. 
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(4) Conduct regular examination or inspection of the above documents to check 
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validity of reports submitted. 
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(5) Set the perfonnance standards for the proper operation of all CSF 
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Cooperatives. 
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SEC. 18. Role of tlte Ballgko SelltraL 
- Pursuant to its mandate to provide policy 
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direction in the areas of money, banking and credit under Republic Act No. 7653, otherwise 
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known as the New Central Bank Act, and to enhanee credit creation in the rural areas and 
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achieve a more inclusive financial system, the Bangko Sentral shall have the following powers: 
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(a) 
(b) 
(c) 
Spearhead 
the 
promotion, 
encouragement, 
creation 
and 
organizational 
development of CSF Cooperatives all over the country; 
Facilitate the acquisition by CSF Cooperatives of technical assistance such as 
training and seminars in coordination with other public or private stakeholders for 
purposes of the CSF; and 
Assist the CDA in setting the criteria and qualifications for CSF Cooperatives and 
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provide such other forms of assistance as maybe determined by the Monetary 
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Board to be consistent with its mandate. 
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SEC. 19. Books of Accounts, Records, Reportorial Requirements and Administrative 
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Fees. - Subject to the requirements stated in the implementing rules and regulations, the CSF 
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Cooperative shall set and keep accurate accounts and internal financial controls. 
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Thc reportorial requirements and administrative fees required from CSF Cooperatives, 
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taking into consideration their unique character and purposes, shall be provided in the 
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implementing rules and regulations. 
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SEC. 20. Implementing Rules and Regulations. - Within sixty (60) days from the 
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effectivity of this Act, the CDA shall draft and issue the rules and regulations to implement all 
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the provisions of this Act. 
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SEC. 21. Goveming Law. - The provisions of this Act and its implementing rules and 
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regulations shall primarily govern the organization, establishment, governance and operation of 
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CSF Cooperatives. The provisions of the Cooperative Code of 2008 shall apply only insofar as 
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they are not inconsistent herewith. 
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SEC. 22. Interpretation and Construction. - In case of doubt as to the meaning of any 
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provision of this Act or the regulations issued in pursuance thereof, the same shall be liberally 
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construed and resolved in favor of the establishment of the CSF Cooperatives. 
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SEC. 23. Transitory Provisiom~ - All existing CSF agreements established prior to the 
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effectivity ofthis Act, pursuant to the Bangko Sentral's CSF Program are hereby deemed eligible 
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to be registered at the CDA as CSF Cooperatives, subject to the rules of registration as provided 
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by this Act, Republic Act No. 9520 and this Act's implementing rules and regulations. 
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SEC. 24. Amendatory Clause. - The pertinent provisions of Republic Act No. 6938, as 
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amended by Republic Act Nos. 9520, 8523, 3844, 7160, as well as all other laws, presidential 
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decrees, rules and regulations, executive orders or parts thereof that are inconsistent with the 
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provisions ofthis law shall be deemed amended accordingly. 
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SEC. 25. Separability. - Should any provision of this Act be declared unconstitutional, 
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the other provisions not affected thereby shall continue to be in full force and effect. 
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SEC. 26. Effectivity Clause. 
- This Act shall take effect fifteen (15) days after its 
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publication in the Official Gazette or in two (2) newspapers of general circulation 
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Approved, 
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