FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
Senate Bill No. 138 
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INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
The Constitution mandates the State to formulate pOlicies "that provide 
adequate social services, promote full employment, a rising standard of living, 
and an improved quality of life for all." (Article II, Section 9) 
Countless solutions, plans and programs, both old and new, have rightly 
been forwarded. Among the many, two general summaries can be inferred. The 
first is the distribution of aids and grants to the less and underprivileged in our 
cities and countryside. The other manner by which poverty is tackled is by 
providing technical and financial assistance through loans. It has been often said, 
"it is better to teach a man how to catch a fish than just give him a fish." The 
question now is "What will happen if the man who was taught how to catch a fish 
does not have the means to produce by himself the rod he needs to fish?" Many 
plans and programs failed and blueprints unable to [eave the drafting table 
because critical factors were not taken into account. 
It is necessary to look closer at state-sponsored or supported poverty 
alleviation programs and develop mechanisms that weigh the critical factors of 
finance, management and organization capability as well as the issue of 
existence, essential to consider in discussing the standard of living and the 
quality of life for a[1. 
The Landbank and other government financial institutions provide credit to 
cooperatives. However, primary (small and starting cooperatives) cooperatives 
find it difficult to access these credit facilities. This bill intends to provide, through 
a Cooperative Trust Fund, access to credit for primary cooperatives that need 
support from the government. 
Senator 


FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
Senate Bill No. 738 
:0 
JUt. -7 Pi! :1l; 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
ESTABLISHING 
A 
FIVE 
BILLION 
PESO 
(Php5,OOO,OOO,OOO.OO) 
COOPERATIVE TRUST FUND THAT WILL PROVIDE FINANCING FACILITIES 
TO LIVELIHOOD PROGRAMS OF COOPERATIVES AND APPROPRIATING 
THE 
NECESSARY 
SUM 
FOR 
INCLUSION 
IN 
THE 
GENERAL 
APPROPRIATIONS ACT OVER A PERIOD OF FIVE (5) CONSECUTIVE 
FISCAL YEARS IN FIVE EQUAL APPORTIONMENTS 
Be it enacted by the Senate and the House of Representatives of the Philippines 
in Congress assembled: 
SECTION 1. Declaration of Principles and Policy. - It is the declared 
policy of the State to free the people from poverty through the promotion of full 
employment, a rising standard of living, and an improved quality of life for all 
(Constitution, Article 2, Section 9). 
The State recognizes that the promotion of social justice shall include the 
commitment to create economic opportunities based on freedom of initiative and 
self-reliance (Constitution, Article 13, Section 2). 
The State has identified cooperatives as private enterprises that can 
promote industrialization and full employment based on sound agricultural 
development and agrarian reform (Constitution, Article 12, Section 1). 
The State mandates the Government and all its branches, subdivisions, 
instrumentalities and agencies to ensure the provision of technical guidance, 
financial assistance and other services to enable cooperatives to develop into 
viable and responsive economic enterprises (RA No. 6938, "Cooperative Code of 
the Philippines." Chapter 1, Article 2). 
SEC. 2. Creation of a Cooperative Trust Fund. - The Government shall 
provide financial assistance to cooperatives through the creation of a 
Cooperative Trust Fund with the Landbank of the Philippines, a Government 
Financial Institution hereinafter referred to as the Landbank, which shall manage 
, 
. 
the loans of these private enterprises based on the provisions of this Act. 
The Cooperative Trust Fund, hereinafter referred to as the Trust Fund, 
shall amount to Five Billion Peso~ (Php 5,000,000,000.00). 
SEC. 3. Fund Sources. -The following fund sources shall be used to 
finance the Trust Fund established in Section 2 hereof: 


a) Cooperative Support F:und, formerly the Samahang Nayon Support 
Program (SNSP) established under a project agreement between the United 
States Agency for International Aid (USAID) and the National Economic Council 
of the Philippines; 
b) Cooperative Rural Development Loan Fund, formerly administered by 
the defunct Regional Cooperative Development Assistance Offices IX & XII 
(RCDAO IX & XII); 
c) Cooperative Marketing Project Fund as established under a loan 
agreement between the Governments of the Philippines and United States of 
America, through the USAID for qooperative Marketing; and 
d) Cooperative Development Loan Fund established under Presidential 
Decree No. 175. 
Congress shall appropriate an amount that is necessary to augment the 
sum total of the funds enumerated above to be automatically included into the 
General Appropriations Act over a period of five (5) consecutive fiscal years to 
commence on the year of effectivity of this Act in five equal apportionments to be 
deposited in trust to the Landbank. 
The Landbank shall automatically provide for a counter-part fund equal to 
the amount appropriated by Congress for a particular fiscal year. 
SEC. 4. The Board of Trustees.- A Board of Trustees of the Trust Fund, 
hereinafter referred to as the Board, is hereby created. The Board of Trustees 
shall be composed of the following: 
1. The Chairman of the Cooperative Development Authority as Co-
Chairman; 
: 
2. A representative from the private cooperative sector appointed by the 
President of the Republic of the Philippines as Co-Chairman; 
3. President of the Landbank of the Philippines as Vice-chairman; 
4. The Secretary of Finance as Member; 
5. The Director-General of the National Economic Development Authority 
as Member; 
6. The Cooperative Committee Chairperson of the Senate as Member; 
and 
7. 
The 
Cooperative 
Gommittee 
Chairperson 
of the 
House 
of 
Representatives. 
The representative from the private cooperative sector shall be appointed 
for a term of six (6) years. 
The Board shall convene within fifteen (15) days from the date of 
effectivity of this Act and shall meet at least twice a year thereafter. 
The Board of Trustees shall hold office at the central office of the 
Landbank of the Philippines. 
SEC. 5. Powers and Functions of the Board. - The Board shall have the 
following powers and functions: 
1. Formulate, revise or adjust periodically all policies on the utilization of 
the Cooperative Trust Fund and to promulgate the necessary rules and 
regulations for the effective implementation of this Act; 


2. Monitor the implementation of the loan and trust fund program. 
SEC. 6. Loans Management. - The Board shall determine the necessity 
of requiring borrowing cooperatives to attend a marketing and management 
seminar to be conducted by the 'Cooperative Development Authority, taking into 
consideration the capability of the borrowing cooperative in managing its affairs. 
Borrowing cooperatives that are required to undergo the CDA seminar shall 
submit a certificate of attendance from the CDA together with all other 
requirements to be imposed by the Board in a pplying for a loan under the 
cooperative trust fund program. The CDA seminar shall focus on providing 
borrowing 
cooperatives the 
required 
skills 
in 
the 
preparation 
of the 
documentation for loan as well as management and marketing expertise to 
ensure success of the project. 
SEC. 7. Interest on Loans. - The Landbank is hereby authorized to 
impose a maximum annual interest on loans equal to fifty percent (50%) of the 
prevailing market rate of interest imposed by Landbank under its agrarian lending 
program. 
SEC. 8. Loans Evaluation and Approval. - The following are the only 
types of loan that may be extended to cooperatives from the Trust Fund: 
a) PRODUCTION LOAN - loans to finance income generating cooperative 
programs such as crops, fisheries and livestock-based projects; 
. 
b) WORKING CAPITAL LOAN - loans to finance the start-up operation of 
the cooperative project such as labor costs, fuel, rental of facilities and 
marketing; 
c) FIXED ASSET LOAN - loans to be utilized for the acquisition of new or 
upgrading of existing facilities and equipment; 
d) TRADING CAPITAL LOAN - loans to be used for the purchase of raw 
materials; and 
e) REDISCOUNTING LOAN - rediscounting of Promissory Notes (PNs) of 
eligible credit cooperatives/unions and other registered organizations 
The evaluation and approval of .Ioans shall remain the sole responsibility 
of the Landbank subject to the guidelines and policies set by the Board of 
Trustees of the Cooperative Trust Fund. 
Loans, however, may only be granted to cooperatives based on the 
following pre-qualifying requirements: 
1. Must be duly registered with the CDA; 
2. Must have a membership of at least sixty (60) individuals; 
3. All members should have attended pre-membership education seminar 
(PMES) given by the CDA accredited trainors. (Attendance certific~te need~d); 
all eligible borrowers should have attended a membership education seminar 
(MES) given by CDA accredited trainors. (attendance certificate needed); 
4. With a minimum paid-up share capital. The Board of Trustees shall 
determine the amount; 


6. With an ongoing capital build-up program resulting in an increase in 
paid-up share capital per member. The Board of Trustees shall determine the 
amount of increase in paid-up share capital; 
on: 
6. With written policies, systems, procedures, and short/long-term plans 
a) Membership management including continuous membership 
expansion; 
b) Capital build-up and savings mobilization; 
c) Credit including loan pricing and collection; 
d) Accounting and internal control systems; and 
e) Budgeting; and 
7. Must have been accredited by the Cooperative Development Authority 
for at least six (6) months prior to its application for a loan. 
The Board is hereby authorized to formulate additional pre-qualifying 
reqUirements for borrowing cooperatives, taking into consideration the policies 
set forth in RA 6938 and in this Act. 
SEC. 9. Audit. - The Commission on Audit shall be the ex-officio auditor 
of all the funds provided for in this Act and is, accordingly, empowered to 
designate and appoint its representative(s) and other subordinate personnel to 
perform such necessary audit duties as the Commission shall direct. They shall 
be responsible to and shall only be removed by the Commission on Audit. 
SEC.10 . Sunset Review. - As the need arises, the Congress shall 
conduct a sunset review of the accomplishments and impact of the Trust Fund 
program as well as the performance of its implementing agencies for purposes of 
determining whether or not the Trust Fund program and the corresponding 
appropriations mentioned in this Act deserve to be continued based on a cost-
benefit analysis thereof. If the result of the review is unfavorable, then the 
appropriate Committee of Congress shall not report favorably any bill or 
resolution that authorizes the en\,lctment of a new budget authority for the Trust 
Fund program. 
For purposes of this Act, the term "sunset review" shall mean, with respect 
to the Trust Fund program, a systematic evaluation by the committees of the 
Senate and House of Representatives which have legislative jurisdiction over 
such programs, with the assistance of appropriate agencies and congressional 
support agencies, to determine the merits of the program, justify its continuation 
rather than termination or its continuation at a level less than, equal to, or greater 
than the existing level. Such review shall be undertaken in the scope and the 
detail the committee having jurisdiction deems appropriate and shall include, but 
not limited to, an assessment of .the degree to which the original objective of the 
program has been achieved, of the problem it was intended to address, and the 
costs and benefits of the program. 
SEC. 11. Separability Clause. - Should any part of this Act be declared 
unconstitutional, the rest of the provisions of this Act shall not be affected 
thereby. 
SEC. 12. Repealing Clause. - All laws, decrees, executive orders, 
proclamations, rules and regulations, and issuances, or parts thereof which are 
inconsistent with the provisions of this Act, are hereby repealed, amended or 
modified accordingly. 


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SEC. 13. Effectivity Clause. - This Act shall take effect fifteen (15) days 
from its publication in a newspaper of general circulation. 
Approved,