FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
1 
7 JUL -3 ?3 ’?t: 
OF THE PHILIPPINES 
First Regular Session 
1 
Introduced by Senator Biazon 
EXPLANATORY NOTE 
The Constitution mandates the State to formulate policies “that provide adequate 
social services, promote full employment, a rising sfandard of living, and an improved 
quality of life for all.” (Article 11, Section 9) 
Much has been done in response to the serious malaise that plagues our society 
- yet millions of our people continue to live in the bowels of poverty without hope of a 
brighter future. 
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 leave the drafting table 
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 all. 
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. 
because critical factors were not taken into account. 
RODOLFO G(,~IAZON 
Senator 


FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
I Jut- -3 P3 :2a 
OF THE PHILIPPJNES 
1 
First Regular Session 
1 
Introduced by Senator Biaron 
AN ACT 
ESTABLISHING A FIVE BILLION PESO (Php5,000,000,000.00) 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 lsrovisions of this Act. 
The Cooperative Trust Fund, hereinafter referred to as the Trust Fund, shall 
amount to Five Billion Pesos (Php 5,000,000,000.00). 
Trust Fund established in Section 2 hereof: 
Sec. 3. Fund Sources. -The following fund sources shall be used to finance the 
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a) 
Cooperative Support Fund, 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; 
Cooperative Rural Development Loan Fund, formerly administered by the 
defunct Regional Cooperative Development Assistance Offices IX & XI1 
(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 Cooperative Marketing; and 
d) 
Cooperative Development Loan Fund established under Presidential 
Decree No. 175. 
b) 
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 Committee 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 
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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 
applying 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. lnferest 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) 
b) 
PRODUCTION LOAN - loans to finance income generating cooperative 
programs such as crops, fisheries and livestock-based projects; 
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 loans 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 certificate 
needed); 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; 
5. 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; 
6. With written policies, systems, procedures, and short/long-term plans on: 
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. 
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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. I O .  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 enactment 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 
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. 
publication in a newspaper of general circulation. 
unconstitutional, the rest of the provisions of this Act shall not be affected thereby. 
Sec. 13. Effectivity Clause. - This Act shall take effect fifteen (15) days from its 
Approved. 
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