Social Reform and Poverty Alleviation Act

Declaration of policy and objectives

Section 2 establishes State policy to adopt an area-based, sectoral and focused intervention to poverty alleviation.
Section 2 mandates empowering every poor Filipino family to meet minimum basic needs covering health, food and nutrition, water and environmental sanitation, income security, shelter and decent housing, peace and order, education and functional literacy, participation in governance, and family care and psycho-social integrity.
Section 2 directs the State to actively pursue asset reform or redistribution of productive economic resources to basic sectors.
Section 2 requires institutionalizing and enhancing the Social Reform Agenda (SRA) through consultations and summits on poverty alleviation.
Section 2 adopts principles and strategies including:
- social reform as a continuing process addressing basic inequities through systematic social interventions;
- SRA enhancement through equal partnership with basic sectors via meaningful consultations and participation;
- clear definition of policy, programs, and resource commitments to ensure accountability and transparency;
- pursuit of a policy environment conducive to sustainable social reform;
- a gender-responsive approach;
- promotion of ecological balance with major stakes for basic sectors in use, management, conservation, and protection of productive resources;
- integration of the principle and interrelationship of population and development to promote self-help and self-reliance;
- focus of implementation on specific target areas and basic sectors.

Key definitions under the Act

Section 3 defines “Artisanal fisherfolk” as municipal, small scale, or subsistence fishermen using fishing gear not requiring boats or requiring boats below three (3) tons.
Section 3 defines “Basic sectors” to include: farmer-peasant, artisanal fisherfolk, workers in the formal sector and migrant workers, workers in the informal sector, indigenous peoples and cultural communities, women, differently-abled persons, senior citizens, victims of calamities and disasters, youth and students, children, and urban poor.
Section 3 defines “Cooperative” as a duly registered association of at least fifteen (15) persons, majority of whom are poor, with a common bond of interest, organized to achieve a lawful common social and economic end, with equitable share capital contributions and acceptance of a fair share of risks and benefits.
Section 3 defines “Capability building” as enhancing viability and sustainability of microfinance institutions through activities such as training in microfinance technologies, upgrading accounting/auditing systems, technical assistance for management information systems, and monitoring of loans and related activities; it does not refer to equity investments, seed funding, partnership seed funds, equity participation, start-up funds, or any infusion of capital or funds from government or the people’s development trust fund; it precludes grant of any loan or equity funds to the microfinance institution.
Section 3 defines “Microfinance” as a credit and savings mobilization program exclusively for the poor to improve household asset base and expand access to savings, using viable alternative credit schemes and savings programs including specified microfinance instruments and practices.
Section 3 defines “Micro-enterprise” as any economic enterprise with capital of One hundred fifty thousand pesos (P150,000) and below, subject to periodic determination by the Department of Trade and Industry to reflect economic changes.
Section 3 defines other terms expressly used in the Act, including collateral-free arrangement, group character loan, indigenous cultural communities/indigenous peoples (by reference to Republic Act No. 8371), migrant workers (by reference to Republic Act No. 8042), minimum basic needs, human development index, nongovernment organizations, people’s organization, poor, poverty alleviation, absolute poverty, relative poverty, social reform, Small Savers Instrument (SSI) (including key features and that SSIs are not eligible as legal reserve of banks and legal reserves of insurance companies), urban poor, workers in the formal sector, workers in the informal sector, and youth (15 to 30 years old).

Social Reform Agenda framework and flagship programs

Section 4 provides that the National Anti-Poverty Action Agenda shall principally include the core principles and programs of the SRA.
Section 4 requires the SRA to adopt a multi-dimensional approach to poverty consisting of:
- Social dimension: equitable control and access to social services and facilities such as education, health, housing, and other basic services;
- Economic dimension: asset reform and access to economic opportunities addressing inequities in ownership, distribution, management, and control of resources;
- Ecological dimension: sustainable development ensuring effective and sustainable utilization of natural and ecological resources with greater social acceptability and participation in conservation and management;
- Governance dimension: democratizing decision-making and management processes enabling basic sectors’ participation affecting rights, interests, and welfare.
Section 4 directs the SRA to focus on sector-specific flagship programs for:
- farmers and landless rural workers: agricultural development;
- fisherfolk: fisheries and aquatic resources conservation, management and development;
- indigenous peoples and indigenous communities: respect, protection and management of the ancestral domains;
- workers in the informal sector: workers’ welfare and protection;
- urban poor: socialized housing;
- members of other disadvantaged groups (women, children, youth, persons with disabilities, elderly, and victims of natural and man-made calamities): Comprehensive Integrated Delivery of Social Services (CIDSS).
Section 4 mandates cross-sectoral flagships including:
- institution-building and effective participation in governance;
- livelihood programs;
- expansion of micro-credit/microfinance services and capability building;
- infrastructure buildup and development.

National Anti-Poverty Commission creation and structure

Section 5 creates the National Anti-Poverty Commission (NAPC) under the Office of the President as the coordinating and advisory body for implementing the SRA.
Section 5 abolishes the Presidential Commission to Fight Poverty (PCFP), the Social Reform Council (SRC), and the Presidential Council for Countryside Development (PCCD) and provides that the NAPC exercises the powers and functions of those bodies.
Section 5 makes the NAPC the successor-in-interest of the three (3) abolished commissions and councils.
Section 6 provides that the President of the Republic of the Philippines serves as Chairperson of the NAPC.
Section 6 requires the President to appoint the Lead Convenor of the NAPC (government or private sector) who heads the National Anti-Poverty Commission Secretariat with the rank of a Cabinet Secretary.
Section 6 establishes vice chairpersons:
- a vice chairperson for the government sector designated by the President; and
- a vice chairperson for the basic sectors elected among basic sector representatives.
Section 6 enumerates NAPC members including heads of specified departments and agencies, Presidents of leagues of local government units, and sectoral representatives for the basic sectors.
Section 6 requires sectoral councils to nominate three (3) nominees per sector within six (6) months after effectivity of the IRR, then every three (3) years thereafter and in case of vacancy; it further requires the President to appoint representatives within (30) days after submission.
Section 6 provides that sectoral representatives serve for a term of three (3) years without reappointment, and appointments to vacancies cover only the unexpired term.

NAPC powers, operations, and Secretariat

Section 7 requires NAPC to:
- coordinate with national/local government agencies and the private sector to assure full implementation of social reform and poverty alleviation programs;
- coordinate with LGUs in formulating social reform and poverty alleviation programs consistent with the National Anti-Poverty Action Agenda;
- recommend policies and measures for responsive implementation of SRA commitments;
- ensure meaningful representation and active participation of basic sectors;
- oversee, monitor, and recommend measures to ensure effective formulation, implementation, and evaluation of policies, programs, and resource allocation/management;
- advocate mobilization of funds by national and local governments and for capability building activities of people’s organizations;
- provide financial and non-financial incentives to LGUs with counterpart resources for SRA implementation;
- submit an annual report to Congress including operations, programs, project implementation, financial status, and other relevant data reflected by the basic reform indicator.
Section 8 requires the NAPC to establish its principal office in Metro Manila and authorizes branches as the President deems necessary.
Section 9 creates the NAPC Secretariat headed by the Lead Convenor and requires it to provide technical and administrative support.
Section 9 requires the Secretariat’s formation through unification of secretariats of PCFP, SRC, and PCCD.
Section 9 mandates the Office of the President to finalize the NAPC organizational plan within three (3) months from effectivity.
Section 9 automatically accredits all accredited organizations under the three unified bodies under the NAPC until the NAPC provides additional accreditation requirements.

People’s Development Trust Fund (PDTF)

Section 10 establishes the People’s Development Trust Fund (PDTF), monitored by the NAPC.
Section 10 fixes the Trust Fund amount at Four billion and five hundred million pesos (P4,500,000,000), funded from earnings of PAGCOR plus appropriations by Congress, voluntary contributions, and grants/gifts from local and foreign sources accepted/decided by the NAPC.
Section 10 provides that additional amounts become part of the corpus unless the donor/contributor/grantor expressly conditions inclusion in the disbursible portion.
Section 10 requires the President to assign administration of the Trust Fund to an existing government department or agency based on expertise, capability, and orientation; the NAPC is limited to monitoring utilization, while designated agencies directly administer utilization of PDTF earnings.
Section 10 mandates that only the fruits of the PDTF are used for the purposes of the Act, and undisbursed fruits for the preceding year become part of the disbursible portion in the following year.
Section 10 authorizes NAPC monitoring functions including:
- sourcing funds for establishment/augmentation of the Trust Fund;
- recommending accreditation of resource partners for institutional development and capability building and for microfinance and micro-enterprise beneficiaries of accredited organizations;
- ensuring validation and monitoring activities for funded projects/beneficiaries;
- promoting research and development work on livelihood and microfinance technology and publications/communications assisting poor beneficiaries.
Section 11 provides PDTF purposes, including consultancy/training for microfinance institutions and beneficiaries, scholarships/training grants, community organizing, feasibility studies/researches, savings mobilization and incentives, information and communication systems (baseline surveys, development monitoring, socioeconomic mapping, and organizational assessments), legal/management support services (registration, documentation, contract review/enforcement, financial audit, operational assessment), dissemination of microfinance technology, and other approved activities.
Section 11 provides who may access PDTF:
- registered microfinance organizations serving the poor for micro-enterprise services;
- LGUs for microfinance and micro-enterprise programs, provided that PDTF is not used by LGUs for personal services and maintenance and other operating expenses;
- LGUs undertaking self-help projects, with a requirement that at least twenty-five percent (25%) of total PDTF earnings be used exclusively for materials and technical services.

LGU role in anti-poverty action

Section 12 requires LGUs, through local development councils, to be responsible for formulation, implementation, monitoring, and evaluation of the National Anti-Poverty Action Agenda within their jurisdictions.
Section 12 obligates LGUs to identify the poor using indicators such as the minimum basic needs approach and the human development index, along with location, occupation, nature of employment, and primary resource base, then formulate a provincial/city/municipality anti-poverty action agenda.
Section 12 requires LGUs to identify and source funding for specific social reform and poverty alleviation projects.
Section 12 requires coordination, monitoring, and evaluation of LGU efforts with the private sector for local action programs.
Section 12 requires LGUs to coordinate and submit progress reports to the NAPC regarding local action programs.
Section 12 preserves LGU powers granted under the Local Government Code without diminution.

Microfinance services for the poor

Section 13 integrates and adopts the SRA flagship program on credit and further enhances it with thrusts including:
- development of a policy environment supportive of basic sector initiatives for microfinance services to the poor, particularly savings generation;
- rationalization of existing government programs for credit and guarantee;
- utilization of existing government financial entities to provide microfinance products/services for the poor;
- promotion of mechanisms, including indigenous microfinance practices, for implementing microfinance services.
Section 14 identifies the People’s Credit and Finance Corporation (PCFC) as the vehicle for delivery of microfinance services for the exclusive use of the poor.
Section 14 requires PCFC, as a government-owned and controlled corporation, to be the lead government entity tasked to mobilize financial resources from local and international funding sources for microfinance services for the poor.
Section 15 directs measures to enable PCFC charter amendment to:
- increase authorized capital stock from One hundred million pesos (P100,000,000) to Two billion pesos (P2,000,000,000) divided into twenty million common shares with par value of One hundred pesos (P100) per share;
- increase subscribed capital stock from One hundred million pesos (P100,000,000) to Six hundred million pesos (P600,000,000) with national government subscribing the difference of Five hundred million pesos (P500,000,000);
- increase initial paid-up capital from One hundred million pesos (P100,000,000) to Two hundred fifty million pesos (P250,000,000), then increase to total Six hundred million pesos (P600,000,000) so that after four (4) years subscribed capital shall be fully paid-up, with annual payment/appropriation amounts:
  - first year: P150,000,000
  - second year: P150,000,000
  - third year: P100,000,000
  - fourth year: P100,000,000
Section 15 requires additional paid-up capital appropriations sourced from the national government’s share in PAGCOR earnings in the manner provided in Section 18.

Credit windows, SSI servicing, and privatization

Section 16 mandates existing government financial institutions to provide savings and credit needs of the poor through coordination with NAPC and PCFC to set up special credit windows and other arrangements such as servicing of Small Savers Instruments (SSIs) to promote the Act’s microfinance program.
Section 16 permits private financing institutions to set up similar credit windows and arrangements to promote the Act’s savings component of microfinance.
Section 16 requires that special credit windows for the poor include, as far as practicable, allocation for basic sectors—particularly those in rural areas, agrarian reform communities, and women in the countryside.
Section 17 provides a PCFC privatization mechanism: if ownership of the majority of PCFC’s issued voting stocks passes to private investors limited to exclusively qualified nongovernment organizations, people’s organizations and cooperatives, the stockholders shall register revised PCFC Articles of Incorporation and By-laws with the Securities and Exchange Commission (SEC).
Section 17 provides that after such registration, PCFC is considered a privately organized entity subject to laws and regulations applied to private corporations.
Section 17 allows the PCFC chairman to remain a member of NAPC after privatization, provided PCFC continues its main purpose of providing for the savings and credit needs of the poor.

Appropriations, transfers, and transitional rules

Section 18 appropriates PHP 100,000,000 as the initial operating fund for NAPC in addition to unutilized funds of the rationalized commissions and councils, sourced from the President’s Contingent Fund; it provides that subsequent-year amounts necessary to implement the Act go to annual appropriations managed by NAPC.
Section 18 appropriates PHP 4,500,000,000 for ten (10) years for establishment of the PDTF from the national government’s share in PAGCOR earnings, distributed as:
- year 1: PHP 350,000,000
- year 2: PHP 350,000,000
- year 3: PHP 400,000,000
- year 4: PHP 400,000,000
- years 5 through 10: PHP 500,000,000 annually.
Section 18 appropriates PHP 500,000,000 for four (4) years to increase PCFC capitalization from the national government’s share in PAGCOR earnings, distributed as:
- year 1: PHP 150,000,000
- year 2: PHP 150,000,000
- year 3: PHP 100,000,000
- year 4: PHP 100,000,000.
Section 19 provides a transitory arrangement where the Social Reform Council (SRC) and its representatives exercise NAPC powers and duties in temporary capacity until NAPC members are duly appointed or designated.
Section 19 transfers assets, liabilities, and personnel of PCFP, SRC, and PCCD to the NAPC.
Section 19 grants separation pay to personnel who cannot be absorbed by the NAPC: one and one-half (1 1/2) months for every year of service, plus other benefits under existing retirement laws, at the personnel’s option.
Section 19 requires the Office of the President to formulate the IRR within six (6) months after effectivity of the Act.

Repeals, separability, and timing of implementation

Section 20 provides that all laws, executive orders, rules and regulations, or parts thereof inconsistent with the Act are repealed, amended, or modified accordingly.
Section 20 provides that the Act shall not be repealed, amended, or modified unless expressly provided in subsequent general or special laws.
Section 21 establishes separability: if any provision is held invalid or unconstitutional, the remaining provisions remain in full force and effect.
Section 22 sets the Act’s effectivity date as June 30, 1998.