NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
SENATE
856
of Ilu> ‘&ecretarp
’22 JUL25 P2:07
RHCEIVED BV;
S. No.
Introduced by SENATOR RAMOM BONG REVILLA, JR.
AN ACT
PROVIDING PROTECTION TO COOPERATIVE DEPOSITORS AND 
ESTABLISHING THE PHILIPPINE COOPERATIVE INSURANCE 
CORPORATIONS, DEFINING ITS POWERS AND FUNCTIONS, 
APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Republic Act No. 6938, otherwise known as the "Cooperative Code of the 
Philippines" was approved on March 10, 1990 and was amended by Republic Act No. 
9520 which was approved on February 17, 2009. The law recognizes cooperatives 
as "a practical vehicle for promoting self-reliance and harnessing people's power 
towards the attainment of economic development and social justice"
According to the Cooperative Development Authority (CDA), there are a total 
of 18,848 operating cooperatives as of 2020, majority of which are multipurpose 
cooperatives. The reporting cooperatives indicated 11.5 million membership and 
364.7 thousand employment generated.
The ''Cooperative Depositors Protection Act of 2022" seeks to further 
maximize the potentials and contribution of cooperatives In the country by providing 
a permanent and continuing insurance coverage on ail deposits to establish a sound 
and stable cooperative system. For this purpose, the measure proposes to establish 
a Philippine Cooperative Deposit Insurance Corporation which, among others, will


provide a deposit insurance scheme for insured cooperatives and to receive, liquidate 
and wind up any cooperative.
This measure was filed by Senator Francis N. Pangilinan in the 18th Congress.
In light of the foregoing, the immediate passage of this bill Is highly 
recommended.
RAMON BONG REVILLA, JR.


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
SENATE 
S, No. 856
of tl)p ^'Trptnvp
■22 JUL 25 P 2 :07
RliCEIVtO BY,
Introduced by SENATOR RAMON BONG REVILLA, JR.
AN ACT
PROVIDING PROTECTION TO COOPERATIVE DEPOSITORS AND 
ESTABLISHING THE PHILIPPINE COOPERATIVE INSURANCE 
CORPORATIONS, DEFINING ITS POWERS AND FUNCTIONS, 
APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Phiiippines in 
Congress assembied:
Section 1. Short Tide. - This Act shall be known as the "Cooperative Depositors 
Protection Act of2022'.
Sec. 2. Deciaration of Principies andPoiides. - Sectionl, Article Xn of the 1987 
Constitution declares that the State shall promote the viability and growth of 
cooperatives as instruments for social justice and economic development. Towards 
this end, the government must extend all means and mechanisms necessary for the 
Philippine Cooperative Deposit Insurance Corporation to effectively fulfill its vital task 
of promoting and safeguarding the interests of the depositing public by way of 
providing permanent and continuing insurance coverage on all deposits, in order to 
help develop a sound and stable cooperabVe system at all times.
Sec. 3. Creation and Nature of the Corporation. - There is hereby aeated a 
Philippine Cooperative Deposit Insurance Corporation which shail have the status of a 
tax-exempt government corporation attached to the Department of Finance (DOF) for 
policy coordination and guidance.
Sec. 4. Powers and Functions. — The Corporation shail have the following 
powers and functions:


1 
(a) To provide a deposit insurance scheme for insured cooperatives and to
2 
receive, liquidate and wind up any cooperative;
3 
(b)To formulate and issue rules and regulations for the effective discharge
4 
of its responsibilities;
5 
(c) To organize its office, fix the compensation of an appointed personnel
6 
as may be deemed necessary upon the recommendation of the President
7 
of the Corporation;
8 
(d)To direct the management and operation of the Corporation;
9 
(e) To receive and manage grants, donations, and other forms of assistance;
10 
(f) To sue and be sued;
11 
(g)To adopt an annual budget for, and authorize such expenditures by the
12 
Corporation;
13 
(h) To perform such other acts as it may deem necessary for the Corporation
14 
to undertake its mandate and functions.
15 
Sec. 5. The Board of Directors. - The Corporation shall be governed by the
16 
Board of Directors which shall be composed of five (5) members as follows:
17 
(a) The Secretary of Finance who shall be the Ex-Officio Chairman of the
18 
Board without compensation.
19 
(b)The Chairman of the Cooperative Development Authority (CDA), who
20 
shall be an Ex-Officio Member of the Board without compensation.
21 
(c)The President of the Corporation, who shall be appointed by the
22 
President of the Philippines from either the Government or private sector
23 
to serve on a full-time basis for a term of six (6) years. The President
24 
of the Corporation shall also serve as Vice Chairman of the Board.
25 
(d)Two (2) members from the private sector, to be appointed for a term of
26 
six (6) years without reappointmant by the President of the Philippines:
27 
Provided, That of those first appointed, the first appointee shall serve
28 
for a period of two (2) years.
29 
No persons shall be appointed as member of the Board unless he is of
30 
good moral character and of unquestionable integrity and responsibility,
31 
and who is of recognized competence in cooperativism, economics,
32 
banking and finance, law, management administration or insurance, and


1 
shall be at least thirty-five (35) years of age. For the duration of their
2 
tenure or term in office and for a period of one (1) year thereafter, the
3 
appointive members of the Board shall be disqualified from holding any
4 
office, position or employment in any insured cooperative.
5 
The Secretary of Finance may designate a representative, whose
6 
position shall not be lower than an undersecretary or deputy governor
7 
respectively, to attend such meetings and to vote on behalf of the
8 
principal. Whenever the Chairman of the Board is unable to attend a
9 
meeting of the Board, or in the event of a vacancy in the office of the
10 
Secretary of Finance, the President of the Corporation shall act as
11 
Chairman.
12 
. The presence of three (3) members shall constitute a quorum. All
13 
decisions of the Board of Directors shall require the concurrence of at
14 
least three (3) members.
15 
The Secretary of Finance shall fix the rate of per diem for every Board
16 
meeting attended by the members of the Board of Directors.
17 
Sec. 6. The President of the Corporation. ^ The President of the Corporation
18 
shall be the Chief Executive thereof and his salary shall be fixed by the President of
19 
the Philippines. The sum total of the salary of the President and allowances and other
20 
emoluments which the Board of Directors may grant him and shall be the ceiling for
21 
fixing the salary, allowances and other emoluments of all other personnel in the
22 
Corporation. The power and duties of the President of the Corporation are:
23 
(a) To prepare the agenda for the meeting of the Board and to submit for
24 
the consideration of the Board the policies and measures which he
25 
believes to be necessary to carry out the purposes and provisions of this
26 
Act;
27 
(b)To execute and administer the policies and measures approved by the
28 
Board;
29 
(c) To direct and supervise the operations and internal administration of the
30 
Corporation In accordance 
with the policies established 
by the Board.
31 
The President may delegate 
certain parts 
of 
his administrative


1 
responsibilities to other officers of the Corporation, subject to the rules
2 
and regulations of the Board;
3 
(d)To represent the Corporation, upon prior authority of the Board, in ail
4 
dealings with other offices, agencies and instrumentalities of the
5 
government and with all other persons or entities, public or private,
6 
whether domestic, foreign or international;
7 
(e)To authorize, with his signature, upon prior authority of the Board,
8 
contracts entered into by the Corporation, notes and securities issued by
9 
the Corporations, and the annuel reports, balance sheets, profits and
10 
loss statements, correspondence and other documents of the
11 
Corporation. The signature of the President may be in facsimile
12 
wherever appropriate;
13 
(f) To represent the Corporation, either personally or through counsel, in all
14 
legal proceedings or actions;
15 
(g)To delegate, with the prior approval of the Board of Directors, his power
16 
to represent the Corporation, as provided in Subsection (d) and (f) of
17 
this Section, to other officers of the Corporations; and,
18 
(h)To exercise such other powers as may be vested in him by the Board.
19 
The President shall be assisted by a Vice President and other officials whose
20 
appointment and removal for cause shall be approved and whose salary shall be fixed
21 
by the Board of Directors upon recommendation of the President of the Corporation.
22 
During the absence or temporary incapacity of the President, or in case of a vacancy
23 
or permanent incapacity and pending the appointment of a new President of the
24 
Corporation by the President of the Philippines, the Vice President shall act as
25 
President and discharge the duties and responsibilities thereof.
26 
Sec. 7. Definition of Terms as Used in this Act. -
27 
(a) Board of Directors xneaws the Board of Directors of the Corporation.
28 
(b) Cooperative s\\aW be synonymous and interchangeable and shall Include
29 
other types and categories of cooperatives that encourage and accept
30 
savings among its members and the general public.
31 
(c) Receiver includes a receiver, commission, person or other agency
32 
charged by law with the duty to take charge of the assets and liabilities


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
of the cooperative which has been forbidden from doing deposit business 
in the Philippines, as well as the duty to gather, preserve and administer 
such assets and liabilities for the benefit of the depositors of said 
cooperative, and to continue into liquidation whenever authorized under 
this Act or other laws, and to dispose of the assets and wind up the 
affairs of such cooperative.
(d) Insured Cooperative means any cooperative the deposits of which are 
insured in accordance with the provisions of this Act.
(e) Non-insured Cooperative means any cooperative whose deposits are not 
insured.
(f) Deposit means the unpaid balance of money or Its equivalent received 
by a cooperative in the usual course of savings deposit business and for 
which it has given or is obliged to give credit to a savings, time or thrift 
account, or Issued in accordance with CDA rules and regulations. 
Republic Act No. 9520 and other applicable laws, together with such 
other obligations of a cooperative consistent with cooperative principles 
and practices, the Board of Directors shall determine and prescribe by 
regulations to be deposit liabilitleri of the cooperative,
1) Investment products such as share capital, fix deposits, bonds 
and securities, trust accounts, and other similar instruments;
2) Deposit accounts or transactions which are unfunded, or that are 
fictitious or fraudulent;
3) Deposit accounts or transactions constituting, and/or emanating 
from, unsafe and unsound cooperative savings transactions 
practice/s, as determined by the Corporation, In consultation with 
the CDA, after due notice and hearing, and publication of a cease 
and desist order issued bv the Corporation against such deposit 
accounts or transaction; and,
4) Deposits that are determined to be the proceeds of an unlawful 
activity as defined under Republic Act No. 7160, as amended.
{q) Insured Deposit t(\qbx\s the amount due to any bona fide depositor for 
legitimate deposits in an insured cooperative net of any obligation of the


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
depositor to the insured cooperative as of the date of closure; but not to 
exceed Three hundred thousand pesos (P300,000,00). Such net amount 
shall be determined according to such regulations as the Board of 
Directors may prescribe. In determining such amount due to any 
depositor, there shall be added together all deposits in the cooperative 
maintained in the same right and capacity for his benefit either In his 
own name or In the name of others. A joint account regardless of 
whether the conjunction "and", "or" "and/or" is used, shall be insured 
separately from any individually-owned deposit account: Provided, That 
(1) If the account is held jointly by two or more natural persons, or by 
two or more juridical persons or entities, the maximum insured deposit 
shall be divided Into as many equal shares as there are individuals, 
juridical persons or entities, unless a different sharing is stipulated in the 
document of deposit; and (2) if t!ie account Is hold by a juridical person 
or entity jointly with one or more natural persons, the maximum insured 
deposit shall be presumed to belong entirely to such juridical person or 
entity: Provided, further, That the aggregate of the interest of each co­
owner over several joint accounts, whether owned by the same or 
different combinations of individuals, juridical persons or entities, shall 
likewise be subject to the maximum insured deposit of Five hundred 
thousand pesos (P500,000.00): Provided, furthermore. That the 
provisions of any law to the contrary notwithstanding, no owner/holder 
of any negotiable certificate of deposit shall be recognized as a depositor 
entitled to the rights provided in this Act unless his name is registered 
as owner / holder thereof in the books of the issuing cooperative: 
Provided, fmaiiy. That in case of a condition that threatens the monetary 
and financial stability of the financial system that may have systemic 
consequences, as defined In Section 19 hereof, as determined by the 
Monetary Board, the maximum deposit insurance cover may be adjusted 
in such amount, for such a period, and/or for such deposit products, as 
may be determined by a unanimous vote of the Board of Directors In a


1 
meeting called for the purpose and chaired by the Secretary of Finance,
2 
subject to the approval of the President of the Philippines.
3 
(h) Transfer Deposit means deposit in an insured cooperative made
4 
available to a depositor by the Corporation as payment of insured deposit
5 
of such depositor in a closed cooperative and assumed by another
6 
insured cooperative.
7 
Sec. 8. Deposit Insurance Coverage. - The deposit liabilities of any
8 
cooperative, which is engaged in the business of receiving deposits as herein defined
9 
on the effective date of this Act, or which thereafter may engage in the business of
10 
receiving deposits, shall be Insured with the Cof'poration.
11 
Sec. 9. Assessment of Member Cooperative. -
12 
(a) The assessment rate shall be determined by the Board of Directors:
13 
Provided, That the assessment rate shall not exceed one-fifth (1/5) of
14 
one percent (1%) per annum. The semi-annual assessment for each
15 
Insured cooperative shall be in tlie amount of the product of one-half
16 
(1/2) the assessment rate multiplied by the assessment base but In no
17 
case shall It be less than Three thousand pesos (P3,000.00). The
18 
assessment base shall be the amount of the liability of the cooperative
19 
for deposits as defined under Subsection (f) of Section 7 of this Act
20 
without any deduction for indebtedness of depositors.
21 
(b)The semi-annual assessment based for one semi-annual period shall be
22 
the average of the assessment base of the cooperative as of the close
23 
of business on March thirty-one and June thirly and the semi-annual
24 
assessment base for the other semi-annual period shall be the average
25 
of the assessment base or the cooperative savings deposit as of the close
26 
of business on September thirty and December thirty-one: Provided,
Tj 
That when any of said days Is a non-business day or legal holiday, either
28 
national or provincial, the preceding business day shall be used. The
29 
certified statements required to be filed with the Corporation under
30 
Subsections (b) and (c) of this Section shall be in such form and set forth
31 
such supporting information as the Board of Directors shall prescribe.
32 
The assessment payments required from the insured cooperatives under


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
Subsections (b) and (c) of this Section shall be made in such manner 
and at such time or times as the Board of Directors shall prescribe, 
provided the time so prescribed shall not be later than sixty (60) days 
after filing the certified statement setting forth the amount of 
assessment.
(c) On or before the 31st of July of each year, each insured cooperative shall 
file with the Corporation a certified statement showing for the six (6) 
months ending on the preceding June thirty the amount of the 
assessment based and the amount of the semi-annual assessment due 
to the Corporation for the period ending on the following December 
thirty-one, determined in accordance with Subsection (a) of this Section, 
which shall contain or be verified by a written declaration that it is made 
under the penalties of perjury. Each insured cooperative shall pay to 
the Corporation the amount of the semi-annual assessment it is required 
to certify. On or before the 31st day of January of each year, each 
insured cooperative shall file with the Corporation a similar certified 
statement for the six (6) months ending on the preceding December 
thirty-one and shall pay to the Corporation the amount of the semi­
annual assessment for the period ending on the following June thirt>^ 
which it Is required to certify.
(d) Each cooperative which becomes an insured cooperative shall not be 
required to file any certified statement or pay any assessment for the 
semi-annual period in which It becomes an insured cooperative. On the 
expiration of such period, each such cooperative shall comply with the 
provisions of Subsection (b) of this Section except that the semi-annual 
assessment base for its first certified statement shall be the assessment 
base of the cooperative as of the close of business on the proceeding 
June thirty or December thirty-one, whichever is applicable, determined 
in accordance with Subsection (a) of this Section. If such cooperative 
has assumed the liabilities for deposits of another cooperative, it shall 
Include such liabilities In Its assessment base. The first certified 
statement shall show as the amount of the first semi-annual assessment


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
due to the Corporation, an amount equal to the product of one-half of 
the annual assessment rate multiplied by such assessment base.
(e) All assessment collections and income from operations after expenses 
and charges shall be added to the Deposit Insurance Fund under this 
Section. Such expenses and charges are: (1) the operating costs and 
expenses of the Corporation for the calendar year; (2) additions to 
reserve to provide for insurance and financial assistance losses, net of 
recoverable amounts from applicable assets and collaterals, during the 
calendar year; and (3) the net insurance and financial assistance losses 
sustained in said calendar year.
(f) The Corporation (1) may refund to an insured cooperative any payment 
of assessment In excess of the amount due to the Corporation, or (2) 
may credit such excess toward the payment of the assessment next 
becoming due from such cooperative and upon succeeding assessments 
until the credit is exhausted.
(g) Any insured cooperative which fails to file any certified statement 
required to be filed by It in connection with determining the amount of 
any assessment payable by the cooperative to the Chairperson may be 
compelled to file such statement by mandatory injunction or other 
appropriate remedy in a suit brought for such purpose by the 
Corporation against the cooperative and any officer or officers thereof in 
any court of the Philippines of competent jurisdiction in which such 
cooperative is located.
(h) The Corporation, in a suit brought in any court of competent jurisdiction, 
shall be entitled to recover from any insured cooperative the amount of 
any unpaid assessment lawfully payable by such insured cooperative to 
the Corporation, whether or not such cooperative shall have filed any 
such certified statement and whether or not suit shall have been brought 
to compel the cooperative to file any such statement. No action or 
proceeding shall be brought for recovery of any assessment due to the 
Corporation or for the recovering of any amount paid to the Corporation 
in excess of the amount due to it, unless such action or proceeding shall


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
have been brought within five (5) years after the right accrued for which 
the claim Is made, except where the insured cooperative has made or 
filed with the Corporation a false or fraudulent certified statement with 
the intent to evade, in whole or in part, the payment of assessment, in 
which case the claim shall not have been deemed to have accrued until 
the discovery by the Corporation, that the certified statement is false or 
fraudulent.
(i) The Corporation shall not terminate the insured status of any 
cooperative which continues to operate or receive deposits. Should any 
insured cooperative fail or refuse to pay any assessment required to be 
paid by such cooperative under any provision of this Act, and should the 
cooperative not correct such failure or refusal within thirty (30) days 
after written notice has been given by the Corporation to an officer of 
the cooperative citing this Subsection, and stating that the cooperative 
has failed or refused to pay as required by the law, the Corporation may, 
at its discretion, file a case for collection before the appropriate court 
without prejudice to the imposition of administrative sanctions allowed 
under the provisions of this law on the cooperative officials responsible 
for the non-payment of assessment fees.
Sec. 10. Sanctions Against Unsafe and Unsound Cooperative Practices.- 
(a) Whenever upon examination by the Corporation Into the condition of 
any insured cooperative, it shall be disclosed that an insured cooperative 
or its directors or agents have committed, are committing or about to 
commit unsafe or unsound practices in conducting the savings deposit 
business of the cooperative or have violated, are violating or about to 
violate any provisions of any law or regulation to which the insured 
cooperative Is subject, the Board of Directors shall submit the report of 
the examination to the CDA to secure corrective action thereon. If no 
such corrective action is taken by the CDA within forty-five (45) days 
from the submission of the report, the Board of Directors shall, motu 
propio, institute corrective action which it deems necessary. The Board 
of Directors may thereafter issue a cease and desisi: order, and require
10


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
the cooperative or its directors or agents concerned to correct the 
practices or violations within forty-five (45) days. However, if the 
practice or violations is likely to cause insolvency or substantial 
dissipation of assets or earnings of the cooperative, or is likely to 
seriously weaken the condition of the cooperative or otherwise seriously 
prejudice the Interests of its depositors and the cooperative, the period 
to take corrective action shall net be more than fifteen (15) days. The 
order may also include the imposition of fines provided in Section 22 (f) 
hereof. The Board of Directors shall duly inform the CDA of action It has 
taken under this Subsection with respect to such practices or violations.
(b) The actions and proceedings provided in the preceding subsection may 
be undertaken by the Corporation if. In its opinion, an insured 
cooperative or its directors or agents have violated, or violating or about 
to violate any provision of this Act or any order, rule or instruction Issued 
by the Corporation or any written condition imposed by the Corporation 
in connection with any transaction with or grant by the Corporation.
(c) The Corporation shall not terminate the insured status of any 
cooperative which continues to operate or receive deposits. Should any 
insured cooperative fail or refuse to pay any assessment required to be 
paid by such cooperative under any provision of this Act, and should the 
cooperative not correct such failure or refusal within thirty (30) days 
after written notice has been given by the Corporation to an officer of 
the cooperative citing this Subsection, and stating that the cooperative 
has failed or refused to pay as required by the law, the Corporation may, 
at its discretion, file a case for collection before the appropriate court 
without prejudice to the imposition of administrative sanctions allowed 
under the provisions of this law on the cooperative officials responsible 
for the non-payment of assessment fees.
Sec. 11. Powers, Responsibilities, and Prohibitions. ~
(a) The Board of Directors shall administer the affairs of the Corporation 
fairly and Impartially and without discrimination.
11


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
(b) The Board of Directors shall appoint examiners who shall have the 
power, on behalf of the Corporation to examine any insured cooperative. 
Each such examiner shall have the power to make a thorough 
examination of all savings of the cooperative and in doing so, he shall 
have the power to administer oaths, to examine and take and preserve 
the testimony of any of the officers and agents thereof, and, to compel 
the presentation of books, documents, papers, or records necessary in 
his judgement to ascertain the facts relative to the condition of the 
cooperative; and shall make full and detailed report of the condition of 
the cooperative to the Corporation. The Board of Directors in like 
manner shall appoint claim agents who shall have the power to 
investigate and examine all claims for insured deposits and transferred 
deposits. Each claim agent shall have the power to administer oaths 
and to examine under oath and take and preserve testimony of any 
person relating to such claim.
The investigators appointed by fhe Board of Directors shall have the 
power on behalf of the Corporation to conduct Investigations on frauds. 
Irregularities and anomalies in relation to saving transactions committed 
in cooperatives, based on reports of examination conducted by the 
Corporation and CDA or complaints from depositors or from other 
government agencies. Each investigator shall have the power to 
administer oaths, and examine, take, and preserve the testimony of any 
persons relating to the subject of Investigation.
(c) Each insured cooperative shall make to the Corporation reports of 
condition in such form and at such times as the Board of Directors may 
require such reports to be published in such manner, not inconsistent 
with any applicable law, as it may direct. Every such cooperative which 
fails to make or publish any such report within such time, not less than 
five (5) days, as the Board of Directors may require, shall be subject to 
a penalty of not more than One hundred pesos (PIOO.OO) for each day 
of such failure recoverable by the Corporation for Its use.
12


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
(d) The Corporation shall have access to reports of examination made by, 
and reports of conditions made to the CDA or its appropriate supervising 
agencies.
(e) Each insured cooperative shall keep and maintain a true and accurate 
record or statement of Its daily deposit transactions consistent with the 
standards set by the CDA and the Corporation. Compliance with such 
standards shall be duly certified by the Chairman / President of the 
cooperative or the compliance otficer: Provided, That refusal or willful 
failure to issue the required certification shall constitute a violation of 
this Section and shall subject such officers of the cooperative to the 
sanctions provided for under Section 22 (f) of this Act.
(f) Personnel of the Corporation are hereby prohibited from:
(1) being an officer, director, consultant, employee or member, 
directly or indirectly, of any cooperative;
(2) receiving any gift or thing of value from any officer, director or 
employee thereof;
(3) revealing in any manner, except as provided in this Act or under 
order of the court, information relating to the condition of 
business of any such cooperative. This prohibition shall not apply 
to the giving of informption to the Board of Directors, the 
President of the Corporation, Congress, any agency of 
government authorized by law, or to any person authorized by 
either of them in writing to receive such information.
(g) The Corporation shall underwrite or advance litigation costs and 
expenses, including legal fees and other expenses of external counsel, 
or provide legal assistance to, directors, officers, employees or agents 
of the Corporation in connection with any civil, criminal, administrative 
or any other action or proceedings, to which such director, officer, 
employee or agent is made a paity by reason of, or in connection with, 
the exercise of authority or performance of functions and duties under 
this Act: Provided, That such legal protection shall not apply to any civil, 
criminal, administrative or any action or proceeding that may be initiated
13


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
by the Corporation, in whatever capacity, against such director, officer, 
employee or agent: Provided, further, That directors, officers, 
employees or agents who shall resign, retire, transfer to another agency 
or be separated from the service, shall continue to be provided with such 
legal protection in connection with any act done or omitted to be done 
by them in good faith during their tenure or employment with the 
Corporation: Provided, finaiiy, That in the event of a settlement or 
compromise, indemnification shall be provided only in connection with 
such matters covered by the settlement as to which the Corporation is 
advised by counsel that the persons to be indemnified did not commit 
any negligence or misconduct.
(h)The costs and expenses incurred In defending the aforementioned 
action, suit or proceeding may be paid by the Corporation In advance of 
the final disposition of such action, suit or proceeding upon receipt of an 
undertaking by or on behalf of the director, officer, employee or agent 
to repay the amount advanced should It ultimately be determined by the 
Board of Directors that he is not entitled to be indemnified as provided 
in this Subsection.
Unless the actions of the Corporation or any of its officers and employees 
are found to be In willful violation of this Act, performed in bad faith, 
with malice and/or gross negligence, the Corporation, its directors, 
officers, employees and agents are held free and harmless to the fullest 
extent permitted by law from any liability, and they shall be indemnified 
for any and all liabilities, losses, claims, demands, damages, deficiencies, 
costs and expenses of whatsoever kind and nature that may arise In 
connection with the performance of their functions, without prejudice to 
any criminal liability under existing laws.
Legal assistance shall include the grant or advance of reasonable legal 
fees as determined by the Board of Directors to enable the concerned 
directors, officers, employees or agent to engage counsel of his choice, 
subject to approval by the Board of Directors.
14


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
Notwithstanding the provisions of this Section and Section 4 and 5, 
members of the Board of Directors and personnel of the Corporation 
may become directors and officers of any cooperative in connection with 
financial assistance extended by the Corporation to such institution and 
when. In the opinion of the Board, it is appropriate to make such 
designation to protect the interest of the Corporation.
Sec. 12. Receivership and Liquidation.—
(a) The provisions of other laws, general or special, to the contrary 
notwithstanding, whenever it shall be appropriate for the CDA to appoint 
a receiver of any cooperative pursuant to existing laws, the CDA shall 
give prior notice and appoint the Corporation as receiver.
(b) The Corporation as receiver shall control, manage and administer the 
affairs of the closed cooperative. Effective immediately upon takeover 
as receiver of such cooperative, the powers, functions and duties, as 
well as all allowances, remunerations and perquisites of the directors, 
officers, and shareholders of such cooperative are suspended, and the 
relevant provisions of the Articles of Corporation and By-Laws of the 
closed cooperative are likewise deemed suspended.
(c) The assets of the closed cooperative under receivership shall be deemed 
in custodia legis in the hands of the receiver. From the time the closed 
cooperative is placed under sucn receivership, its assets shall not be 
subject to attachment, garnishment, execution, levy or any other court 
processes.
(d) In addition to the powers of the receiver pursuant to existing laws, the 
Corporation is empowered to:
(1) bring suits to enforce liabilities to or recoveries of the closed 
cooperative;
(2) appoint and hire persons or entities of recognized competence In 
cooperativism as its deputies and assistants, to perform such 
powers and functions of the Corporation as receiver or liquidator 
of the closed cooperative;
15


1 
(3) suspend or terminate the employment of officers and employees
2 
of the closed cooperative: Provided, That payment of separation
3 
pay or benefits shall be made only after the dosed cooperative
4 
has been placed under liqu dation and that such payment shall be
5 
made from available funds of the cooperative after deducting
6 
reasonable expenses for receivership and liquidation;
7 
(4) pay accrued utilities, rentals and salaries of personnel of the
8 
closed cooperative for a period not exceeding three (3) months,
9 
from available fund of the closed cooperative;
10 
(5) collect loans and other claims of the closed cooperative, and for
11 
the purpose, modify, compromise or restructure the terms and
12 
conditions of such loans or claims as may be deemed
13 
advantageous to the interest of the creditors and claimants of the
14 
closed cooperative;
15 
(6) hire or retain private counsels as may be necessary;
16 
(7) borrow or obtain a loan, or mortgage, pledge or encumber any
17 
asset of the closed cooperative, when necessary, to preserve or
18 
prevent dissipation of the assets, or to redeem foreclosed assets
19 
of the closed cooperative, or to minimize losses to the depositors
20 
and creditors;
21 
(8) if the stipulated interest on deposits is unusually high compared
22 
with the prevailing applicable Interest rate, the Corporation as
23 
receiver may exercise such powers which may include a reduction
24 
of the interest rate to a reasonable rate: Provided, That any
25 
modification or reduction shall apply only to unpaid interest; and,
26 
(9) exercise such other powers as are inherent and necessary for the
27 
effective discharge of the duties of the Corporation as a receiver.
28 
The Board of Directors shall adopt such policies and guidelines as may be
29 
necessary for the performance of the above powers by personnel, deputies and agents
30 
of the Corporation.
16


1 
Sec. 13. Court Fees and Other Fees. - In all cases or actions filed by the
2 
Corporation as receiver for the recovery of, or involving any assets of the closed
3 
cooperative, payment of all docket and other court fees shall be free.
4 
Sec. 14. Receivership Expenses. - Before any distribution of the assets of the
5 
closed cooperative in accordance with the preference established by the Philippine
6 
Cooperative Code and other laws, the Corporation shall periodically charge against
7 
said assets reasonable receivership expenses and subject to approval by the proper
8 
court, reasonable liquidation expenses. It has incurred as part of the cost of
9 
receivership / liquidation proceedings and collect payment therefore from available
10 
assets.
11 
After the payment of all liabilities and claims against the closed cooperative,
12 
the Corporation shall pay any surplus dividends at the legal rate of interest from date
13 
of takeover to date of distribution, to creditors and claimants of the closed cooperative
14 
in accordance with legal priority before distribution to the shareholders of the closed
15 
cooperative.
16 
Sec. 15. Permanent Insurance Funds. - To carry out the purposes of this Act,
17 
the permanent insurance fund shall be Five hundred million pesos (P500,000,000.00).
18 
The Deposit Insurance Fund shall be the capital account of the Corporation and
19 
shall principally consist of the following: (i) the Permanent Insurance Fund; (ii)
20 
assessment collection, subject to the charges enumerated in Section 6 (d); (iii)
21 
reserves for insurance and financial assistance losses; and (iv) retained earnings:
22 
Provided, That the reserves for insurance and financial assistance losses and retained
23 
earnings shall be maintained at a reasonable level to ensure capital adequacy:
24 
Provided, further, That the Corporation may, within two (2) years from the passage
25 
of this Act, and every five (5) years thereafter, conduct a study on the need to adjust
26 
the amount of the Permanent Insurance Fund, insurance cover, assessment rate and
27 
assessment base, and thereafter make the necessary recommendation to Congress.
28 
For this purpose, the Corporation may hire the services of actuarial consultants to
29 
determine, among others, the affordability of assessment rates, analysis and
30 
evaluation of insurance risk, and advisability of imposing varying assessment rates or
31 
insurance cover of different cooperatives.
17


1 
Sec. 16. Payment of Insured Deposits. - Whenever an insured cooperative
2 
shall have been closed by the CDA, payment of the insured deposits on such closed
3 
cooperative shall be made by the Corporation as soon as possible either (1) by cash
4 
or (2) by making available to each depositor a transferred deposit in another insured
5 
cooperative In an amount equal to insured deposit of such depositor: Provided,
6 
however, That the Corporation, in its discretion, may require proof of claims to be filed
7 
before paying the insured deposits, and that in any case where the Corporation is not
8 
satisfied as to the viability of a claim for an insured deposit, it may require final
9 
determination of a court of competent jurisdiction before paying such claim: Provided,
10 
further, That failure to settle the claim, within six (6) months from the date of filing of
11 
claim for insured deposit, where such failure was due to grave abuse of discretion,
12 
gross negligence, bad faith, or malice, shall, upon conviction, subject to directors,
13 
officers, or employees of the Corporation responsible for the delay, to imprisonment
14 
from six (6) months to one (1) year: Provided, furthermore. That the period shall not
15 
apply if the validity of the claim requires the resolution of Issues of facts and/or law
16 
by another office, body or agency including the case mentioned in the first proviso or
17 
by the Corporation together with such other ofice, body or agency.
18 
Sec. 17. Subrogation. •“ The Corporation upon payment of any depositor, shall
19 
be subrogated to all rights of the depositor against the closed cooperative to the extent
20 
of such payment. Such subrogation shall include the right on the part of the
21 
Corporation to receive the same payments from the proceeds of assets of such closed
22 
cooperative and recoveries on account of cooperatives debtors as would have been
23 
payable to the depositor on a claim for the insured deposits but, such depositor shall
24 
retain his claim for any uninsured portion of his deposit. All payments by the
25 
Corporation of insured deposits in closed cooperatives partake of the nature of public
26 
funds, and as such, must be considered a preferred credit similar to taxes due to the
27 
national government In the order of preference under Article 2244 of the New Civil
28 
Code.
29 
Sec. 18. Determination of Insured Deposits. -
30 
(a) The Corporation shall commence the determination of Insure deposits
31 
due the depositors of a closed cooperative upon Its actual takeover of
32 
the closed cooperative. The Corporation shall give notice to the
18


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
depositors of the closed cooperative of the insured deposits due them 
by whatever means deemed appropriate by the Board of Directors: 
Provided, That the Corporation shall publish the notice once a week for 
at least three (3) consecutive weeks in a newspaper of general 
circulation or, when appropriate, In a newspaper circulated in the 
community or communities where the closed cooperative or its branches 
are located and post the same in the office of the cooperative.
(b) Payment of an insured deposit to any person by the Corporation shall 
discharge the Corporation, and payment of transferred deposit to any 
person by the new cooperative or by an Insured cooperative in which a 
transferred deposit has been made available shall discharge the 
Corporation and such new cooperative or other insured cooperative, to 
the same extent that payment to such person by the dosed cooperative 
have discharged it from liability for the Insured deposit.
(c) Except as otherwise prescribed by the Board of Directors, neither the 
Corporation nor such other insured cooperative shall be required to 
recognize as the owner of any portion of a deposit appearing on the 
records of the closed cooperative under a name other than that of the 
claimant, any person whose name or interest as such owner is not 
disclosed on the records of such closed cooperative as part owner of said 
deposit, if such recognition would increase the aggregate amount of the 
insured deposits In such closed cooperative.
(d) The Corporation may withhold payment of such portion of the insured 
deposit of any depositor In a closed cooperative as may be required to 
provide for the payment of any liability of such depositor as a 
shareholder of the closed cooperative, or of any liability of such depositor 
to the closed cooperative or its receiver, which is not offset against a 
claim due from such cooperative, pending the determination and 
payment of such liability by such depositor or any other liable therefor.
(e) Unless otherwise waived by the Corporation, if the depositor in the 
closed cooperative shall fail to claim his insured deposits with the 
Corporation within two (2) years from actual takeover of the closed
19


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
cooperative by the receiver, or dc es not enforce his claim filed with the 
Corporation within two (2) years after the two-year period to file a claim 
as mentioned hereinabove, all rights of the depositor against the 
Corporation with respect to the insured deposit shall be barred; 
however, all rights of the depositor against the closed cooperative or the 
receivership estate to which the Corporation may have become 
subrogated, shall thereupon revert to the depositor. Thereafter, the 
Corporation shall be discharged from any liability on the insured deposit.
Sec. 19. Corporate Funds and Financial Assistance. ~
(a) Money of the Corporation not otherwise employed shall be invested in 
obligation of the Republic of the Philippines or in obligation guaranteed 
as to principal and interest by the Republic of the Philippines.
(b) The banking or checking accounts of the Corporation shall be kept with 
the Bangko Sentral ng Pilipinas, with the Land Bank of the Philippines, 
or with any other bank designated as depository or fiscal agent of the 
Philippine government.
(c) It is hereby declared to be the policy of the State that the Deposit 
Insurance Fund of the Corporation shall be preserved and maintained at 
all times: Provided, That the Corporation shall be exempt from income 
tax, final withholding tax, value-added tax on assessments collected 
from member cooperatives, and local taxes.
(d) When the Corporation has determined that an insured cooperative is in 
danger of closing, in order to prevent such closing, the Corporation, in 
the discretion of its Board of Directors, is authorized to make loans to, 
or purchase the assets of or assume liabilities of, or make deposits in, 
such insured cooperative, upon such terms and condition as the Board 
of Directors may prescribe, when in the opinion of the Board of Directors, 
the continued operation of such cooperative is essential to provide 
adequate cooperative saving service in the community or maintain 
financial stability in the economy.
The authority of the Corporation under the foregoing paragraph to 
extend financial assistance to, assume liabilities of purchase the assets
20


1 
of an insured cooperative may also be exercised in the case of a closed
2 
insured cooperative if the Corporation finds that the resumption of
3 
operations of such cooperative is vital to the interests of the community:
4 
Provided, That the reopening and resumption of operations of the dosed
5 
cooperative shall be subject to the prior approval of the CDA.
6 
The Corporation may provide any corporation acquiring control of,
7 
merging or consolidating with or acquiring the assets of an insured
8 
cooperative danger of closing in order to prevent such closing or of a
9 
closed insured cooperative in order to restore to normal operations, with
10 
such financial assistance as it could provide an insured cooperative under
11 
this Subsection: Provided, That within sixty (60) days from date of
12 
assistance, the Corporation shall submit a report thereof to the CDA.
13 
The Corporation, prior to the exercise of the powers under this Section,
14 
shall determine that actual payoff and liquidation thereof will be more
15 
expensive than the exercise of this power: Provided, That when the CDA
16 
has determined that there are systemic consequences of a probable
17 
failure or closure of an insured cooperative, the Corporation may grant
18 
financial assistance to such insured cooperative in such amount as may
19 
be necessary to prevent its failure or closure and/or restore the insured
20 
cooperative to viable operations, under such terms and conditions as
21 
may be deemed necessary by the Board of Directors, subject to
22 
concurrence by the CDA and w'thout additional cost to the Deposit
23 
Insurance Fund.
24 
Sec. 20. Authority to Borrow. - The Corporation is authorized to borrow from
25 
the Bangko Sentral ng Pilipinas and the Bangko Sentral is authorized to lend the
26 
Corporation on such terms as may be agreed upon by the Corporation and the Bangko
27 
Sentral, such funds as In the judgement of the Board of Directors of the Corporation
28 
are from time to time required for Insurance purpose and financial assistance provided
29 
for in Section 19 (d) of this Act: Provided, That ahy such loan as may be granted by
30 
the Bangko Sentral shall be consistent with monetary policy: Provided, further. That
31 
the rate of interest thereon shall be fixed by the Monetary Board but shall not exceed
32 
the treasury bill rate.
21


1 
When in judgennent of the Board of Directors, the funds of the Corporation are
2 
not sufficient to provide for an emergency or urgent need to attain the purposes of
3 
this Act, the Corporation is likewise authorized to borrow money, obtain loans or
4 
arrange credit lines or other credit accommodations from any bank designated as
5 
depository or fiscal agent of the Philippine Government: Provided, That such loan shall
6 
be short-term duration.
7 
Sec. 21. Reports and Audit -
8 
(a) The Corporation shall annually make a report of its operation to the
9 
Congress as soon as practicable after the first day of January of each
10 
year.
11 
(b)The financial transactions of the Corporation shall be audited by the
12 
Commission on Audit in accordance with the principle and procedures
13 
applicable to commercial corporate transactions and under such rules
14 
and regulations as may be prescribed by the Commission on Audit, the
15 
audit shall be conducted at the place or places where accounts of the
16 
Corporation are normally kept. Except as to matters relating to the
17 
function of the Corporation as receiver which shall be subject to visitorial
18 
audit only, the representatives o^ the Commission on Audit shall have
19 
access to all books, accounts, records, reports, files and all other papers,
20 
things or property belongings to or in use by the Corporation pertaining
21 
to its financial transactions and necessary to facilitate the audit, and they
22 
shall be afforded full facilities for verifying transactions with the balances
23 
or securities held by depositories, fiscal agents, and custodians. All such
24 
books, accounts, records, reports, files, papers, and property of the
25 
Corporation shall remain In possession and custody of the Corporation.
26 
(c) A report of the Audit for each fiscal year ending on June 30 shall be
27 
made by the Auditor General to the Congress not later than January 15
28 
following the close of such fiscal year. On or before December 15
29 
following such a fiscal year, the Auditor General shall furnish the
30 
Corporation a short form report showing the financial position of the
31 
Corporation at the close of fiscal year. The report to Congress shall set
32 
forth the scope of the audit and shall include a statement of assets and
22


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
liabilities and surplus or deficit; a statennent of surplus or deficit analysis; 
a statement of income and expenses; a statement of sources and 
application of finds and such comments and information as may be 
deemed necessary to inform Congress of the financial operations and 
condition of the Corporation, together with such recommendations with 
respect thereto as the Auditor General may deem advisable. The report 
shall also show specifically any program, expenditure, or other financial 
transactions or undertaking observed in the course of the audit, which 
In the opinion of the Auditor General, has been carried on or made 
without authority of law. A copy of each report shall be furnished to the 
President of the Philippines, to the Governor of the Bangko Sentral ng 
Pilipinas, and the Corporation at the time submitted to Congress.
Sec. 22. Penalties. -
(a) Every Insured cooperative shall display at each place of business 
maintained by it a sign or signs, and shall include a statement In all its 
advertisements to the effect that its deposits are insured by the 
Corporation.
(b) No insured cooperative shall pay any dividend on its share capital or 
distribute any of its capital assets while it remains in default in the 
payment of any assessment due to the Corporation: Provided, That if 
such default is due to a dispute between the insured cooperative and 
the Corporation over the amount of such assessment, this subsection 
shall not apply if such cooperative shall deposit security satisfactory to 
the Corporation for payment upon final determination of the issue.
(c) Without prior written consent by the Corporation, no insured cooperative 
shall (1) merge or consolidate with any cooperative, or (2) assume 
liability to pay any deposits made in, or similar liabilities of, any 
cooperative, or (3) transfer assets to any cooperative in consideration of 
the assumption of liabilities for any portion of the deposits made in such 
insured cooperative.
(d) The Corporation may require an insured cooperative to provide 
protection and indemnity against burglary, defalcation, losses arising
23


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
from discharge of duties by, or particular acts of defaults of its directors, 
officers, or employees, and other similar insurable losses. The Board of 
Directors in consultation with the GDA, shall determine the bonding 
requirement as It refers to directors, officers and employers of the 
Insured cooperative as well as the form and amount of the bond. 
Whenever any Insured cooperativ'e refuses to comply with any such 
requirement, the Corporation may contract for such protection and add 
the cost thereof to the assessment otherwise payable by such 
cooperatK^e.
(e) Any assessment payable by an insured cooperative under this Act shall 
be subject to payment of interest computed from the date such 
assessment became due and payable and at the legal rate for loans as 
prescribed by law or appropriate authority and In case of willful failure 
or refusaJ to pay such assessment and interest thereon, there shall be 
added a penalty equivalent to twice the amount of Interest payable as 
computed herein for each day such violations continue, which the 
interest and penalty the Corporation may recover for its use: Provided, 
That the penalty shall not be applicable under the circumstances stated 
in the provisions of Subsection (b) of this Section.
(f) If the penalty of prision mayor ox a fine of not less than Fifty thousand 
pesos (P50,000.00) but not more than Two million pesos 
(P2,000,000.00), or both, at the discretion of the court, shall be imposed 
upon any director, officer, empioyee or agent of a cooperative:
(1) for any willful refusal to submit reports as required by law, rules 
and regulations;
(2) any unjustified refusal to permit examination and audit of the 
deposit records or the affairs of the cooperative;
(3) any willful making of a false statement or entry in any cooperative 
report or document required by the Corporation;
(4) submission of false material Information In connection with or In 
relation to any financial assistance of the Corporation extended 
to the cooperative;
24


1 
(5) splitting of deposits or creation of fictitious loans or deposit
2 
accounts.
3 
Splitting of deposit occurs whenever a deposit account with an
4 
outstanding balance of more than the statutory maximum amount
5 
of insured deposit maintain under the name of natural or juridical
6 
persons is broken down and transferred in two (2) or more
7 
accounts in the name/s of natural or juridical persons or entities
8 
who have no beneficial ownership on transferred deposits in their
9 
names within one hundred and twenty (120) days immediately
10 
preceding or during a cooperative declared holiday, or
11 
immediately preceding a closure order issued by the CD A for the
12 
purpose of availing of the maximum deposit insurance coverage;
13 
(6) refusal to allow the Corporation to take over a closed cooperative
14 
placed under its receivership or obstructing such action of the
15 
Corporation;
16 
(7) refusal to turn over or destroying or tampering cooperative
17 
records;
18 
(8) fraudulent disposal, transfer or concealment of any assets,
19 
property or liability of the closed cooperative under the
20 
receivership of the Corporation;
21 
(9) violation of, or causing any person to violate, the exemption from
22 
garnishment, levy, attachment or execution;
23 
(10) any willful failure or refusal to comply with, or violation of
24 
any provisions of this Act, or commission of any other
25 
irregularities, and/or conducting business in an unsafe or unsound
26 
manner as may be determined by the Board of Directors.
27 
The Board of Directors is hereby authorized to impose administrative fines for
28 
any act or omission, enumerated In the preceding Subsection, and for violation of any
29 
order, instruction, rule or regulation issued by the Corporation, against a cooperative
30 
and/or any of its directors, officers or agents responsible for such act, omission, or
31 
violation, in amounts as may be determined to be appropriate, but in no case to exceed
32 
three (3) times the amount of the damages or costs cause by the transaction for each
25


1 
day that the violation subsists, taking Into consideration the attendant circumstances,
2 
such as the nature and gravity of the violation or irregularity and the assets of the
3 
cooperative.
4 
Sec. 23. Separability Clause. - If any provision or part hereof is held invalid or
5 
unconstitutional, the remainder of the law or the provision or part not otherwise
6 
affected shall remain valid and subsisting.
7 
Sec. 24. Repealing Clause. - Any law, presidential decree or issuance,
8 
executive order, letter of instruction, administrative order, rule, or regulation contrary
9 
to or inconsistent with the provisions of this Act are hereby repealed, modified, or
10 
amended accordingly.
11 
Sec. 25. Effectivity. - This Act shall take effect fifteen (15) days after its
12 
publication in the Official Gazette ov in a newspaper of general circulation.
Approved,
26