Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO, 1681

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

EXPLANATORY NOTE

The government recognizes the importance of both financial security and literacy for
its people. Congress has continuously championed for the strengthening of resource
management and savings mobility for the citizenry, especially for those in areas that
lack the presence of financial institutions to cater to them.

Hand in hand with government in this effort are the cooperatives that also promote
savings mobility and financial security. Cooperatives have since been in the forefront
of leading the citizenry in financial security, and literacy. This genuine collective effort
is recognized in our Constitution as an instrument for social justice and economic
development. This has been assured by the enactment of Republic Acts No. 6939
and 9520, both laws aimed for the development of cooperatives in the country

This bill intends to support this through strengthening the regulatory powers of the
Cooperative Development Authority (CDA), the main agency tasked to promote the
viability and growth of cooperatives in the country, thereby repealing Republic Act
No. 6939. It hopes to develop cooperatives to be more responsive to the needs of
the citizenry and provide cooperatives more avenues for engagement and promotion
for the sector.

The bills also propose to create the Cooperative Development Council and the
Cooperative Adjudication Board within the CDA to ensure a solid relationship


between the sector and the government. The Council shall be the policy-making
body of the authority tasked to create integrated plans and programs on cooperative
development that is consistent with the national policy. The Board shall be a
specialized quasi-judicial body focusing on issues among cooperatives for prompt
dispute and grievances resolution between and among cooperatives and among its
members.

The approval of this bill is earnestly sought.

LUIS RA RAY” F. VILLAFUERTE, JR.

2


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Queson City

EIGHTEENTH CONGRESS
First Regular Session

HouSE BILL No, 1681

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT
REORGANIZING THE COOPERATIVE DEVELOPMENT AUTHORITY,
REPEALING FOR THE PURPOSE REPUBLIC ACT NO. 6939, CREATING THE.
COOPERATIVE DEVELOPMENT AUTHORITY

Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the “Cooperative Development
Authority Charter Act’.

SECTION 2. Declaration of Policy. - It is hereby declared the policy of the State to
promote the viability and growth of cooperatives as instruments of equity, social justice
and economic development and to create an agency, in fulfillment of the mandate in
Section 15, Article XII of the 1987 Constitution.

Toward this end, the State shall recognize cooperatives as associations organized for
the economic and social betterment of their members, operating business enterprises
on mutual aid, and founded upon internationally accepted cooperative principles and
practices. The State recognizes the cooperatives as primarily responsible for the
institutional development of cooperatives. Accordingly, the State recognizes the rights
of the cooperatives to initiate and foster within their own ranks cooperative promotion,
organization, training, information gathering, audit and support services, with
government assistance where necessary. In furtherance of this policy, the National
Economic and Development Authority shall include the promotion of growth and
expansion of cooperatives as major and indispensable components of national


development plans. The government and all its branches, subdivisions,
instrumentalities and agencies shall ensure the provision of technical guidance,
financial assistance and other services to enable the cooperatives to develop into
viable and responsive economic enterprises towards a strong cooperative movement
free from any condition which infringes upon the objectives and character of
cooperatives. The State shall, except as provided in this Act, maintain the policy of
non-interference in the management and operation of cooperatives.

SECTION 3. Cooperative Development Authority. ~ The Cooperative Development
Authority created under Republic Act No. 6939, hereinafter referred to as the Authority,
is hereby reorganized to carry out the provisions of this Act and those of Republic Act
No. 9520, otherwise known as the “Philippine Cooperative Code of 2008”. The
Authority shall have its principal place of business in Metro Manila, and shall maintain
offices and branches in such other places as the proper conduct of its business shall
require. The Authority shall be an agency attached to the Office of the President for
Policy and program coordination.

SECTION 4. Power, Functions, and Responsibilities. - The Authority shall have
the following powers and functions:

a. Exercise supervision and jurisdiction over all types and categories of
cooperatives registered with the Authority;

b. Register all types of cooperatives including amendments to its by-laws, division,
merger, consolidation, dissolution and liquidation of cooperatives as well as the
transfer of all or substantially all of their assets and liabilities;

c. Order the cancellation or revocation of the Certificate of Registration after due
notice and hearing pursuant to Articles 67 & 68 of the Philippine Cooperative
Code of 2008 and the by-laws of the cooperative;

d. Formulate, adopt, and implement integrated plans and programs on
cooperative development consistent with the national policy on cooperatives,
and establish an integrated framework on cooperative development for all
government agencies;

e, Develop and formulate, in consultation with the cooperative sector, and issue
appropriate regulations, standards, rules, orders’. Guidelines and/or circulars


to implement the Cooperative Code to ensure the sound operation of
cooperatives;

Establish a consultative mechanism in order to provide the cooperative sector
a system for maximum participation on matters of government plans, projects
and policies related to cooperatives.

The cooperative sector shall undertake the organization/streamlining or
rationalization of an apex body, representing all types and categories of
cooperatives under the Philippine Cooperative Code of 2008, which shall
function as the overall consultative and coordinating body with the Authority;
Establish and maintain a continuing educational and capability-program for the
Authority;

. Require the submission of annual reports, audited financial statements, and
such reports in compliance with the Philippine Cooperative Code of 2008, in
‘such forms as may be prescribed by the Authority;

Conduct regular inspection or examination of a cooperative in accordance with
rules and regulations promulgated by the Authority and when deemed
necessary conduct a special inspection and investigation to protect the interest
and welfare of the members of cooperatives. However, the Authority may
delegate this power to accredited federations and unions in accordance with
the Philippine Cooperative Code of 2008 and the implementing rules and
regulations issued for this purpose;

Compel the cooperative to call a General Assembly under the supervision of
the authority, subject to the criteria or condition/s to be defined in the
implementing rules and regulations issued for this purpose;

In case a cooperative fails to call and conduct a General Assembly, the
Authority shall, on its own, call a General Assembly meeting to address and
settle the issues. The Authority may enlist the aid and support of and/or
deputize any and all enforcement agencies of the government and federations
and unions for the implementation of its orders;

Impose sanctions for non-compliance with lawful orders, rules and regulations
of the Authority, including the Articles of Cooperation and the By-Laws of the
Cooperative subject to conditions as defined in the implementing rules and
Tegulations of this Act;


|. Collect reasonable fees, fines or charges in the performance of its registration
and regulatory functions;

m. Establish and strengthen extension offices in all political and administrative
regions in the country and such other places as may be determined by the
Authority;

n. Hear, decide and settle disputes between and among members, officers, and
directors of cooperatives, and between and among cooperatives in accordance
with Article 137 of the Philippine Cooperative Code of 2008;

©. Implement and enforce its decision with the assistance of deputized law
enforcement agencies or the local government unit concerned as may be
necessary; and

Pp. Exercise such other powers and functions as may be necessary to implement
the provisions of the Philippine Cooperative Code of 2008.

SECTION 5. Organization Structure. - The Authority shall have a Board of Directors
and an Office of the Administrator.

The Board of Directors, hereinafter referred to as the Board, shall be the collegial
policy-making body of the Authority which shall be composed of the Chairperson and
six (6) members of the Board of Directors all of whom shall be chosen from among the
nominees of the cooperative sector, with two (2) representatives each from Luzon,
Visayas and Mindanao

They shall be appointed by the President of the Philippines and shall serve for a term
of six (6) years without reappointment. Except for the chairperson, the Members of the
Board shall serve on a part-time basis only: Provided, that any vacancy in the Board
shall be filled up by appointment of the President in accordance with the provision of
this section: Provided, further, that a member so appointed shall serve only for the
unexpired term: Provided, finally, that the incumbent Chairperson and members of the
Board shall continue to serve and act as chairperson and members of the present.
board up to the end of their term under Republic Act No. 6939.


Except for the Chairperson, the members of the Board shall be entitled to per diem at
rates to be determined and approved by the Department of Budget and Management
and actual travel expenses.

The Office of the Administrator shall be headed by the Chairperson of the Board who
shall exercise overall supervision on the operations of the Authority.

SECTION 6. Powers and Functions of the Board. - The Board as the policy-making
body shall have the following powers and functions:

a. Formulate policies, rules and regulations consistent with the provisions of the
Philippine Cooperative Code of 2008;

b. Adopt implementing rules and regulations for the conduct of the internal
operations of the Authority;

c. Organize the operating structure and functions of the Authority. No changes in
the approved organizational structure including the transfer of personnel shall
be effected without the approval of the Board; and

d. Approve and adopt the annual budget of the Authority.

SECTION 7. Qualifications of Members of the Board. - The Chairperson or a
Member of the Board who shall be appointed must possess the following
qualifications;

a. Anatural born Filipino citizen;

b. Must not be more than sixty (6) years old at the time of the appointment and
must be in good health;

c. Aholder of at least a bachelor's degree and five (5) years of experience as an
official or officer of a cooperative, government agency, or non-government
organization engage in cooperative development or, in the absence of the
bachelor’s degree, at least seven (7) years of experience in cooperatives either
as an officer of a cooperative or a government agency or non-government
organization engage in cooperative development;


d. Except the Chairperson who should be a resident of the Philippines, the other
Members of the Board must be a resident of the region represented for, at least
five (5) years; and

e. Must be recommended and endorsed by a federation and/or union of
cooperatives operating in good standing under the provisions of this Act and
the Philippine Cooperative Code of 2008

Any person appointed as Chairperson or regular member of the Board shall, upon
appointment, divest himself of any direct or indirect pecuniary interest or dealing with
any cooperative.

SECTION 8, Removal Member of the Board. ~ The President of the Philippines may
remove any member of the Board for any of the following reasons:

a. If the member if subsequently disqualified under the provisions of this Act:

b. If the member becomes physically or mentally incapacitated to properly
discharge the duties and responsibilities of the position and such incapacity has
lasted more than six (6) months; and

c. If the member is guilty of acts or omissions which are fraudulent or illegal in
character or which are manifestly opposed to the aims, objectives and interests.
of the Authority and the cooperative sector.

SECTION 9. Meetings of the Board. - The Board shall meet at least once a month
for the transaction of its regular business. Special meetings may be called by the
Chairperson or majority of the members of the Board to consider specific matters. A
majority vote by the entire Board shall be required for a decision. All regular and
special meetings of the Board shall be held at the head office in Metro Manila.

SECTION 10. Chairperson/Administrator. - The Chairperson shall be the
Administrator of the Authority and shall have the rank and privileges of an
Undersecretary.

In the absence of the Administrator, the Director IV shall be the Officer-in-Charge of
the Authority who shall exercise the powers and duties of the Administrator.


SECTION 11. Powers and Functions of the Chairperson/Administrator. - The
Chairperson/Administrator of the Authority shall have the following powers and
functions:

a. Preside over the meetings of the Board;

b. Supervise the overall operations of the Authority;

c. Prepare, consolidate and submit periodic reports for the consideration of the
Board;

d. Implement a human resource management system consistent with the Civil
Service Code that will promote professionalism and excellence in accordance
with sound principles of management;

@. Prepare the proposed annual and supplemental budgets of the Authority for the
consideration and approval of the Board;

f. Report to the President of the Philippines and Congress on the performance
and accomplishment of the Authority on a periodic;

g. Represent the Authority in all undertakings where its presence is required; and

h. Perform such other functions as may be required by law.

SECTION 12. Power to Register Cooperatives. - The power to register cooperatives

shall be vested solely on the Authority pursuant to the provisions of the Philippine
Cooperative Code of 2008.

All cooperatives duly registered with the Authority shall present their Certificate of
Registration to the nearest Bureau of Internal Revenue office and the latter shall within
ten (10) days issue the Certificate of Tax Exemption.

Any provision of law, executive order rule or regulation to the contrary notwithstanding,
the certificate of registration issued by the Authority to a duly registered cooperative
shall ipso facto constitute as the sole legal basis or requirement for the full enjoyment
of the tax exemption granted under Articles 60 and 61 of the Philippine Cooperative
Code of 2008. Any public official or employee who violates or in any manner
circumvents this provision shall be dealt with under Article 140 of Philippine
Cooperative Code of 2008


The Authority shall cite this provision in the certification of registration.

SECTION 13. Prohibition. - Except as provided for under Article 130 of the Philippine
Cooperative Code of 2008, the use of the word “cooperative” by any person or
organization unless duly registered with the Cooperative Development Authority shall

be prohibited and shall be penalized under Article 140 of the Philippine Cooperative
Code of 2008.

SECTION 14. Settlement of Disputes. - Disputes within or between cooperatives, or
disputes within or between federations or unions shall be mediated, conciliated or
settled in accordance with this Act, Article 137 of the Philippine Cooperative of 2008
and its implementing rules and regulations or Republic Act No. 9285, otherwise known
as the Alternative Dispute Resolution Act of 2004.

SECTION 15. Cooperatives in the Education System. - The history, philosophy,
concepts, values, principles and practices of cooperatives and their role as a factor in
the national economy shall be disseminated both in formal and non-formal education.

Notwithstanding existing laws, memorandum orders and directives, cooperatives
development and administration as a field of study may be offered as a baccalaureate,
post-baccalaureate or masteral program in State universities and colleges (SUCs) in
accordance with the standards, rules and regulation promulgated by their respective
Board of Regents, the Commission on Higher Education (CHED) and the Authority in
consultation with the cooperative sector as necessary : Provided, that SUC’s shall
provide for equivalency credit and accreditation of work experiences and non-formal
education and training of cooperative leaders, managers and members: Provided
further, that in cases where the SUC's do not offer a separate academic program in
cooperatives development and administration, the SUC’s shall be encouraged to
include a 3-unit subject in the curricula of accountancy, agribusiness, agriculture,
agricultural economics, business, community development, economics, education,
forestry, social sciences, and other curricula that can be instrumental in the
development of cooperatives. Special incentives including scholarships shall be


formulated by the Authority for students taking up degree courses on cooperatives
development and administration.

The role of non-government organizations, not registered as cooperatives but duly
registered under Philippine laws and engaged in cooperative promotion, organization,
research and education shall be recognized. The Authority may accredit such non-
government organizations as non-academic training organizations. The training
courses offered by them may be eligible as credits for the purposes of academic,
professional and career advancements of their trainees. Existing training centers for
cooperatives may qualify as non-government organizations under this Act.

Upon request of cooperatives, State colleges and universities shall provide technical
assistance and guidance to cooperatives in the communities where they are located.

SECTION 16. Cooperatives Engaged in Services Covered by Other Law. -
Registered cooperatives may engage in business endeavors in accordance with its
approved articles of incorporation provided they acquire the necessary licenses,
franchises, certificates of authority and permits from the appropriate agencies
governing their type of cooperatives such as, but not limited to those providing
manpower services, construction services, professional services, health care services,
ecological and environmental services, farmers and fisherfolk cooperatives and
services to indigenous cultural minorities.

SECTION 18. Reorganization of the Authority. - The Authority shall be reorganized
within one hundred twenty (120) days from the effectivity of this Act.

SECTION 19. Transitory Provisions. - Upon the effectivity of this Act, the personnel
of the Cooperative Development Authority shall, unless removed for cause and after
due process, continue to perform their duties and responsibilities and shall receive
their corresponding salaries and benefits.

In the reorganization and staffing of the Authority, these personnel shall be given
preference subject to civil service rules and regulation and rules of the Organization
Position Classification and Compensation Bureau of the Department of Budget and


Management (DBM): Provided, that those who shall not be absorbed by the
organization shall be allowed to retire under existing retirement laws if qualified or
under Section 10 and other applicable provisions of Executive Order No. 366, S. 2004,
whichever is beneficial to the employee concerned.

SECTION 20. Appropriations. - The amount necessary for the implementation of this
Act shall be included in the annual General Appropriations Act.

SECTION 21. Transfer of Funds and Programs. - The Cooperative Development
Loan Fund and the Fund for Management Training and Assistance Program created
under Presidential Decree No. 175, as amended, and the Cooperative Marketing
Project created under loan agreements, all granted to the Department of Agriculture is
hereby transferred to the Authority which shall be used for the development and
strengthening of cooperatives.

SECTION 23. Implementing Rules and Regulations. - The Board shall, in
consultation with the cooperative sector, formulate the implementing rules and
regulations for the effective implementation of the provisions of this Act. The
implementing rules and regulations shall take effect within fifteen (15) days after
publication in the Official Gazette or in two (2) newspapers of general circulation. All
subsequent amendments to the implementing rules and regulations shall also be
published before taking effect.

SECTION 24. Information Campaign. - The Cooperative Development Authority is
mandated to conduct a six (6) months information campaign on the provisions of this
Act from its effectivity.

SECTION 25. Separability Clause. - Should any provision herein be declared

unconstitutional, the same shall not affect the validity of the other provisions of this
Act.

SECTION 26. Repealing Clause. — All laws, decrees, orders, rules, and regulations

or other issuances or parts inconsistent with the provisions of this Act are hereby
repealed, amended, or modified accordingly.


SECTION 27. Effectivity Clause. ~ This Act shall take effect in fifteen (15) days after
publication in the Official Gazette or in one (1) newspaper of general circulation in the
Philippines.

Approved,