Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY “HORI” G. 
HORIBATA AND HON. NICOLAS “NICK” ENCISO VIII 
EXPLANATORY NOTE 
This proposed measure seeks to establish the Philippine Cooperative Insurance 
Corporation as a way to protect funds and savings that are mobilized by credit 
cooperatives.  
The Philippine Deposit Insurance Corporation (PDIC) safeguards the interests of the 
depositing public by way of providing insurance coverage on all insured deposits. 
However, only cooperative banks are included in the membership of PDIC. Notably, the 
credit cooperatives are not. 
Savings and credit cooperatives mobilize millions of pesos of deposits, mostly coming 
from the low-income and middle-income classes. It would therefore be prudent to put 
deposit insurance for savings and credit cooperative deposits, especially since around 
40 percent of the total number of cooperatives are engaged in the business of savings 
and credit as reported by the Cooperative Development Authority. 
In view of the foregoing, the immediate passage of this bill is earnestly sought. 
LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR. 
MIGUEL LUIS R. VILLAFUERTE  
TSUYOSHI ANTHONY “HORI” G. HORIBATA 
NICOLAS “NICK” ENCISO VIII 
September 13, 2022
8:00 am
4711


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
HOUSE BILL NO. ____ 
Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,  
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY “HORI” G. 
HORIBATA AND HON. NICOLAS “NICK” ENCISO VIII 
AN ACT 
PROVIDING PROTECTION TO COOPERATIVE DEPOSITORS AND ESTABLISHING 
THE PHILIPPINE COOPERATIVE INSURANCE CORPORATION, DEFINING ITS 
POWERS AND FUNCTIONS, APPROPRIATING FUNDS THEREFOR, AND FOR 
OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. – This Act shall be known as the "Cooperative Depositors 
Protection Act."  
SECTION 2. Declaration of Principles and Policies. – Section 1, Article XII 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 cooperative system at all times.  
SECTION 3. Creation and Nature of the Corporation. – There is hereby created a 
4711


 
 
Philippine Cooperative Deposit Insurance Corporation which shall have the status of a 
tax-exempt government corporation attached to the Department of Finance for policy 
coordination and guidance. 
 
SECTION 4. Powers and Functions. – The Corporation shall have the following powers 
and functions; 
a) 
To provide a deposit insurance scheme for insured cooperatives and to receive, 
liquidate and wind up any cooperative; 
b) 
To formulate and issue rules and regulations for the effective discharge of its 
responsibilities; 
c) 
To organize its office, fix the compensation of an appoint personnel as may be 
deemed necessary upon the recommendation of the president of the 
Corporation; 
d) 
To direct the management and operation of the Corporation; 
e) 
To receive and manage grants, donations, and other forms of assistance; 
f) 
To sue and be sued; 
g) 
To adopt an annual budget for, and authorize such expenditures by the 
Corporation; 
h) 
To perform such other acts as it may deem necessary for the corporation to 
undertake its mandate and functions. 
 
SECTION 5. The Board of Directors. – The Corporation shall be governed by the Board 
of Directors which shall be composed of five (5) members as follows; 
a) 
The Secretary of Finance who shall be the ex-officio Chairman of the Board 
without compensation. 
b) 
The Chairman of the Cooperative Development Authority, who shall be ex-officio 
member of the Board without compensation. 
c) 
The President of the Corporation, who shall be appointed by the President of the 
Philippines from either the Government or private sector to serve on a full-time 
basis for a term of six (6) years. The President of the Corporation shall also 
serve as Vice Chairman of the Board. 


 
 
d) 
Two (2) members from the private sector, to be appointed for a term of six (6) 
years without reappointment by the President of the Philippines: Provided, That 
of those first appointed, the first appointee shall serve for a period of two (2) 
years. 
No person shall be appointed as member of the Board unless he be of good moral 
character and of unquestionable integrity and responsibility, and who is of recognized 
competence in cooperativism, economics, banking and finance, law, management 
administration or insurance, and shall be at least thirty-five (35) years of age. For the 
duration of their tenure or term in office and for a period of one year thereafter, the 
appointive members of the Board shall be disqualified from holding any office, position or 
employment in any insured cooperative. 
The Secretary of Finance may designate a representative, whose position shall not 
be lower that an undersecretary or deputy governor respectively, to attend such 
meetings and to vote on behalf of the principal. Whenever the Chairman of the Board is 
unable to attend a meeting of the Board, or in the event of a vacancy in the office of the 
Secretary of Finance, the President of the Corporation shall act as Chairman. 
The presence of three (3) members shall constitute a quorum. All decisions of the 
Board of Directors shall require the concurrence of at least three (3) members. 
The Secretary of Finance shall fix the rate of per diem for every Board meeting 
attended by the members of the Board of Directors. 
 
SECTION 6. The President of the Corporation. – The President of the Corporation 
shall be the Chief Executive thereof and his salary shall be fixed by the President of the 
Philippines. The sum total of the salary of the President and allowances and other 
emoluments which the Board of Directors may grant him shall be the ceiling for fixing the 
salary, allowances and other emoluments of all other personnel in the Corporation. The 
power and duties of the President of the Corporation are: 
a) 
To prepare the agenda for the meeting of the Board and to submit for the 
consideration of the Board the policies and measures which he believes to be 
necessary to carry out the purposes and provisions of this Act; 
b) 
To execute and administer the policies and measures approved by the Board; 


 
 
c) 
To direct and supervise the operations and internal administration of the 
Corporation in accordance with the policies established by the Board. The 
President may delegate certain of his administrative responsibilities to other 
officers of the Corporation, subject to the rules and regulations of the Board;  
d) 
To represent the Corporation, upon prior authority of the Board, in all dealings 
with other offices, agencies and instrumentalities of the government and with all 
other persons or entities, public or private, whether domestic, foreign or 
international; 
e) 
To authorize, with his signature, upon prior authority of the Board, contracts 
entered into by the Corporation, notes and securities issued by the Corporation, 
arid the annual reports, balance sheets, profits and loss statements, 
correspondence and other documents of the Corporation. The signature of the 
President may be in facsimile wherever appropriate; 
f) 
To represent the Corporation, either personally or through counsel, in all legal 
proceedings or actions; 
g) 
To delegate, with the prior approval of the Board of Directors, his power to 
represent the Corporation, as provided in subsection (d) and (f) of this section, to 
other officers of the Corporations; and 
h) 
To exercise such other powers as may be vested in him by the Board. 
 
The President shall be assisted by a Vice President and other officials whose 
appointment and removal for cause shall be approved and whose salary shall be fixed by 
the Board of Directors upon recommendation of the President of the Corporation. During 
the absence or temporary incapacity of the President, or in case a vacancy or permanent 
incapacity and pending the appointment of a new President of the Corporation by the 
President of the Philippines, the Vice President shall act as President and discharge the 
duties and responsibilities thereof. 
 
SECTION 7. Definition of Terms as Used in this Act. –  
a) 
Board of Directors means the Board of Directors of the Corporation. 
b) 
Cooperative shall be synonymous and interchangeable and shall include other 


 
 
types and categories of cooperatives that encourages and accept savings 
among its members and the general public. 
c) 
Receiver includes a receiver, commission, person or other agency charged by 
law with the duty to take charge of the assets and liabilities 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 the deposits of which 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 Cooperative Development Authority rules and regulations, R.A. 
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 liabilities of 
the cooperative. 
The Corporation shall not pay deposit insurance for the following accounts 
or transaction, whether denominated, documented, recorded or booked as 
deposit by 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 Cooperative Development Authority, 


 
 
after due notice and hearing, and publication of a cease and desist order 
issued by the Corporation against such deposit accounts or transactions; and 
4. Deposits that are determined to be the proceeds of an unlawful activity as 
defined under Republic Act 9160, as amended. 
 
g)  Insured Deposit means the amount due to any bona fide depositor for legitimate 
deposits in an insured cooperative net of any obligation of the 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 the 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 Three Hundred Thousand Pesos (P300,000.00): 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, finally. 
That, in case of a condition that threatens the monetary and financial stability of 
the financial system that may have systematic 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 meeting called for the purpose and chaired by the Secretary of 
Finance, subject to the approval of the President of the Philippines. 
h)  Transfer Deposit means deposit in an insured cooperative made available to a 
depositor by the Corporation as payment of insured deposit of such depositor in 
a closed cooperative and assumed by another insured cooperative. 
 
SECTION 8. Deposit Insurance Coverage. – The deposit liabilities of any cooperative, 
which is engaged in the business of receiving deposits as herein defined on the effective 
date of this Act, or which thereafter may engage in the business of receiving deposits, 
shall be insured with the Corporation. 
 
SECTION 9. Assessment of Member Cooperative. –  
a) The assessment rate shall be determined by the Board of Directors: Provided, That 
the assessment rate shall not exceed one-fifth (1/5) of one percent (1%) per annum. 
The semi-annual assessment for each insured cooperative shall be in the amount 
of the product of one-half (1/2) the assessment rate multiplied by the assessment 
base but in no case shall it be less than Three Thousand pesos (P3,000.00). The 
assessment base shall be the amount of the liability of the cooperative for deposits 
as defined under subsection (f) of section 7 without any deduction for indebtedness 
of depositors. 
b) The semi-annual assessment base for one semi-annual period shall be the average of 
the assessment base of the cooperative as of the close of business on March 
thirty-one and June thirty and the semi-annual assessment base for the other 
semi-annual period shall be the average of the assessment base or the cooperative 
savings deposit as of the close of business on September thirty and December 
thirty-one: Provided, That when any of said days is a non-business day or legal 
holiday, either national or provincial, the preceding business day shall be used. The 
certified statements required to be filed with the Corporation under subsections (b) 


 
 
and (c) of this section shall be in such form and set forth such supporting 
information as the Board of Directors shall prescribe. The assessment payments 
required from the insured cooperatives under 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 months ending on the 
preceding June thirty the amount of the assessment base and the amount of the 
semi-armual 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 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 thirty 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 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 in 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 Corporation 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 have been brought within five 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. 
 
SECTION 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 Cooperative Development Authority to secure 
corrective action thereon. If no such corrective action is taken by the Cooperative 
Development Authority 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 desist order, 
and require 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 not 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 Cooperative Development 
Authority 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. 
 
SECTION 11. Powers, Responsibilities, and Prohibitions. –  
a) The Board of Directors shall administer the affairs of the Corporation fairly and 
impartially and without discrimination. 
b) The Board of Directors shall appoint examiners who shall have 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 the Board of Directors shall have the power on 
behalf of the Corporation to conduct investigations on frauds, irregularities and 
anomalies in relation to saving transaction committed in cooperatives, based on 
reports of examination conducted by the Corporation and Cooperative 
Development Authority or complaints from depositors or from other government 
agency. Each investigator shall have the power to administer oaths, and examine 
and take and preserve the testimony of any person 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 days, as the Board of Directors may require, shall be subject 
to a penalty of not more than P100 for each day of such failure recoverable by the 
Corporation for its use. 
d) The Corporation shall have access to reports of examination made by, and reports of 
condition made to the Cooperative Development Authority 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 
Cooperative Development Authority and the Corporation. Compliance with such 
standards shall be duly certified by the Chairman/President of the cooperative or 
the compliance officer: 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 or business of any such cooperative. 
This prohibition shall not apply to the giving of information 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 proceeding, to which such 
director, officer, employee or agent is made a party 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 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, finally 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 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. 
Notwithstanding the provisions of this Section and Sections 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. 
 
SECTION 12. Receivership and Liquidation. –  
a) The provisions of other laws, general or special, to the contrary notwithstanding, 
whenever it shall be appropriate for the Cooperative Development Authority to 
appoint a receiver of any cooperative pursuant to existing laws, the Cooperative 
Development Authority 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 
Cooperation 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 such 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; 
3. 
suspend or terminate the employment of officers and employees of the closed 
cooperative: Provided, that payment of separation pay or benefits shall be 
made only after the closed cooperative has been placed under liquidation and 
that such payment shall be made from available funds of the cooperative after 
deducting reasonable expenses for receivership and liquidation; 
4. 
pay accrued utilities, rentals and salaries of personnel of the closed 
cooperative for a period not exceeding three (3) months, from available funds 
of the closed cooperative; 
5. 
collect loans and other claims of the closed cooperative, and for the purpose, 
modify, compromise or restructure the terms and conditions of such loans or 
claims as may be deemed advantageous to the interest of the creditors and, 
claimants of the closed cooperative; 
6. 
hire or retain private counsels as may be necessary;  
7. 
borrow or obtain a loan, or mortgage, pledge or encumber any asset of the 
closed cooperative, when necessary, to preserve or prevent dissipation of the 


 
 
assets, or to redeem foreclosed assets of the closed cooperative, or to 
minimize losses to the depositors and creditors; 
8. 
if the stipulated interest on deposits is unusually high compared with the 
prevailing applicable interest rate, the Corporation as receiver may exercise 
such powers which may include a reduction of the interest rate to a 
reasonable rate: Provided, that any modification or reduction shall apply only 
to unpaid interest; and 
9. 
exercise such other powers as are inherent and necessary for the effective 
discharge of the duties of the Corporation as a receiver. 
 
The Board of Directors shall adopt such policies and guidelines as may be necessary for 
the performance of the above powers by personnel, deputies and agents of the 
Corporation. 
 
SECTION 13. Court Fees and Other Fees. – In all cases or actions filed by the 
Corporation as receiver for the recovery of, or involving any assets of the closed 
cooperative, payment of all docket and other court fees shall be free.  
 
SECTION 14. Receivership Expenses. – Before any distribution of the assets of the 
closed cooperative in accordance with the preference established by Philippine 
Cooperative Code and other laws, the Corporation shall periodically charge against said 
assets reasonable receivership expenses and subject to approval by the proper court, 
reasonable liquidation expenses, it has 
incurred as part of the cost of 
receivership/liquidation proceedings and collect payment therefore from available 
assets. 
After the payment of all liabilities and claims against the closed cooperative, the 
Corporation shall pay any surplus dividends at the legal rate of interest from date of 
takeover to date of distribution, to creditors and claimants of the closed cooperative in 
accordance with legal priority before distribution to the shareholders of the closed 
cooperative.  
 


 
 
SECTION 15. Permanent Insurance Funds. – To carry out the purposes of this Act, the 
permanent insurance fund shall be Five Hundred million pesos (P500,000,000.00). 
The Deposit Insurance Fund shall be the capital account of the Corporation and 
shall principally consist of the following: (i) the Permanent Insurance Fund; (ii) 
assessment collection, subject to the charges enumerated in Section 6 (d); (iii) reserves 
for insurance and financial assistance losses; and (iv) retained earnings: Provided, That 
the reserves for insurance and financial assistance losses and retained earnings shall be 
maintained at a reasonable level to ensure capital adequacy: Provided, further, That the 
Corporation may, within two (2) years from the passage of this Act, and every five (5) 
years thereafter, conduct a study on the need to adjust the amount of the Permanent 
Insurance Fund, insurance cover, assessment rate and assessment base, and thereafter 
make the necessary recommendation to Congress. For this purpose, the Corporation 
may hire the services of actuarial consultants to determine, among others, the 
affordability of assessment rates, analysis and evaluation of insurance risk, and 
advisability of imposing varying assessment rates or insurance cover of different 
cooperatives.  
 
SECTION 16. Payment of Insured Deposits. – Whenever an insured cooperative shall 
have been closed by the Cooperative Development Authority, payment of the insured 
deposits on such closed cooperative shall be made by the Corporation as soon as 
possible either (1) by cash or (2) by making available to each depositor a transferred 
deposit in another insured cooperative in an amount equal to insured deposit of such 
depositor. Provided, however, That the Corporation, in its discretion, may require proof of 
claims to be filed before paying the insured deposits, and that in any case where the 
Corporation in not satisfied as to the viability of a claim for an insured deposit, it may 
require final determination of a court of competent jurisdiction before paying such claim: 
Provided, further, That failure to settle the claim, within six (6) months from the date of 
filing of claim for insured deposit, where such failure was due to grave abuse of 
discretion, gross negligence, bad faith, or malice, shall, upon conviction, subject to 
directors, officers or employees of the Corporation responsible for the delay, to 
imprisonment from six (6) months to one (1) year: Provided, furthermore, That the period 


 
 
shall not apply if the validity of the claim requires the resolution of issues of facts and or 
law by another office, body or agency including the case mentioned in the first proviso or 
by the Corporation together with such other office, body or agency. 
 
SECTION 17. Subrogation. – The Corporation upon payment of any depositor, shall be 
subrogated to all rights of the depositor against the closed cooperative to the extent of 
such payment. Such subrogation shall include the right on the part of the Corporation to 
receive the same payments from the proceeds of the assets of such closed cooperative 
and recoveries on account of cooperatives debtors as would have been payable to the 
depositor on a claim for the insured deposits but, such depositor shall retain his claim for 
any uninsured portion of his deposit. All payments by the Corporation of insured deposits 
in closed cooperatives partake of the nature of public funds, and as such, must be 
considered a preferred credit similar to taxes due to the national government in the order 
of preference under Article 2244 of the New Civil Code. 
 
SECTION 18. Determination of Insured Deposits. –  
a) The Corporation shall commence the determination of insure deposits due the 
depositors of a closed cooperative upon its actual takeover of the closed 
cooperative. The Corporation shall give notice to the 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 closed 
cooperative would 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 cooperative by the receiver, or does 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.  
 
SECTION 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 obligations 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 of an insured cooperative may 
also be exercised in the case of a closed insured cooperative if the Corporation finds that 
the resumption of operations of such cooperative is vital to the interests of the community: 
Provided, That the reopening and resumption of operations of the closed cooperative 
shall be subject to the prior approval of the Cooperative Development Authority. 
The Corporation may provide any corporation acquiring control of, merging or 
consolidating with or acquiring the assets of an insured cooperative danger of closing in 
order to prevent such closing or of a closed insured cooperative in order to restore to 
normal operations, with such financial assistance as it could provide an insured 
cooperative under this subsection: Provided, That, within sixty (60) days from date of 
assistance the Corporation shall submit a report thereof to the Cooperative Development 
Authority. 
The Corporation, prior to the exercise of the powers under this section, shall 
determine that actual payoff and liquidation thereof will be more expensive than the 
exercise of this power: Provided, That when the Cooperative Development Authority has 
determined that there are systemic consequences of a probable failure or closure of an 
insured cooperative, the Corporation may grant financial assistance to such insured 
cooperative in such amount as may be necessary to prevent its failure or closure and/or 


 
 
restore the insured cooperative to viable operations, under such terms and conditions as 
may be deemed necessary by the Board of Directors, subject to concurrence by the 
Cooperative Development Authority and without additional cost to the Deposit Insurance 
Fund.  
 
SECTION 20. Authority to Borrow. – The Corporation is authorized to borrow from the 
Bangko Sentral ng Pilipinas and the Bangko Sentral is authorized to lend the 
Corporation ,on such terms as may be agreed upon by the Corporation and the Bangko 
Sentral, such funds as in the judgement of the Board of Directors of the Corporation are 
from time to time required for insurance purpose and financial assistance provided for in 
Section 19 (d) of this Act: Provided, That any such loan as may be granted by the 
Bangko Sentral shall be consistent with monetary policy; Provided, further, That the rate 
of interest thereon shall be fixed by the Monetary Board but shall not exceed the treasury 
bill rate. 
When in judgement of the Board of Directors the funds of the Corporation are not 
sufficient to provide for an emergency or urgent need to attain the purposes of this Act, 
the Corporation is likewise authorized to borrow money, obtain loans or arrange credit 
lines or other credit accommodations from any bank designated as depository or fiscal 
agent of the Philippine Government: Provided, that such loan shall be short-term 
duration. 
 
SECTION 21. Reports and Audit. –  
a) The Corporation shall annually make a report of its operations to the Congress as 
soon as practicable after the first day of January of each year. 
b) The financial transactions of the Corporation shall be audited by the Commission on 
Audit in accordance with the principles and procedures applicable to commercial 
corporate transactions and under such rules and regulations as may be prescribed 
by the Commission on Audit, the audit shall be conducted at the place or places 
where accounts of the Corporation are normally kept. Except as to matters relating 
to the function of the Corporation as receiver which shall be subject to visitorial 
audit only, the representatives of the Commission on Audit shall have access to all 


 
 
books, accounts, records, reports, files and all other papers, things, or property 
belongings to or in use by the Corporation pertaining to its financial transactions 
and necessary to facilitate the audit, and they shall be afforded full facilities for 
verifying transactions with the balances or securities held by depositories, fiscal 
agents, and custodians. All such books, accounts, records, reports, files, papers, 
and property of the Corporation shall remain in possession and custody of the 
Corporation. 
c) A report of the Audit for each fiscal year ending on June 30 shall be made by the 
Auditor General to the Congress not later than January 15 following the close of 
such fiscal year. On or before December 15 following such fiscal year, the Auditor 
General shall furnish the Corporation a short form report showing the financial 
position of the Corporation at the close of fiscal year. The report to Congress shall 
set forth the scope of the audit and shall include a statement of assets and liabilities 
and surplus or deficit; a statement of surplus or deficit analysis; a statement of 
income and expenses; a statement of sources and application of funds 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. 
 
SECTION 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 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 Cooperative 
Development Authority, 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 cooperative 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 cooperative. 
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 refusal 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 prison mayor or 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, employee 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; 
5. 
splitting of deposits or creation of fictitious loans or deposit accounts. Splitting 
of deposits occurs whenever a deposit account with an outstanding balance of 
more than the statutory maximum amount of insured deposit maintained 
under the name of natural or juridical persons is broken down and transferred 
in two (2) or more accounts in the name/s of natural or juridical persons or 
entities who have no beneficial ownership on transferred deposits in their 
names within one hundred twenty (120) days immediately preceding or during 
a cooperative declared holiday, or immediately preceding a closure order 
issued by the Cooperative Development Authority for the purpose of availing 
of the maximum deposit insurance coverage; 
6. 
refusal to allow the Corporation to take over a closed cooperative placed 
under its receivership or obstructing such action of the Corporation; 
7. 
refusal to turn over or destroying or tampering cooperative records; 
8. 
fraudulent disposal, transfer or concealment of any assets, property or liability 
of the closed cooperative under the receivership of the Corporation; 
9. 
violation of, or causing any person to violate, the exemption from garnishment, 
levy, attachment or execution. 
10. Any willful failure ore refusal to comply with, or violation of any provision of this 
Act, or commission of any other irregularities, and/or conducting business in 
an unsafe or unsound manner as may be determined by the Board of 
Directors. 
 
The Board of Directors is hereby authorized to impose administrative fines for any act or 


 
 
omission enumerated in the preceding subsection, and for violation of any order, 
instruction, rule or regulation issued by the Corporation, against a cooperative and/or any 
of its directors, officers or agents responsible for such act, omission, or violation, in 
amounts as it may be determined to be appropriate, but in no case to exceed three times 
the amount of the damages or costs caused by the transaction for each day that the 
violation subsists, taking into consideration the attendant circumstances, such as the 
nature and gravity of the violation or irregularity and the assets of the cooperative. 
 
SECTION 23. Separability Clause. – If any provision or section of this Act or the 
application thereof to any person or circumstances is held invalid, the other provisions or 
sections of this Act, in the application of such provision or section to other persons or 
circumstances, shall not be affected thereby. 
 
SECTION 24. Repealing Clause. – All acts or parts of acts and executive orders, 
administrative orders, or parts thereof which are inconsistent with the provisions of this 
Act are hereby repealed.  
 
SECTION 25. Effectivity Clause. – This Act shall take effect fifteen (15) days following 
the completion of its publication in the Official Gazette or in two (2) newspapers of 
general circulation.  
 
Approved,