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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

2416

House Bill No.

Introduced by Representative FELIMON M. ESPARES

AN ACT
PROVIDING FOR THE REVISED COOPERATIVE CODE
OF THE PHILIPPINES

EXPLANATORY NOTE

This bill seeks to revise Republic Act No. 9520, otherwise known as Philippine
Cooperative Code of 2008 to further strengthen cooperatives in the country.

The role of cooperatives in socio-economic development and nation building is
enshrined in the different provisions of our Constitution. Of particular note is Section 16,
Article XII of the 1987 Constitution, which mandate. Congress to create an agency to
promote the viability and growth of cooperatives as instruments of social justice and
economic development.

The contribution of cooperatives in promoting social justice and economic
development cannot be denied. The more than 26,000 cooperatives nationwide serving
more than 14 million members and employing some 530,000 individuals are testaments
to the importance of cooperatives in our country. As partners of the State in socio-
economic development and nation building, it is imperative that the State grants
essential privileges to cooperatives to ensure their sustainability, growth, and
development.

This bill proposes to grant the most needed privilege of cooperatives - tax
exemption, among others. Under Section 61 of Republic Act No. 9520, otherwise known
as the "Philippine Cooperafive Code of 2008" only cooperatives dealing with non-
members and with accumulated reserves and undivided net earnings of not more than
‘Ten million pesos are exempt from paying taxes. Cooperatives with accumulated reserves
and undivided net earnings of more than Ten million pesos are still required to pay
cettain taxes. This proposal aims to remove the Ten million pesos threshold.


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‘The tax exemption and other policies proposed in this measure will surely bring
the needed development not only of the cooperatives and their members but also of the
community where they operate.

The Corona virus pandemic greatly affected our county, and its socio-economic
impact is truly devastating to our people and the country as a whole. A significant number
of workers have lost their jobs. It is also in this light that there is a need to continuously
develop and strengthen cooperatives so that, or at least, they will be able to provide
economic relief to their members.

This measure also intends to improve the policy on the use of the cooperatives’
reserve fund, community development fund, and optional fund, Under this billf
cooperatives may use the reserve fund for any loss that it may incur due to pandemic,
state of emergencies and force majeure, By allowing such use, the cooperatives are
empowered to meet any unexpected financial obligation, which is actually the true
purpose of a reserve fund.

‘The existing use of community development fund is limited to the community
where the cooperative operates. This proposed measure removes such limitation- but the
area of operation is still the priority of the cooperative. This recommendation authorizes
cooperatives to help the community outside their areas of operation.

The use of the optional fund is effectively expanded and made dear that the same
may be used for the benefit of the members and employees of cooperatives during an
exceptional circumstance such as pandemic or crisis.

The other features of this bill are to increase the required paid-up capital and
shorten the period of application for registration. The cooperatives are also guided by this
proposal of the proper remedy when the Cooperative Development Authority issues
dissolution orders against them.

The cooperatives are indispensable partners of the government in the
socioeconomic development of the country, and their contributions are undeniable. It is
therefore right and just to continue to support the cooperatives.

This bill was approved by the House of Representatives during 19" Congress filed
Representative Felimon M. Espares with original House Bill no. 1333.

Therefore, the immediate passage of this bill is earnestly sought to strengthen
the Cooperative Code of the Philippines.

FELIM T iS


© OVauawn

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Republic of the Philippines

HOUSE OF REPRESENTATIN ES

Quezon City. Metro Manila

TWENTIETH CONGRESS,

First Regular Session

2416

House Bill No.

Introduced by Representative |

AN ACT.
PROVIDING FOR THE REVISED COOP!
OF THE PHILIPPINES:

i it enacted by the Senate and House af Representatives «
assembled:

CHAPTER |
GENERAL PROVISIONS,

SEC. 1. Title. - ‘This Act shall be known as the
‘he Philippines.

SEC. 2. Declaration of Policy. - It is the polis
creation and growth of cooperatives as a practical +
reliance and harnessing people power towards th
development and social justice. The State shall enco:
undertake the actual formation and organization of cc
an atmosphere that is conducive to the growth
cooperatives.

‘Towards this end. the State shall, througi
subdivisions. instrumentalities. and agencies of the
conduct of cooperatives and support their growth and +
with the private sector. ‘The State shall also ensure
financial a nee, and other services to enable the +
siable and. responsive economic enterprises towa
movement, free from conditions that infringe upon the

ist

cooperatives,

LIMON ¥:. ESPARE

RATIVE CODE

the Philippines in| mgress

Revised Cooperati. 2 Code

of the St ite to fo ter the
shicle for promotivg self
attainment. of eéonomic
rage the private s-ctor to
peratives ind shai create
xd development 0" these

the different branches
government. regulate the
evelopment in pari aership
» provision of techn cal and
operatives to develop into
ds a strong cooperative
objectives and cha: acter of


Further. the St

cooper

promotion, organ

services

SEC.

a.

b.

e recognizes the principle of sub
ive sector initiates and fosters. within their
tion, training. information: gathe:
with government assistance if necessary

. General Concepts. — As used in this Act

A cooperative is an autonomous and duly

persons with a common bond of interest wh
together to achieve their social. economic.
aspirations by making equitable contribution
patronizing their products and ser
risks and benefits of the undertaking in acc
accepted cooperative principles

ices. and ac

Cooperative principles =
ordance with Filipino cultu
following universally accepted principles of co.

Every cooperative st
. good values

1) Voluntary and Open Membership =(
organizations. open to all persons ab
willing to accept the responsibilitic
gender. social, racial, cultural
discrimination.

2) Democratic. Member Control = Cov
organizations that are controlled
actively participate in. setting th
decisions, Men and women serving
directors or officers are accountab!
primary cooper:
member, one vote, Cooper
in the same democratic manner

tives, members have
tives al

3) Member Economic Participation
equitably to, and democratically cc
cooperative. At least part of tha
property of the cooperative. ‘Th
compensation or limited interest. if
and paid as a condition of mem|
savings for any or all of the followin
cooperative by setting up reserves. p
be indivisible: benefitting membe

patronage of the cooperative's busir

activities approved by the members

idiarity under whi b the
own ranks. coop: ative
ng, audit and sv pport

egistered association of
have voluntarily ‘oined
ind cultural needs and
to the capital rewaired
epting a fair share of the
srdance with univ: rsally

all conduc: its aff: irs in
and experience. avd the
veration

soperatives: are voluntary
touse their servic s and
of membership, w:thout
political or re‘igious

veratives are dem. cratic
by their member who
ir policies and waking
5 clected

to the members! ip. In

represent itives

equal votiag right: of one
ther levels are ory mized

= Members con ribute
atrol. the capital o their
capital is the common

shall receive ‘imited
iny, on capital sub» cribed
rship. Members « ‘locate
purposes: develo ng the
rtof whick should t least
sin proportion t— their
‘ss; and, supportin. other
ip.


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‘© autone mous.
© they

1) Autonomy and Independence ~ Coop ratives 3
self-help organizations controlled b_ their members.
enter into agreements with other organizations. inc uding
government, or raise capital from es ernal sources, the. shall
do so on terms that ensure democrat’ - control of their members
and maintain their cooperative auto: omy

5) Education, Training, and Informa ‘on ~ Cooperative- shall
provide education and training for t)eir members, elect-d and
appointed representatives. manager and employees, -9 that
they can contribute effectively and efficently 61 the
development of their cooperatives

6) Cooperation Among Cooperatives ~ Cooperatives: serve their
members most effectively and st engthen the coop rative
movement by working together through local, netional.
regional and international structure

5) Concern for Community « Cooperati os work for the
sustainable development of their co: munities through
policies approved by their members

6 Cooperative Viilues = Cooperatives are based on the valies of se help,
self-responsibility. democracy. equality, equity, snd sobdarity,
Cooperative members believe in the ethi
social responsibility and caring for others

AL lues of honesty, ops nness,

4. Definition of Terms. — As used in this ct

a. Area of Operation refers to the place wher» the cooperative operates
and conducts its business. as provided for it its Articles of Coo eration
and By-laws

b. Articles of Cooperation refers to the doci ment registered with the

Cooperative Development Authority, inclu fing its amendmen’s, that
defines and regulates the relations betwe: the cooperative ind the
Si

\utiorily refers to the Cooperative Develo, ment Authority

d. Board of Directors refers to the collegia body responsible for the
stratogi¢ planning. direction-setting, and j oliey-formulation «tivities
of the cooperative



he

m

n.

Branch-lite unit veters to a cooperative bi ik that performs ‘mited
banking activities and records its transactio.s in the books of the head
office or the branch to which it is annexed:

By-laws vefors to the document registered wi 4 the Authority. including
its amendments. that defines and regulat-s the operations of the
cooperative and governs the relations betwen the cooperative «nd its
members and among themselves:

Clustering refers to the grouping togeth: » of cooperatives ander
finance, marketing, public utilities. ecucation and ads cacy
agriculture, and human services:

Committers refer to the mandatory comriittees under this Code
entrusted with specific functions and respo sibilities and such other
committees that the Board of Directors lem necessary fe the
governance of the business affairs of the coo, erative:

Compensation refers to a broad term that in tude remuneration given
for services rendered, such as salary paid reg: larly. or as defined under
Art, 97 of the Labor Code of the Philippines:

Cooperative Union refers to a cooperatis whose member. are
registered cooperatives. federations, or bot! organized purpos ly to
represent the interest and welfare of all ty os of cooperatives t the
city, provincial, regional, national. and sector iI levels:

Cooperatives values refer to the values of se! -help, self-responsibility
democracy, equality, equity. and solidarit’ Cooperative members
believe in the ethical values of honesty. openi oss. social responsi ility
and caring for others:

Education volors to the teaching and unde standing of coope: ative
Principles and Values and knowing how to soply them in the dy
day operations of a co-operative business, It) also concerned with the
wider education offered to members for thei: social developmen? and
social impact:

Federation of Cooperatives shall refer to a cove
which are primary and/or secondary cooperates, organized to conduct
business. undertake enabling or capacity building. activities and
delegated supervision in support of its memer cooperatives, snd its
exercise of self-regulation among its member «, at the municipal. city
provincial. regional, and national level:

ive, the memb srs of

General Assembly refers to the full membersh p of the cooperative duly
assembled physically, via videoconferencing. «r both, for ‘he purpose of


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exercising
to cooper
and By-

II the rights and performing all he obligations pertaining
ives, as provided by this Code, it Articles of Cooper ation
jaws

Honorarium vefers to the token of appreciat_m granted for the -xpert
service rendered in the specific field that does not
receive compensation

Tnvesiment refers to equity participation i: any enterprise f
organized or existing under the laws of the P ilippinc

Interest on Share Capital vefors to the amou: | earned by the me-nbers
on their contribution in the cooperative. The interest on share + apital
and the patronage refund shall be detern ined at tie end of the
calendar year after the net savings shall cave been distribu ed in
accordance with the Articles of Cooperatio. and By-Liws or ty the
Board of Directors

Milinted wit and
nd who ¢ membership consists of

Laboratory Cooperative refers to a cooper: tive i
registered by a pri
minors:

ary cooperative.

Loral Development Hubs (LDH) refer to fai ming zones or tra sport
infrastructure. which are generally far from {ormal markets. anc serve
a minimum of one hundred (100) farmers. lin sing them to buyer. who
may be. among others, traders, processors, ai d export companii

Member vefers to a person either natural o: juridical, who has been
approved and admitted by the Board of Dir ctors of the coope: ative.
federation. or union, after undergoing the Pr Membership Edu: ation
Seminar and has vowed to adhere to the Artic es of Cooperation wad its
By-laws. Members shall be classified as egular or associs\e, as
qualified by the cooperative:

Member Entitled to Vote vefors toa regular rember who has cou plied
with all the membership requirements of the cooperative. has fu filled
all of their duties and obligations, and possesses none «* the
disqualifications as provided by the articles 6 cooperation and by-laws
declared by the Board 0 Directors

of the cooperative, a

Net Income is a cooperative's collection tor, transactions with non-
members minus the expenses incurred in the services rendered «
of goods sold to non-members during an acco: ating perind:

cost

Net Savings is a cooperative's collections from transactions with
members minus the expenses incurred aft or providing servi os or
products during an accounting period. Ne savings is simp! the


cooperative's excess collection or savings to b returned to meml ors
dividends. Patronage Refund, and statutory ‘unds as listed in
97 of this Act:

x. Patronage Refund refers to the paymen’ to the members of
percentage or portion of the amount availec of. the interest on loans
paid, or other services availed from the cooj erative. ‘The amouist will
be determined at the end of the fiscal perio! after the distribu: ion of
the net savings. The percentage of the alloc: ‘ion will be in acco: dance
With the provisions in its Articles of Cooperat on, the By ;
Board of Dircetors. The formula and basis }or the computation of the
rate of patronage refund will be determined »y the Authority

y. Per Diem vefers to the allowance given as reimbursement fo:

expenses incurred in the performance of the duties

2. Performance: Audit refers to an audit cond:cted by the Authority on
the efficiency, efficacy. and effectiveness o! the cooperative’s overall
performance as a whole, its management ard officers, and its various
responsibility centers as basis for impro\ ing indivilual, teom, or
overall performance, and for objectively informing the voneral
membership of the cooperative on such perfi rmance

Primary Cooperative refers to a coopera ive, registered wih the
Authority. the members of which are naturs. persons:

bb. Registration refers to the operative act grant ng juridical person ality to
proposed cooperative and is evidenced by a 'ertificate of Registration

ce. Representative Assembly vefors to the full membership of a body of
representatives clected by cach of the secte 8, chapters. or dist riets of
the cooperative duly assembled for the p irpose of exercisin s such
powers in accordance with its By-laws:

dd, Reserve Fund refers to an account by the co: perative which is sit aside

tocover unexpected losses, or financial oblig :tions. For purposes of this

‘Act, the said fund can be used as stated in $ ection 97(2) of this et:

Nayon and Munieipal Katipuna, ng mga Semahanz Nayon
refors to pre-cooperative organizations ests lished under Presiential
Decree (PD) No. 175. entitled “St
Movement

ee, Samahan

e hening tae Coo; erative

ff, Secondary Cooperative refers to a cooperat ve, the members 6° which

are primary cooperatives. federations, or w ions



Single-Purpose Cooperative refers to a coo
only one economic activity. exeept one that
allied economic activities:

hh. Share Capital refers to the equitable conti!
cooperative fund. the working capital fund
shall have a par value of at least One Hun
issued as common or preferred shares di
membership with the cooperative:

ii, Sovial Audit refers to an audit conducted to
the cooperative and its ethical performance \
vision. goals, and code of social responsil
whereby it can account for the social perforn
evaluate its impact. on the community

accountable for its decisions and actions to it

ji, Subscription Agreement refors to the docum:
to signify the amount that the member int
cooperative fund:

‘nbsidiary Cooperative rollers to a cooper:itir
members or shareholders come from a part

for any other purpose different from that «

managerial. and financial assistance from
with the rules and regulations of the Author

I. Training refers to developing the practi
employees need to run a cooperative in ace:
ethical business practices and to dem
cooperative business responsibly and transp

mm. Video Conferencing refers to the use of com
audio and video data in order to hold a confi
and among two (2) or more participants: «anc

nn. Worker Beneficiary refers to a natural pers
value as an employee or laborer in an agri
in reform cooperative.

within an agrar'!

CHAPTER IL

PURPOSES AND ORGANIZAT

erative that unde: takes:
is allowee to und: etake

ution of a member ‘0 the
f the cooperative. vhich
tred Pesos (P100.0°) and
pending on the © pe of

ssess the social im) act of
is its stated my ssion,

tity. It is a mech anism
e and
making the coop: rative
= members

ance of 8 © 0pe'

nt execute | by am omber
nds to contribute o the

», all or majority of whose
it cooperative. or

and receives to
he latter, in aces
'y

al skills members and
rdance with effieie yt and
eratically control their
rently:

uter networks to tr asmit

ence or meeting bh. tween

n who ren:lers ser
iltural enterprise «

1ON


1 SEC. 5. Goals and Objectives of a Cooperatii v. -' The pr mary obective
2 of every cooperative is to help improve the quality of lif. of its members, Towards
3 this end, the cooperative shall, among others. aim to:

a. Increase income, savings. investment

4 prod activity, and pure)asing
5 power of its members: and promote amo :g themselves equitable
6 distribution of net savings through masimum «tilization of econor ies of
7 seale, cost sharing and risk-sharing
8
9 b. Provide optimum social and economic benefits 0 its members.

10
a ¢. Providing trainings for its members on the el! cient ways of proc ssing
12 tasks in a cooperative manner:

B
14 d. Propagate best practices. innovative ideas in b siness undertakinys and
15 management through the utilization of new te: nnologic
16
v7 6, Empower the marginalized sector to gain opportunities though
18 education and skills training:

19
20 \ctively collaborate with the government. sther cooperatives and
21 people-oriented organizations to promote cor eratives as apr. ctical
2 means towards sustainable socio-economic dev: lopment
2

24 g. Adopt membership expansion mechanism to + asure the growth f the
25 cooperative movement
%6
7 h. Implement policy guidelines that’ will ensure — transpay

28 accountability. and equitable access to its res urces and service:

29 promote the interests of the members:

30
a1 i, Advance the competitiveness. innovativenes. and. sustainabiliiy of

32 cooperatives in various industries:

33

34 j. Coordinate with other cooperatives through | arning ant inforn: ation

35 exchange (o foster sustainable development
36

37 k, Advocate legal framework and enabling poli ies approy the
38 development of cooperatives:

39

40 1. Be the voice and the institution of the marg-nalized for purposes of

41 promoting people-centered development
42
43 m. Encourage thrift and savings mobilization amo: g the members:

44


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n. Generate funds and extend credit to the me: bers for producti: and
provident purposes:

o. Encourage among members systematic produc ion and marketing
p. Provide goods and services and other necessiti s to the members
q. Develop expertise and skills among its members:

Acquire lands and provide housing benefits for the members;

s. Provide insurance programs to cover the risk of financial losses in the

operations of

cooperative:

t. Promote and advance the ceonomic. social. an: educational status of the

members

u. Establish, own, lease, or operate coopers tive banks, cooperative
wholesale and retail complexes, insurance. « ricultural and industrial
processing enterprises. and public markets

\. Coordinate and facilitate the activities of coop. ratives

Ww. Advocate for the cause of the cooperative mov: ment

x. Ensure the viability of cooperatives throug the utilzation of new
technologies:

y. Encourage and promote self-help or self-emy oyment as an eng ne for
economic growth and poverty alleviation:

of the

Adopt such other plans which may help (ster the welf
members. their families, and the community: ind

1a. Undertake any activity stated in the Artick s of Cooperation aad By-
laws of the cooperative

SEC. 6. Cooperatives Not in Restraint of T ade. + Nc cooperssive or
method or act thereof which complies with this Code sh ill be deemed a con -piracy
ov combination in restraint of trade or an illegal monop: ly. or an attempt t lessen
rbitrarily in violation of any | ows of the Philippi

competition or fix prices

This notwithstanding. fair competition bet ven coyperativ.s is
paramount in their collective growth. Cooperatives sha! support and foste: a level
plaving field in their industries. Accordingly. Sections (7. 21 and U1 of this Code



nw

shall be in consonance with Republic Act (R.A) No. 1066". otherwise known 1s the
Philippine Competition Act

SEC. 7. Cooperative Powers and Capacities. A cooperative re}

stered

under this Code shall have the following powers, rights nd capacities:

b.

dd.

h

‘To the exclusive use of its registered name.

‘To sue and be sued:
Of succession:

‘To amend its Articles of Cooperation in accord: nce with the provis:ons of
this Code:

‘Yo adopt By-laws not contrary to law. morals. « “public policy. and smend
or repeal the same in accordance with this Co:

To purchase. receive, take or grant, hold, © avey, sell. lease, sledge
mortgage, or otherwise deal with such real an: personal property as the
transaction of the lawful affairs of the cooper itive may reasonaliy and
necessarily require. subject to the limitations yreseribed by law «ad the
Constitution:

son

any other

‘To enter into joint venture agreement and | artnershij . or
commercial activity with other cooperatives

To enter into division. merger or consolidation as provided in thi Code:

m subsidiary cooperatives and join feds vations, unions. or Jredit

ty Fund Cooperatives. as provided in this Code:

‘Vo avail of loans, be entitled to credit, and. seept and receive rants.
donations, and assistance from foreign and ds mestic sources, sui ject (0
the conditions of the loans. credits, grants, di rations or assistance (hat
must not undermine the autonomy of the coo) -rative:

‘Yo avail of preferential rights granted to cov veratives under R-. 7160.
otherwise known as the “Local vernment “ode of 1991" an. other:
laws, particularly the grant of franchises (o e-‘ablish, construct. .perate
and maintain ferries, wharves. markets or »iaughterhcuses an: lease
public utilities. including access to extens on and on-site re search
services and facilities related to agriculture ad fishery wetivities

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1. To establish, own, and operate schools in ai levels of the edy-ation
system, subject to the rules and regulations of the Department of
Education, Commission on Higher Education. and Technical Edu ation
and Skills Development Authority

m. To operate branch, satellite, and liaison ofices within its area of
operation, subject to the rules and regulatica by the Authorit: . ‘The
Authority and the sector shall issue rules re zarding the creation and

nch, satellite, and liaison offic: s of cooperatives:

n. ‘To provide training for their officers sand members for con inued
development and personal improvem at

If a cooperative is unable to provide trainin: for its members. 1 may
engage the services of a federation or union, fovernment agenci -s and
experts from the private sector are authorized to assist nthe
organization, training. and development’ a
members if the cooperative wishes to do so. Lr this reg:
institutions, and experts
‘Training Service Providers by the Authority. / »ovided, That goverament
agencies and experts from the private sector ste authorized to assist in
the organization, training. and developmen’ of a cooperative ond its
members, in coordination with federations an. unions; and

cooperative vad its
rl, cooper:itives

rom the private se ‘or shall be acered:ted as

o. To exer

ise such other powers #1
to carry out its purposes stated

nted in this ‘ode as shall be ne: essary
n its Articles of Coopera‘ion.

SEC. 8. Organizing a Primary Cooperative. - At least fifte-n (15)
natural persons who are Filipino citizens, of legal age having a common sond of
interest, and are residing or working in the intend: | area of operation, may
organize a primary cooperative under this Code, ‘The ¢: sperators shall att. ad and
complete a Pro-Registration Seminar (PRS) as a prerec sisite for registration. The
details and requisites of the PRS must be included in ths Implemeating Ruies and
Regulations of this Code

Every group of individuals or cooperatives inter ling to form a coop
under this Code shall submit to the Authority a gen-ral statement des ribing.
among others the structure and purposes of the prop: sed cooperative, ay d shall
also submit an cconomie survey. indicating therein the area of operation. he size
of membership. and other pertinent data in a format p: vided by the Authority.

No primary cooperative, except agricultural coop ratives, shall be or-anized
as a multi-purpose cooperative unless it has been in oj eration for at least two (2)

a


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cooper

and shall
ives as prescribed by the Authority

ve complied with the minimum requi:

In order (o encourage cooperativism among the you

shall organ

cooperative shi
through or with the supervision of its guardian cooper

ca laboratory cooperative as defined unde
II have all the rights. privileges, and dutic
ai

by special guidelines to be promulgated by the Authorits

eC.

sperative sector

Mandatory Personnel of the Coopes

shall have a General Manager and a Bookkeeper to be ai

SEC

under this Code shall have limited

10. Liability of the Cooperative. — \ c

bility or only up :

and members’ share capital contribution

SE

perpetu

the Certifi

IL. Term of existence of cooperative. -

existence from the date of registration unless

© of Registration is cancelled for reasons |

and its Implementing Rules and Regulations

SEC.
registration

2. Articles of Cooperation. « All primary
shall present to the Authority the Certif

Seminar and the Articles of Cooperation. signed

acknowledged by them before a notary public. Incas
insurance cooperatives. federations, or unions. the Artic
he acknowledged by its Chairpersons and Cooperative Sv

public, ‘The

b.

A

\rticles of Cooperation shall contain the foll:

ame of the cooperative, which shall includ
“Coop”. “Koop”, or “Kooperatiba” and specify

Purpose or purposes and the economic
cooperative is to be registered:

Powers and capacities:

Area of operation, the postal address of its
official electronic mail address of the cooper

Names, nationality, and the postal addresse

Common bond of member:

hip.

List of names of the directors:

sments for multi-ps-rpose

th, a primary coopeative
this Code. .\ Jabos atory
sof a regular coopes ative.
e, and shall be go. orned
in consultation wich the

tive. - All cooper itives
thorized to operat.

yperative culy regi tered
>the extent of its ssets

\ cooperat ve shall have
voluntarily dissols od or
rovided under this Code

ooperatives applying for
ate of Pro-Regist: ation
v all cooperators and
» of cooperative b inks.
es of Cooperation shall
retaries before a 1 stary
wing provisions:

the word ' Coopers ive".
the type of coopers ive:

ctivities for whieh the

>rincipal cflice, an} the
tive:

of the cooverators

12


ory aneene

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bh. Amount of authorized. subscribed, and p sid-up share capitol, the
number of shares. and the par-value of eac)) share. and the naines of
the cooperators, except for cooperative univ as:

i, A statement as to whether the cooperative primary or secon: ary

j. Other provisions consistent with this Code or any related law: and

k. Certificate of Authority from the appropri ¢ government ager-y.

SEC. 13. By-Laws. - Every cooperative to be r gistered under thi Code

shall adopt By-laws consistent with the provisions of thi: Code, which shall }e filed
together with the Articles of Cooperation. The B:
wide:

rativ shall

ws of each cooper

a. The qualifications for admission to membersh 9:

b. ‘The equitable contribution or interest to be acquired as a cov dition
precedent for the exercise of the right of mem! ership

©. The rights, privileges. duties. responsibilitis, and liabilin»s — of
membership:

d. The circumstances under which membershiy is acquired, main ained,
and terminated, and the procedure to be follo. ed:

©. The conditions under which the transfer of ) share or interest of the
members shall be permitted

{The gener
time. place and manner of calling. convening and conducting m: tings
quorum requirements, voting systems of te General Assembly, the
Board of Directors. committees and the officers, ineludine their
qualifications. disqualifications. powers. dutic s, and responsibilities:

| conduct of the affairs of the coop -rative relative to « genda.

poses for

‘The manner in which the capital may be r-sed and tre pu
which it can be utilized

h. ‘The accounting and auditing systems

i. The manner of contracting loans and | orrowings including the

Jimitations thereof;

j. The allocation and distribution of net saving»

23


ou anewne

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k. ‘The manner of adopting and amending By-law «

1. The institution of a conciliation or mediation m-chanism for the an

settlement of disputes among members. direct: rs. officers and com nittec
members of the cooperative: and

m. Other matters incident to the purposes and ac ivities of te coope? ative.
CHAPTER HII
REGISTRATION

SEC. 14. Requirements for Registration. - Che proposed Arti-les of

Cooperation, By-laws. and such other required docume ats shall Le subnyted in
accordance with the rules and regulations to be prescrit. xd by the Authorits

Except for cooperative unions as described uncer Section 30 hervof, no
cooperative shall be registered unless the Articles of C operation is accompanied
with the bonds of the accountable officers and a sworn s:atement ef the Tr: asurer
showing that at least iwenty-five percent (25°) of the av thorized share cap al has
heen subscribed and at least twenty-five percent (25°s) 6 the total subseripr-on has
been paid

‘The Authority shall initially fix the minimum p..d-up share capita’ in the
Implementing Rules and Regulations of this Code, peri lieally assess the required
paid-up share capital, and may increase or decrea-e it through subsequent
reaulation whenever necessary upon consultation with he cooperstive sector,

‘The Authority may prescribe such other regist
deem necessary

on requirements a it may

SE Registration. - \ cooperative formed and organized unser this
Code acquires juridical personality from the date the Av thority issues a Cer tifieate
of Registration under its official seal, AU application. for regis:ration shall be
finally disposed of by the Authority within a period ol fifteen (17) days from the
filing of the complete documentary requirements, both in form and_ in substance.
otherwise the application is deemed approved. unles» the cause of the selay is
justified as the case may be: Provided. That in case of «denial of the application
for registration, the applicant may file a Motion for Rec snsideraticn within five (6)
days from the receipt of such denial. ‘The Motion for Reconsideration just be
resolved within fifteen (15) days from the filing thereo! An appeal to the | oard of
Directors of the Authority may be filed within fiftee: (15) days from re-eipt of
notice of denial of the Motion for Reconsideration. ‘Te decision of the J'oard of
Directors shall be final and executory but may be elevated to the Court of \ppeals

through a petition for review

14


auaw

oN

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The grounds for denial of the registration sho) be prescribed ia the
Implementing Rules and Regulations of this Code

SEC. 16. Certificate of Registration. - \ Certifiv ate of Registration 'ssued
by the Authority under its official seal shall be cone usive evidence thet the
cooperative thercin mentioned is dul istered unless it is proved thot the
registration thereof has been cancelled

SEC. 17, Amendment of Articles of Cooperation and By-laws. -‘ nless
otherwise prescribed by this Code and for legitimate p»rposes. any provision or
ter stated in the Articles of Cooperation and By-laws may be amended by two-
thirds (5) vote of all the members entitled to vote. pr sent and constitu:ing a
«quorum, without prejudice to the right of the dissenting embers to exereis: their
:ht to withdraw their membership under Section 37 of his Code.

Subject to the guidelines to be issued by the Auti ority, a cooperative. may
opt to amend its Articles of Cooperation and By-laws though a referendun: by a
vote of two-thirds (%) of all the members entitled to vote

Roth the original and amended Articles of Coopera’ ton By-laws shall contain
all the provisions required by law. Amendments shall be sadicated by unders: oring
or otherwise appropriately indicating the change or cha iges made A copy of the
amended Articles of Cooperation or By-laws shall be dw’ certified under o#th by
the Cooperative Sceretary and majority of the directors. stating the fact Uh it the
amendment or amendments to the Articles of Cooperatioa and By-liws have been
cluly approved by the required vote of the members. All arvendments to the Articles
of Cooperation and By-laws shall be submitted to the Av: hority.

An application for amendments shall be deemed #.proved by the Autority
within a period of thirty (0) days from the filing the -eof: Provi fed. Thet the
documentary requirements are complete in form and sui-stance. unless the “ause
is justified

of the del

SEC. 18. Contracts Executed Prior to Resistration and {fects

Thereof. ~ Subject to the execution of a formal writ: n contract made in the
cooperative's name or on its behalf prior to its registration, all conteacts executed
prior to its registration between private persons. andthe

cooperative shall remain valid and binding between ‘he parties insofar as
redounds to the benefit of the cooperative.

SEC. 19. Effects of Failure to Operate or Comply with Conditioas on
istration. - The Certificate of Registration shall be « eemed cancelled and the
‘tive shall be delisted from the registry of coope:atives if the coope ative
ved business activity withi three (3) vears from the

Re

failed to commence its autho
issuance of its Certificate of Registration

15


Wounwne

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SEC. 20. Division of Cooperatives. - \ registe: od cooperative, thr-ugh
resolution approved by a vote of two-thirds (7%) of all the members cntitled ty vote,
present and constituting a quorum, may divide its if into two @) er more
cooperatives. Such division of the cooperative shall be alid: Prot ided, That the
purpose of the division is not to defraud the creditors: | ovided, further, That the
division shall ensure the continuity of the existing g-vernment programs and

projects.

The dissenting members shall have the right 9 exercise their right to
Withdraw their membership pursuant to Section 37 of U is Code.

‘The Authority shall prescribe the rules and regt lations for the division of
the cooperative: Provided, That all the requirements s:¢ forth in this Cod» have
been complied with by the newly-formed cooperatives.

CHAPTER IV

MERGER AND CONSOLIDATION OF COOPERATIVES

SE!

21. Merger or Consolidation of Cooperstives. —

a. Two (2) or more cooperatives may merge o: consolidate into » single
cooperative.

b. No merger or consolidation shall be valid ualess approved by a two-
thirds (5) vote of all the members entit ed to vote, present and
constituting a quorum of each of the constitue it cooperatives ats: parate
General Assembly meetings. ‘The dissenting members shall have the
right to exercise their right to withdraw thei membership pursuant to
Section 37 of this Code.

© ‘The Authority shall issue the guidelines g: verning the proceiure of
merger or consolidation of cooperatives. Th» merger or consohdation
shall be effective upon the issuance by the Avihority of the Certineate of
Merger. or in the case of a consolidation of coo) eratives. # new Ces tificate
of Registration.

SEC, 22. Effects of Merger and Consolid ition. - ‘Ihe merser and
consolidation of cooperatives shall have the following ¢'fects:

a In case of merger of cooperatives, the con tituent cooperatives shall
become a. single cooperative or. in the ease of consolids:ion of

tives, the consolidated cooperative shill be the new coop: rative:

cooper

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b. The single cooperative or the consolidated cou yerative shall poss: ss all
the assets, rights, privileges, immunities, and ‘ranchises and assume all
the liabilities and obligations of each of the constituent cooperativs:

6. Any claim, action. or proceeding instituted by ot against the constituent
cooperatives may be continued by the single or consolidated cooperative:
and

d. ‘The merger or consolidation shall not impair he rights of creditors nor
any lien upon the property of the constituent «operatives

CHAPTER V

TYPES AND CATEGORIES OF COOP MRATIVES:

IC. 23. Types and Categories of Cooperativ: s. -

Clusters of Cooperatives - Cooperatives may
clusters based on their business activity:

fall inder any of the following

1. Credit, Finance, Banking, and Insurance Clu. er refers to coope atives

organized for the promotion of financial freedim and literacy among its
members. and undertakes savings. lending, and other financial ser
its members, such as’

ices to

(i) Cooperative Banks. + Cooperative banks ized vor the
primary purpose of providing a wide re age of financial ser: ices to
cooperatives and their members:

re orga

(ii) Credit Cooperatives. ~ Credit cooperatives are engaged solely in
lending services

Gi) Credit. and Savings Cooperatives — Credit and -avings
cooperatives promote and undertake s: vings and ‘ending ervices
among its members. They generate © common pool of funds in
order to provide financial assistance to their members for
productive and provident purpos

(iv) Credit Surety Fund Cooperative... — Credit surery fund
cooperatives, in partnership with cal Government Units
(LGUs), are comprised of we Feapitalized ani well-
manayedmember-cooperatives or non government organ/zations
that meet the criteria and qualifications prescribed by the
Authority, LGUs. Government Finan: ial Institutions, and other

government agencies:

wv


waVvaneone

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(v) Insurance Cooperatives. = Insurance co peratives are engivsed in
the business of providing health, life, :nd non-life insurance, as
well as pre-need plans (education. pension, and memorial plans)
of cooperatives and their members:

(vi) Savings and Deposits Cooperatives — Savings and deposits
cooperatives are engaged solely in pr:moting and encouraging
savings among its members: and

(vii) Other cooperatives as may be dete mined by the Au:hority
under this cluster in consultation with he cooperative sect or.

2 Consumers, Marketing, Producers, and Ls gisties Cluster recrs to

cooperatives organized for the supply. procur. ment, transport. siorage,
distribution, and marketing of products of its members. industrial
production, and non- agricultural business tivity for the prouction
and processing of raw materials or goods or it . derivative. such +

(i) Consumers Cooperatives. — Cov sumer cooperativ sare
engaged primarily in provaring and distrvuting
commodities to members and non-n embers:

(ii) Marketing Cooperatives. — Mar seting  cooperativ: sare
engaged in the supply of productiin inputs to membe es and
markets their products, including  rading and proces» ing:

(iii) Logisties Cooperatives. = Logistics cooperatives are engaged
in operations involving facilities av L supplies whose bsiness
is related to the supply chain:

hives

(iv) Producers Cooperatives. — Pre iucers cope e
engaged in joint production vhether ngricultyeal or
industrial. They are formed and o; erated by the mensbers 10
undertake the production and pro. -ssing of rw mate
goods produced by the members | ito finished or pr cess
products for sale by the cooperati e, Any ent produc or its
derivative arising from the raw siaterials produced by the
members. sold in the name an! for the account of the
cooperative, shall be deemed a pre iuct of the coopera ve and
its members: and

(x) Other cooperatives as may be de ermined by the Avthority
under this cluster in consultation ith the conperativ: sector

18


Human Services, Health, Housing, Workers, «1d Labor Service Custer

refers to cooper
opportunities to its members. housing. and st -viees F¢
health and wellness. and death care, technology, including

dental

organized for providing « mployment and business
Javed to medical,

tive

digital payment services. such as

(i)

(ii)

Gi)

(iv)

Ww)

(wi)

Health Services Cooperatives. — He ilth services cooper tives
are organized for the primary purp se of providing m:dical
paramedic, diagnostic, an! other health se vie
cooperative health — ¢-ganizatiors, hos itals
tients:

dental.
includi
clinics, pharmacies. and transportis ¥ of pz

Housing Services Cooperatives - Housing si rvices

cooperatives are organized to as-ist or provide accoss to
cocialized housing for the benefit of he members who s: tively

participate in the savings program ‘or housi

Labor Services Cooperatives, — Lor services cooperatives
are engaged in providing specific se vices (o a orincipai under
a legitimate contracting or subeon:racting arrangement. as
defined under existing Jaws. and in accordance wih the
cooperative principles set forth und -r this Code:

‘Technology Service Cooperative. — Technology service
cooperatives are organized to prowide the members with
sorvices that are designed to facilit ite the usc of Information
‘Vochnology by end-users. electroni: money iss 1ers licensed by
Bangko Sentral ng Pilipinas (BS "), or provide spe: alized
technology-oriented solutions by eo nbining the proces-es and
functions of — software. hardware networks.
telecommunications. and electroni:

s, among others:

Workers Cooperatives. - Workers ooperatives are orzanized
by workers. including the self-emp oyed. who are at the same
time the members and owners of th» enterprise. The principal
purpose of these cooperatives ist. provide employm: nt and
business opportunities to the mem vers and manage them in
cordance with cooperative prine ples; and

Other cooperatives as may be de ermined by the Avthority

under this cluster in consultation vith the cooperative sector.

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A. Education and Advoraey Cluster vefers to cooperatives organized | or the
promotion and advocacy of cooperativism am-ng its members and the
public through  socially-oriented projects, -dueation and training.
research and communic

tion, such as:

(i) Advoeacy. Cooperatives, = Advoca y cooperatives promote
cooperativism and advocate policie: for the general inverest
and welfare of the members. the si ctor, the movemen:, and
the public through socially-oriented projects. education and

ining. research and communicat on, campaigns, lobbying.

and other similar activities to reach out to intonded
beneficiaries:

(ii) Edueation Cooperatives. - Edw ation cooperative. are

organized for the primary purpose of evning
nd operating licensed education: institutions. subieet to
existing laws, rules and regulations and

(ii) Other cooperatives as may be det rmined by the Authority
under this cluster in consultation w th the cooperative sector.

Agriculture, Agrarian, Aquaculture, Farme., Dairy, and Fis: erfolie
Cluster refers to cooperatives engaged in the cultivation of plans and
animals. including the production and proces ing of agricultural soods.
and those organized by agrarian reform be aeficiaries and marginal
farmers. such as

(i) Agrarian Reform Cooperatives. — Agrarian :eform
cooperatives are organized by mar inal farmors, majerity of
whom are agrarian reform benefic aries, for the pur) ose of
developing an appropriate system of Iand tenure land
development, land consolidation 0: land managemen areas

covered by agrarian reform

Gi) Agricultural Cooperatives. — Agriculture cooperatives are
organized as agricultural-baser economic _ ente: prises
voluntarily established through joint investment joint
ownership and joint: managemcat for the purpose of

mproving agricultural productio: capacity. agro-in-tustry,

agri-business, or services related ‘9 agricultural production,
which shall include agrarian yeform. dairy, fishermen,
community forestry, as well consumers, marketing,
producers and aquaculture cooper itives, anc multi-) arpose
cooperatives whose primary busiiess activity isa) least

20


fifty percent (50%) related to agric dtural preduction agro-
industry. agri-business, or service. related to agricuitural
production:

(iii) Dairy Cooperatives. — Dairy cooper. tives are engaged on the
production and marketing of fre.h milk which may be
processed or marketed as dairy proc ucts:

(iv) Farmers Coopera -
organized by marginalized farmers. majority of whom :
age
their products. either fresh or proce sed:

ves. Far-ners cooperative. are

e not

rian reform beneficiaries, for (1 purpose of supporting

(v) — Kisherfolk Cooperatives. = Fis ierfolk conperativ: sare
organized by marginalized fisheriolk whose producis are
marketed either as fresh or — processe 1. for the
mobilization of capital in the proc irement of fishing boats.
nots, gears. and accessories. produ tion of aquatic products

and access to storage and agricultu: al facilities:

(vi) Irrigators Cooperatives. — Lrrigator: cooperatives are engaged
in providing sustainable irrigation - ervi

es for farmers and

(vil), Other cooperatives as may be det rmined by the Au:hority
under this cluster in consultation with the cooperative sector.

Public Ulilities Cluster refers to cooperatives organized for the purpose
of undertaking electricity. generation, utyiizing renewable nergy
sources, including hybrid systems. acquisit on and operation of sub-
transmission or distribution: operation ar | management of water
ices: and

systems: Jand, air, and sea transport tion s¢
communications services. including ‘olephone and digital
communications, which require a franchisor certificate of public

convenience and necessity such as:

(i) Communications — Cooperatives. = Communications
cooperatives
communication structures and arr ingements, such 2
cable ‘TV. newspaper. and refited industries, for the
Widespread dissemination of inforr ation for the members and
the public

re organized to ov n. operate, and sanage
adio,

(ii) Electric Cooperatives. = Electric « soperatives are rexistered
under this Code organized for the primary purjose of

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undertaking power generation, utili ing
sources

stems.

including hybrid s

of sub-transmission or distribution ¢

(iii)

wa

‘Transport

service cooperatives are
te

of passengers or cargoes. or are ens

Service Cooperatir
organize:

or air transportation service

or auxiliary services to the transpor

(iv)

Water Service Cooperatives. — Wate

organized to own, operate, and man
provision and distribution of potab

and their households: a

(vy)

Ti

Other cooperatives as may be det
under this cluster in consults

ion w

7. Multi-Purpose Cooperative refers to one whict

of the busines:

b, Categories of Coope

activities of the different types

atives are cate

1. In terms of membership, cooperatives may be

A. Primary Cooperatives: and

B. Secondary Cooperatives:

2. In terms of terr
operations: and

In terms of

SSCLS,

ory, cooperatives are categori

cooperatives shall follow the bu:

by the Department of Trade and Industry (DTD.

SEC. 24. Apex of Cooperatives. — The Apex of «
singular cooperative vested with a juridical persons

represent the cooperative sector at the national and ints

voluntarily organized by the members of the coope!

ma

date to enga

matters relating to cooperatives, as well as Lo promote t) & coop

culture,

atin

ge in discussions and advise the app:

renewable c aergy
equisition and operation
< the household members:
s. — Transport
to rende public land
for the safe convevance
wged in providing lated
industry:

service cooperatiy »s are
age water systems ior the
‘water for the menbers

emined by the Au‘ hority
th the cooperative ector.

combines ‘wo (2) 6: more
of cooperative

orized as follows:

categorize L into:

ed according to areas of

siness size ‘ategori:s used

ooperatives refers 10 the
ity and the mansate to
rnational levels. fuily and
+ sector. lt shall hove the
opriate authorities on all

nd

rat_ve ident ty

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CHAPTER VI

FEDERATION OF COOPERATIVES

SEC. 25. Area of Coverage. - \ federation of coop: ratives may be orgsni

uu

at the municipal or city level. district or provincial level, egional, inter-regional or

national levels

SEC. 26. Members of a Federation of Coop: ratives. - Member, of a

federation of cooperatives shall consist of coopera

ive with common ne

ds or

purposes: Provided, That a member cooperative may fre: ly withdraw meml:rship

trom the federation. The minimum number of members shall be ai least ta (10)

primary or secondary cooperatives for a federation of co: veratives

SEC.

. Authorized, Subser

ibed, and jaid-Up Capital of a

Federation. « ‘The authorized share capital of a cooper. tive shall be provived for

in its Articles of Cooperation where at least twenty-ive percent ¢

authorized share capital shall be subs

five percent (25

registration.

5)

ped to by the me: abers and at least tventy-

of the

of the subscribed share capital shit be paid up prior to its

‘The minimum paid-up share capital for a federat: sn of cooperatives + all be

One million pesos (P1,000,000.00).

af cooperatives shall be registered with the Authority

SEC, 29. Functions of a Federation of Coopvratives. - \ feder
cooperatives shall undertake the following functions:

a) ‘Yo carry on any cooperative enterprise # ithorized under S«
that complements.

28. Registration of Federation of Covveratives. — \ fed ration

tion of

tion

augments. or supplem nts but does not « onfliet

compete with. nor supplant the business « » economic activitics of its

members;
b) ‘To carry on, encourage. and assist educ tional and advisor
relating to the business activities of its menbers:

©) To render service
cconomy in the conduct of the business i
and to facilitate the implementation of the r bookkeeping. acc
and other systems and procedures:

work

designed to encourage simplicity. efficien: y. and
s member cooperatives

inting,

4d) Toprint. publish. and circulate any newspaper or other publication in

the interest of its member-cooperatives ar | enterprises,

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e) To coordinate and facilitate the activities of its member-cooper: tives:

1) ‘To enter into joint ventures with local or i iternational cooperatives
of products in the Philippines and

in the manufacture and si

bri

‘To mandatorily act as conciliator-mediator_n inter
disputes among and between the member. and off
cooperatives

intra cooperative
rs of primary

h) To assist members in the submission of the » quired reports ani other
compliances to the Authority and other :wvernment or regulatory

bodies:

i) ‘To assist in the liquidation of the remain ng assets of dissoi. ed or
cancelled primary cooperative members

j) ‘To develop programs on education, traini ag. monitoring, covching.
research, and advocacy that complement. augment, or supplement
the businesses of their members: and

k) To assist the Authority in ensuring the compliance of its member-
atives with the laws. regulations, ;olicies, and inspec: ion or

coope'
examination findings of government regulaiory agenc es.

1) To perform such other functions as may ve necessary to ati
objectives.

in. its

CHAPTER VIL
COOPERATIVE UNIONS:

SEC, 30. Organization and Duties. - All re istered cooperatives may
orwanize or join cooperative unions to protect the intere.t and promote the welfare
of all types of cooperatives: Provided. ‘That a membur cooperative may freely
withdraw membership therefrom.

‘The cooperative unions shall represent the cons ttuent cooperatives at the

appropriate level and exercise the following duties and “unctions:

a. To represent its member organizations:

b. To acquire. analyze, and disseminate econon te, statistical, anv other
information relating to its members and to all t pes of cooperatives within

its area of operation:

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ants, or subsidies from loc:

‘To sponsor studies in the economic. legal, financi:’, social an other phases
of cooperation, and publish the results thereof:

‘To conduct trainings to member-cooperatives
provider:

an accredited (vining

‘To promote the knowledge of cooperative princip es and practices iy their
respective jurisdictions:

‘To develop the cooperative movement

‘To assist the national agencies and local govern-nent units in coop: rative
development activities within their respective jur sdiction:

"Ty assist in the dissemination and monitoring of (re Philippine Coop: rative

Development Plan

‘To assist the members in the submission of the | -quired reports anv other
compliances to the Authority and other governmy: at or regulatory bo:ties:

‘To assist the Authority. upon written request, nthe pervormane: of its
power of inspection or examination by we of providing r levant
information, such as research. reports. and finan: ial records

‘To advise the appropriate authorities on sil questions relaing to
cooperatives at the municipal. city. district, prov acial or regional ley els;

‘To act as liquidators or rendering assistance in the liqaidation of the
remaining assets of dissolved primary cooperativ “members upon re. uest of
the dissolved cooperative: and

.'To do and perform such other non-business acti ities as may be necessary

to attain the foregoing objectives

SEC. 31. Sources of Funds for Cooperative Unions. - The funds of a

cooperative union and the .\pex Cooperative shall be so srced from the mens nership
fos, dues and contributions, remitted cooperd
(CET) from member-cooperatives. training fees, fundr sising actis ities, do.iations,

tive education and training fund

and foreign sources, wh« th

: private or public

CHAPTER VIEL

MEMBERSHIP:

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SEC. 32. Membership. - \ cooperative shall be regular memb: rs or

associate members,

|\ regular member is one who has complied vith all the membership
requirements, including the Pre-Membership Seminar and entitled to sil the
rights and privileges of membership.

An associate member is one who has no right (o ¥: te nor be voted upea, nor
be appointed to any position in the cooperative. and shal be entitled only t such
rights and privileges as the bylaws may provide: Pro ided. That an
member who mects all the requirements of regular mem! ership. including  ¢ Pre-
Membership Education Seminar, continues to patronize the cooperativs for
two (2) years, and signifies the intention to remain am: mber shal be cons dered

a regular member,

SEC. 33. Qualifications of Membership. - Members of 1
primary cooperatives must be natural persons, Filipino: itizens or former n--tural-
born Filipino citizens, of legal age. with capacity to ener into a contract. vithin
the common bond of membership and area of operation, and must possess the
qualifications and none of the disqualific «ded for in the By-iaws of
the cooperative: Provided, that in of former natvral-born Filipino © izen:
they must comply with Philippine taxation laws: Prot ded, further, that ‘ne age
juirement shall not apply to laboratory cooperatives 1s defined in Section 8.
member must have completed the Pre-Membership Edu sation Seminar.

«-stered

ions as p

1.34. Government Officers and Employec

‘a. All elective officials of the Government sb ull be ineligible to ecome
officers of cooperatives: Provided. That th» disqualification dyes not
extend to a party list representative who epresents the coo, -rative
sector: Provided, further. That nothing p eeludes cosperatiy s from
engaging in activities in support of party li-ts represeating thy sector.
such as, but not limited to participating in campaigning or donating
funds:

b. Employees of the Authority are allowed 1» become a membe: of any
cooperative, However. they shall be dis ualified to be ek vted or
appointed as an officer, except for coo} sratives organized among
themselves: and

c. Any government employee or official m: y. in the discharg: of the
duties asa member in the cooperative, be illowed by “he head of office
concerned to use official time for attendan eat the General A: sembly,
Board and committee meetings includ ng cooperative Semin

‘s.

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conferences. workshops. technical meetin. s, and training courses
locally or abroad

EC. 35. Processing of Applications for Membership. - An applivation
for membership shall be acted upon by the Board of Directors within the period
fixed in the By-laws but not later than thirty (30) days. Ctherwise, the application
for membership shall be deemed approved. subject 1 the condition that the
applicant has submitted the duly accomplished applivation and has pad the
membership fees to the cooperative

In case the application for membership is denied sy the Board of Dir-ctors
an appeal may be made to the Election Committee. siting
grievance body, within fifteen (15) days after receipt of te notice of denial snd the
dovision of the Election Committee shall be final.

the appea's and

If the Election Committee fails to decide within he prescribed period, the
appeal is deemed approved in favor of the applicant.

Liability of Members. -.\ member she'L be liable for the debts of
ative to the extent of the member's subscript on to the share eapital of
the cooperative,

SEC. 37. Termination of Membership. ~

a. Subject to the Terms and Conditions as si ited in the by-laws of the
coope W membership
from the cooperative by giving written noti: © to the Board of Directors
which shall be acted upon within thirty (3 ) days from receipt of said
notice.

itive. a member of a cooperative m wy withd

b. ‘The death or insanity of a member in a pr mary cooperative. nd the
insolvency or dissolution. de-listing. or ca: cellation of the cer ifieate
of registration of a member in a secon lary cooperative svall be
considered valid grounds for termination of membership: P) vided,
"Phat in the case of death or insanity of an @ zrarian reform bencticiary-
member of a cooperative. the qualified nv xt-of-kin may assume the
duties and responsibilities of the original 1 ember

© Termination of membership in the coo; erative shall be initiated
through the filing of a complaint before te ethies committe: of the
cooperative, The committee shall recomme ad to the Board of P rectors:
the termination of membership for any of he following cause

(1) Failure. to patronize any services of the cooperative for
unreasonable period of time as provid -d in the By-laws:

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(2) Failure to comply with the obligations o' membership as pr. vided
in the By-laws or policies of the coopera ive

(3) Violation of the By-laws of the cooperat ve:

(4) Commission of any act or omission inju vious or prejudicial :o the
interest or the welfare of the cooperatiy »: and

(5) Others, as may be provided in the By-l: ws of the cooperate

Such member shall be informed. in writing, and |e given an opportu tity to
he heard by the grievance committee. ‘The result of He investigation shall be
referred to the Board of Directors for its consi‘eration. Based or the
recommendation of the grievance committee. the Board may terainate
membership in the cooperative by a majority vote of all ts members. The ¢: cision
nf ihe Board shall be in writing. and communicated either personally or by
registered or electronic mail. The decision may be ppealed to the General
\ssembly within thirty (30) days from receipt thereof.

‘The General Assembly shall decide on such app: al within thirty Gi) d
alter receipt thereof Failure of the General Assem ly to decide within the
prescribed period shall be deemed in favor of the me nber. ‘The decision of the
neral Assembly decision shall be final and executor, ‘ending thy final ds cision:
the membership shall remain in force. ‘This notwithstar ting, the member ray file
a petition for review of the decision of the General As-embly with the Au: hority
within fifteen (15) days from receipt thereof,

SEC. 38. Refund of Interests. - \\| sums comp: ed in accordance with the
Ihv-laws due from the cooperative to a former member + hall be paid in accordance
with this Code and as prescribed in the Implementi:y Rules and Regusations:
Provided, That such refund shall not be made if upon» uch payment. the » alue of
ihe assets of the cooperative would be less than the ag. regate amount of its debts
and liabilities exelusive of the members’ share capital « mtributior

In the computation of the interest due to the fermer member, the -urrent
balance of such member in the ledger of accounts of thy cooperative shall be taken
into account

CHAPTER IX
ADMINISTRATION

EC. 39. Composition of the General Assembly and Representative
Assembly. -‘The General .\ssembly shall be the full mesabership of the coo} erative,
(sercising all the rights and performing all the obligati as as provided in this Code.

and in its Articles of Cooperation and By-laws.

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For cooperatives with numerous and dispersed rembership, the General
\esembly shall delegate — the exercise. ofits powers to
Representative Assembly. the members of which arc elected by each sector
chapter, or district of the cooperative in accordance with its articles of coopeation
and by-laws: Provided, ‘That in eases provided under tris Code for the cit of 4
rexular or special General Assembly. or the approval or vonfirmation there f, the
Representative Assembly shall also suffice, where apyticable, Such delecation
shall be in accordance with the rules and regulations of he Authority

SEC, 40. Powers of the General Assembly. - The General \ssembly shall
he the highest policy-making body of the cooperative and shall exercise such powers
as are stated in this Code, and in the Articles of Coope vation and By-laws of the
cooperative. The General Assembly, through its meml rs entitled to vote shall
have the following exclusive powers which cannot be de! -gated:

a. Determine and approve amendments to the .\ticles of Cooperativn and
By-laws:

b. Elect, appoint, or remove, the members of the Board of Directors
However, in the ease of the electric cooperasives registered uncer the
‘Authority, the election of the members othe Board shall be in
accordance with its By-laws or election guide! nes:

©. Approve the annual strategic and developme ital plans, and the vudget
of the cooperative:

d. Approve or disapprove proposals from the Bo ird of Directors per’ aining
to external borrowings. investments, gran’s, donations, ancé other
financial assistance: and

© Decide membership issues within the cooper: tive.

Subject to such other provisions of this Code and nly for purposes of prompt
and intelligent decision-making, the General Assemby may by a three-fourths
Ci/1) vote of all its members entitled to vote, present ad constituting a quorum,
delogate some of its powers to the Board of Directors, These powers ~hall be
enumerated under the By-laws of the cooperative

Ei

41. Meetings. —

a. The General Assembly shall conduct a regular ann al meeting on a
date fixed in the By-laws, which shall be within ninety (90) days or
one hundred eighty (180) days after the « lose of each calendar year
for primary or secondary cooperatives, r-speetively Provid: 4. That
notice of regular meetings shall be sen’ in writing, by po-ting or

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publication. or through other electronic neans to all memb:

record

Whenever necessary, a special meeting of t!:e General Assembiy may
be called at any time by a majority vote of he Board of Directors, or
upon petition of at least ten percent (10%) of the total members who
are entitled to vote, or as provided for in thy By-laws: Provides ‘That
a notice in writing shall be sent one (1) weok prior to the meeling to
all members who are entitled to vote.

If the Board fails to call a regular or specia’ meeting within the given
period. the Authority, upon petition of ten :ercent (10%) of members
entitled to vote, or the quorum as stated int reir By-laws, and fer good
ause shown, shall issue an order to the pevtioners directing them to
call a meeting of the General Assembly b. giving proper nc
required in this Code or in the By-laws:

In the case of a newly registered coope:ative, a special General
Assembly meeting shall be called within - ixty (60) cays fron such
tration. for the followin ¢ purposes

approval of its regis

1) Presentation of approved Articles of ‘operation and By-laws:

2) Approval of the annual strategic an.| development plaps, and
budget: and

3) Other matters, as may be determine | by the conperativ:

The Authority shall compel the cooperative to call a General or
Representative Assembly for the purpose o! reporting 0 the members
the result of any examination or other inves tigation of the coop»rative

affairs: and

Notice of any meeting may be waived, exp:essly or impliedly. by any
member.

42. Mode of Conducting Regular or Special Assembly Mectings.

= Regular and special assembly meetings may be condur ‘ed in any of the following

b.

c.

d

e.
SEC,

manner:

a.
b.

Duly assembled in one venue, wherein thy mectings are held on the

same day: or

Simultancously. wherein the meetings arv held on the same day but
in different venues

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As a general rule, assembly meetings shall be conducted in a manner
provided in the By-laws of the cooperative, Howev e, due to technological
advancement. public health and safety measures, increased level of participation
of members and other equally important considerations iv favor of the viabili'y and
arowth of cooperatives, cooperatives are allowed to condu t their ass »mbly mveting
through videoconferencing or a combination of puysical attendance: and
videoconferencing. except for electric cooperatives: Pr vided, Thist cooperatives
Aho opt to conduct General Assembly meetings throu: h videoconferencins or a
combination of physical attendance and videoconferenci:.g as an alternative mode
shall amend their By-laws adopting the same: Provided, urther.’That cooperatives
shall adopt policies. and procedures. sufficiently ad Iressing administrative
technical, and logistical concerns for an effective and efficient videocont: rence
meoting

SEC. 43. Quorum. - Unless a higher requirem: nt is provided in tre By-
laws of the cooperative. a quorum shall consist of at least twenty-five percent (25%)
of all the members entitled to vote: Provided. That electr: cooperatives shall follow
the minimum quorum requirement as may be pre cribed by the Notional
Electrification Administration (NEA): Provided, furth nr. That the quorum for
Ropresentative Assembly shall in no case be lower than twenty-five percent (25°)
of the total membership entitled to vote.

In the case of fede and unions, the quorum requirement shall ‘e fifty
sentuum (50%) of the total number of members entit! -d to vote.

SEC. 44. Voting System. - Hach member of a orimary cooperative shall
have only one (1) vote regardless of the share capital of such member. In the case
of federations or secondary cooperatives. a “one memer-cooperstive, one vote”
system shall apply regardless of the member-primaries sha

capital

In the case of incentive voting. the member-coop: ratives shill have one (1)
basic vote and up to five (5) incentive votes. as provided in the Ry- laws. In vase of
share voting, the voting rights of the member-cooperat-ves shall be propor ionate
to the number of their paid-up shares. subject to the limitation imposed under
Section $4 of this Code: Provided, That at least one-third (1/3) of +he seats in the
Board shall be reserved for small shareholders. The votes cast by the delegates
shall be deemed as votes cast by the members thereof.

‘The foregoing notwithstanding. the By-laws of » cooperative, other than a
primary cooperative, may provide for voting by prox: Voting Ly proxy means
sllowing a delegate to represent or vote on behalf of another delegate who is from
the same federation or union.

SEC. 45. Composition and Term of the Boare of Directors.—Th: Board
of Directors shall be composed of not less than five (5) nor more than fifteen (15)
members elected by the General Assembly for a term of two (2) years. bus not to

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exeved three (3) consecutive terms. The Board sha! hold office until their
successors are duly elected and qualified, or until duly r moved for cause

For federations. a member-coope'

ative shall hays only one representative

cligible to run and be voted upon as
re capital holdings.

1 member of the soard, irrespective of the

member-cooperative's sha

SHC. 46. Powers of the Board of Directors. -T)e Board of Directors shall
be responsible for the annual strategic planning, dir-ction-setting and policy

formulation activities of the cooperatives
SEC. 47. Directors. ~

a, Any member of a cooperative who has the :ight to vote and be voted
upon, and who possesses all the qualifications and none of the
disqualifications provided in this Code or in ts By-laws shall be « tigible
for election as director. subject to the limitat-on impose I by the -econd
paragraph of Section 15 of this Code:

b. ‘The cooperative may. by resolution of its Bu urd of Directors. acimit as
an ex officio director or committee memb-r one appointed y any
financing institution from which the cooporative received financial
assistance, solely to provide technical know edge not available within
its membership. Such director or committe member need nt be a
member of the cooperative and shall have no powers, righ:s,
responsibilities except to provide technical assistance as required by
the cooperative,

nor

©. ‘The members of the Board of Directors shal! ot hold any other position
directly involved in the day-to-day operation and maragemen: of the
cooperative

d. Any member engaged in a business similar: » that of the cooper itive or
Who. in any way. has a conflict of interest vith it, is disqualified from
being elected as a director.

SKC. 48. Meeting of the Board and Quorum tequirement. ~

a. In the case of primary cooperatives. reguls meetings of the Hoard of
Directors shall be held at least once a mont, Special meetings may be
held at any time: i) at the call of the Chair yerson. upon prior vritten
notice given at least three (3) days prior to he date of said mes ‘ing: ii)
or at the call of a majority of the member of the Board, up-n prior
written notice given at least one (1) day bet sre said meeting: Pyovided
that only two (2) special meetings may be he'd in one (1) month. Notices

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ont through electronic means. to the fficial contact numer or
email account of the officers,

b. A majority of the members of the Board sha‘! constitute a quorem for

the conduct of business.

« Each member of the Board shall only have ine vote, whether» be a
primary or secondary cooperative, irresper ive of the share capital
holdings of the member-cooperative.

d. Directors cannot attend or vote by proxy :

Voard meetings.

6. Cooperatives may opt to allow meetings of (xe Board of Directors and
members of the different committees of the ¢ operative to be con-iueted
either through physical attendance or vi eoconferercing. or both,
subject to the rules on sending of notics. quorum, and voting
requirements as provided for in the By-laws. n the conduct of meetings
through videoconferencing, cooperatives sho | adopt their own policies
and procedures which shall be included in their By-laws.

SEC. 49. Vacancy in the Board of Directors. incase of » vacancy other
than by expiration of term or an increase in the numbe: of Board cf Direct's, the
Roard, if still constituting a quorum, may. in a special mecting called sor the
purpose. appoint. by majority vote, any member of the cooperative to fF such
vacancy; Provided, That the director so appointed shall possess all of the
qualifications and none of the disqualifications as press ribed under this Cede and
the By-laws of the cooperative. If the remaining mer bers of thy Board do not
constitute a quorum, the vacancy shall be filled in an election cond.zcted through @
special General Assembly called for the purpose, held w thin thirty (30) days from
the time the vacancy occurs, or during the regular Ge? eral Assernbly, whichever
comes first, The director so appointed or elected shall s: rve only fer the un-xpired

term of the predecessor in office.

If the General Assembly fails to fill the vacancy, . s directed sn the preceding
paragraph, or in case of the vacaney of the entire Board of Directors, the Authority
Shall compel the cooperative, through the Election Con mittee. to call for x special
General Assembly for the purpose of electing a new toard of Directors In the
J Assemily may appoint an td Hoc
I for such sprcial General Assen:bly.

absence of the Election Committee. the Gi
Committee that shall be responsible to

ner

SEC. 50. Officers of the Cooperative. - Th officers of the coo, erative
I] include the members of the Board of Directors members of the cifferent
committees, General Manager or Chief Executive Ofiicer, Secretary, ‘Tr-asurer,
ind other officers as may be provided for in the By-laws. As such, they shall

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exercise their duties and responsibilities within the scope of their defined
functions

‘The Board of Directors shall elect from among th: mselves the Chairperson
amd Vice-Chairperson. and elect or appoint other office: s of the conperative from
outside of the Board. in accordance with their By-laws,

‘The Board of Directors is prohibited from appoint ng any person within the
third civil degree of consanguinity or affinity of the embers of the Bourd of
Directors, Neither shall the appointive officers be relat: d to each other up to the
nguinity or affinity. Further. ao officer shall engage in
a business similar to that of the cooperative nor in any of her manner have in:crests
in conflict with the cooperative,

second civil degree of con

SEC, 51. Committees of Cooperatives. ~

The By-laws may create an executive committe, the members of which
shall be appointed by the Board of Directors with such powers and duties
as may be delegated to it in the By-laws or by a majority vote of all the
members of the Board of Directors,

b. ‘The By-laws shall provide for the creation of «ther committees, such as
conciliation-mediation, ethics. gender and dev lopment, educaticn, and
other committees as may be necessary for the c nduct of the affair of the
cooperative. The members of the audit and eh-etion committee stall be
clected by the General Assembly, while the mem ers of the other remaining
committees shall be appointed by the Board.

Unless otherwise provided in the By-laws. the | oard, in case of a sacancy
in the committecs, may appoint or call an election to fill the vacaney as the
case may be: Provided, that the person so appoiated or elected shail serve
only for the unexpired portion of the term

SEC. 52. Functions, Responsibilities and T:aining Requirements of
Directors, Officers and Committee Members ~ ‘The functions and
responsibilities of
training requirements, shall be prescribed in the By- aws of the cooperative, in
accordance with the rules and regulations issued by th» Authority

ectors. officers, and committee snaembers. as well as their

SEC. 58. Liability of Directors, Officers and Committee Members. -
Directors. officers, and committee members shall be joi atly and severally }hable for
all damages or losses to the cooperative, its members. or other persons in case of

the following:

a. Willfully and knowingly voting for or ass: ating to patently valawful

acts:

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b. Gross negligence or bad faith in directing the affair
or

of the cooperative:

Acquiring any personal or pecuniary interest ‘9 conflict with their duty

When directors, officers. or committee members atten pt to or have acquit ed. in
Violation of their duties, any interest or equity adverse to. he cooperative in respect
to any matter which has been reposed in them in confiden: e, they shall, as a trustee
for the cooperative, be liable for damages and shall be a-countable for doubie the
profits which otherwise would have accrued (0 the coope: ative.

SEC. 5

- Compensation and Other Emoluments.

1. In the absence of any provision in the By-laws fixin : their compensation, the
directors or officers of the cooperative shall not r ceive any compensation
except for reasonable per diems: Provided. That ne additional compensation
other than per diems shall be paid during the firs. year of existence uf any
cooperative: Provided, further, That only the ‘ieneral Assembly. shall

approve any additional compensation or the incre: se thereof,

bh. The compensation of officers or committee membe;s may be fixed in the By-

laws.

Directors and officers shall not be entitled to any por diem if the cope: ative
reported a net loss in the preceding calendar year or a had a dividend rate
less than the official rate for the same year.

d. Uniess already fixed in the By-laws. the compensat on of all otner employees
shall be determined by the Board of Directors in accor
Regional Tripartite and Wage Productivity Board

dence with the

SEC. 55. Dealings of Directors, Officers, or Committee Members. -
act entered into by the cooperative with one (1) or more of its directors, or
their spouses and relatives within the first civil degree of onsanguinity or affinity,
is voidable, at the option of the cooperative. unless the following conditions are

cont

present:

a. ‘The presence of such director in the Board meetiig wherein contrac: was
approved was not necessary to constitute a quoruy 1 for such meeting

b. ‘The vote of such director was not necessary for the approval of the con ract:
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«. ‘The contract is fair, reasonable. and beneficial to he cooperative under the
circumstances.

In the case of contracts executed between the cooper: tive and its other oificers
or committee members. or their spouses or relatives within the first civil de: ree of
consanguinity or affinity. such contracts are voidab!., at the option of the
cooperative, unless previously authorized by the General \ssembly cr by the Soard
of Directors, and the contract is fair. reasonable, and beveficial to the cooperative
under the circums

nees.

‘The Board of Di
during its re

ectors shall report any such contraci to the General .\ssmbly
lar mecting for ratification.

Wher
absent
thre

any of the first two conditions set forth in th» preceding paragrph is
in the case of a contract with a director. such con ract may Le ratifies by a
ourths (3/1) vote of all the members entitled to vote present and consti: ating
a quorum in a meeting called for the purpose: Provided. “hat full disclosure of the
‘est of the directors involved is made at such meeting and that the
act is fair and reasonable under the circumstances

rdverse inte

cont

SEC. 56. Disloyalty of a Director and Other Officers of the Cooperative.
~ .\ director or other officer of the cooperative who, by vir'ue of such office, divectly
or indirectly acquires for themselves an opportunity wt ich should belong +9 the
cooperative, shall be liable for damages and must account for double the ;-rolits
that otherwise would have accrued to the cooperative by -efunding the same ‘This
provision shall be applicable, notwithstanding the fact 1hat the director or other
olficers of the cooperative used their own funds to acquir such oppertunity

KC, 57. Mlegal Use of Confidential Information —

a. A director. officer. or any person who, in conspiration or conni ance
therewith, makes use of confidential information t- the benefit or advantage
of such person, which, if generally known. niy adversely affec! the
operation and viability of the cooperative, shall br held liable for the lirect
losses and for the unrealized benefit suffered by te cooperative. as a vesult
of the transaction

b. ‘The cooperative shall take the necessary steps 0 enforce the liabilities
described in paragraph (a) herein

SEC. 58. Removal From Office. No otticer may be emoved except for ause,
al policies of the cooperative. aft: r due notice? and he-vring.
Loss of (rust and confidence in the performance of dutic : shall be a valid ground
for removal

as provided in the inter

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All complaints for the removal of any clected offic: r shall be filed wiih the
Roard of Directors, except as otherwise provided herein, {pon finding prim. facie
evidence of guilt, the Board shall inform the officer ¢ ncerned and present its
recommendation for removal in a regular or special Geseral Asserbly called for
the purpose. wherein such officer shall be given a final «oportunity to present his
case, The regular or special General Assembly, by a thre fourths (/) votes of the
members entitled (o vote present and constituting a cuorum, shall approve or
disapprove the removal of the officer.

In cases involving directors, the complaint shall br filed with the Ethics and
Grievance committee, which shall follow the procedu‘e set in the preceding
paragraph,

In cases involving the removal of any appointive of icer, a complaint sl-all be
filed with the Ethics and Grievance committee of the -ooperative, which shall
submit its recommendation to the Board of Directors for p -oper action. The de-ision

of the Board of Directors may be appealed to the Genera! Assembly

During the investigation, the Board of Directors or he Ethies and Grievance
committee may. as the case may be, upon majority vote place suck officer under
preventive suspension, as prescribed in the By-laws.

‘The decision of the

neral Assembly may be apps led to the Author v.
CHAPTER X
RESPONSIBILITIES, RIGHTS AND PRIVILEGES OF COOPERATIVES

SEC, 59. Address. - Every cooperative shall have in official postal ad:lress
where the principal office is located and an electronic mail address to which all
communications, reports. notices. and summons may |» served. and where all
other documents required shall be submitted. The Artick sof Cooperation awl the
By-laws shall be amended accordingly should there be a change in the o'ficial
postal and electronic mail addresses of the cooperative.

For this purpose, an electronic mail registry shall ve created in accordance
with the guidelines to be promulgated by the Authority

SE

*. 60. Books to be Kept Open. ~

a. Every cooperative shall have the followin: documents reads and
accessible to its members and representat ves of the Authori:y for
inspection, examination, and investigation luring reasonable ffice
hours at its registered principal office:

1. A copy of this Code and all other laws pertaining to
cooperatives:

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b.

d.

2. A copy of the Implementing Rules and Regulations ol this
Code:

\ copy of the Articles of Coopers: ion and by-laws of the
cooperative:

1. A registry of members:

f the General

‘The books of the minutes of the neetings «
Assembly, Board of Directors and e mmittees:

6. Ashare and transfer book. except fi r unions:

nancial statements and other fins acial recor Is: and

8. Such other documents as may be pr -seribed by the Authority,
Jaws, and the By-laws.

The accountant or the bookkeeper of he cooperative shall be
responsible for the maintenance and safi keeping of the boos and
records of ly
accepted accounting practices. The accourtant or beokkeepe” shall
also be responsible for the production of thy same at the time o! audit,
inspection, examination, or investigation,

counts of the cooperative in sccordance with gene

‘The Audit committee shall be resp-nsible for the continuous
and periodic review of the books and rec rds of accounts to ensure
that such records are in accordance with generally a cepted
accounting practices. It shall also be respo asible for the produ: tion of
the same al the time of audit or inspection

Each cooperative shall maintain records of accounts such that the
true and correct condition and the reswts of the cperation of the
cooperative may be ascertained therefrom at any time. The financial
statements. audited according to generally accepted suditing
standards, principles and practices. shall ve published annuslly and
shall be kept posted in conspicuous plac: s in the principal fice of
the cooperative, its branches. and satellit: offices

Subject to the pertinent provisions of the National Internal hevenue
Code. 2

amended, and other laws. a cooperative may dis) ose, by
burning or any method of complete destru: tion, any documen’ record
or book pertaining to its financial and nor financial «perations which

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are already more than five (5) years old
transactions which are the subject

administrative proceedings. An inventory
records and books to be disposed of shall be
by the Cooperative Secretary and the
committee and presented to the Board
thereupon approve the disposition of said

‘The information and data being examined which
matters or privileged communication should not be dis«
consent of the cooperative in accordance with Republic
known as the “Data Privacy Act of 2018.

SEC. 61. Annual Reports. - Every cooperative
ss report with the necessary attachments as n
\uthority at the end of every calendar year. The reports
to its members and properly authorized government age
Functions and extension services for cooperatives, wher:
available upon request of members on record during rex

‘These reports shall be filed with the Authority w
(120) days from the end of the calendar year. The form 2
shall be as prescribed by the rules of the Authority
reports on time shall subject the accountable officer to 1!
he prescribed by the Authority. Failure to file the requi
shall be a ground for the suspension or cancellati
Registration of the cooperative, subject to the guidel:
Authority.

If a cooperative fails to make and file the reports :
include therein any matter required by the Code, the ut
(0) days from the expiration of the prescribed period

a

notice stating its non-compliance and the commensu
will be imposed until such time that the cooperativ:
requirements.

SEC. 62. Registry of Members as Prima Facie
members kept by the cooperative shall be prima facie
particulars:

a. The date on which the name of
list of members: and

any person was ©

b. ‘The date on which any such person ceased to be a

except these relating to
4 civil, criminal. and
f the audited documents.
Irawn up and certilied to
Shairman of the audit
f Directors, which may
cords.

may contain confidential
osed or used without the
Act No. 10173, otherwise

shall prepare an sanual
w be prescribed by the
shall be made accessible
cies with levelopmental
‘n copies thereof shall be
onable office hours

shin one handred « venty
id contents. of the r ports
ilure to fils the revuired
res and penalties 9s may
ed reports despite notice
in of the Certificste of
nes to be issued by the

-quired heeein. or {ils to
rority shall. within ‘hirty
send such cooperative a
fines and penalties that
has complied with the

Evidence
ovidenc

\ registry of
of the following

itered in such registry or

member.

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However, other information may be required in accor lance with the guidelines
that shall be prescribed by the Authority in consultation with the cooperative

sector.

SEC. 63. Probative Value of Certified Copies of Entries. - A copy of any
¥ in any book, registry, or list regularly kept in the course of business of the
cooperative shall, if duly certified in accordance with “he rules of evidence, be
admissible as evidence of the existence of entry and py'ma facie evidence of the
matters and transactions therein recorded

ent

No cooperative or person in possession of the books of such cooperative sh all, in
ny legal proceedings to which the cooperative is not a party. be compeiied to
produce any of the books of the cooperative, unless by or ler of the Authority in the
oxercise of its adjudicatory powers or a competent court

SEC. 64. Bond of Accountable Officers. — A\ officers and employees
handling funds, securities. or property on behalf of the evoperative shall be covered.
by a surety bond to be issued by a duly registered insur ince or bonding company,
the adequacy of which shall be determined by the Board of Directors. for the
faithful performance of their respective duties and obligations, he cooperative
may likewise secure other insurance poli
monies, securities. and other properties.

es for its protection against losses of

Within thirty (30) days upon approval of the registr ition of a cooperative, the
bonds of the accountable officers shall be submitted to tie Authority. The bond for
the cooperative's Treasurer shall be ten percent (10%) of ‘he sum of the initial paid-
up capital and membership fees. ‘The bonds for all ac ountable efficers shall be
renewed annually and adjusted accordingly

a. Notwithstanding the provisions of existing law- rules and regulations to
the contrary, any debt due to the cooperativs from the member shall
constitute a first lien upon any raw material. product
products produced: or any land, building, facii ties, equipment, goods or
services acquired and held. by such member t! rough the proceeds of the
loan or credit granted by the cooperative to such member fur as lony as the
same is not fully paid.

ion, inpuis, and

b. No property or interest on property which i subject to a lien under
paragraph (a) herein shall be sold nor conveyed ‘0 third parties without the
prior permission of the cooperative. The lien upon the property or .nterest
shall continue to exist even after the sale or conveyance thereof unril such
lien has been duly extinguished.

© Notwithstanding the provisions of any law to the contrary. any sale or

conveyance made in contravention of the preceding paragraph shall be void

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SEC. 66. Instrument for Salary or Wage Deduction. -

a, A member of a cooperative shall, notwithstanding the provisions of esisting
laws to the contrary, execute an instrument in favor of the cooperative
authorizing the employer to deduct from the salaiv or wages commu‘ation
of leave credits, and any other monetary benefits yayable by the employer
and remit stich amount as maybe specified in savisfaction of a debt. share
capital contribution. or other demand due frm the member 1 the
cooperative,

b. Upon the execution of such instrument and as may be required by the
cooperative contained in a written notification, thy employer shall make the
deduction in accordance with the agreement an | remit forthwith othe
cooperative the amount so deducted within ten (1!) days afte* the end of the
pavroll month. ‘The employer shall make the ded ition for ss long a such
debt or other demand remains unpaid by the emp oye.

© ‘Phe term “employer” as used in this Section shal! include all private firms,
national government agencies, including government-owned and con: rolled
corporations, government instrumentalities vith corporate powers
government corporate entities. or government f nancial institutions, and
focal government units that employ a member «1 a cooperative an: have
agreed to carry out the terms of the instrument n entioned in this Se-tion

Ud. The provisions of this Section shall apply to all sinilar agrecments roferred
herein and were enforced pr or to the approval of this

to in paragr:
Code.

ph

v, the

© Notwithstanding the provisions of existing liws to the cont
responsibilities of the employer as stated in paragraphs (2) and (b) herein
shall be mandatory and without the need Or any prior conditions,
accreditation or other similar processes to fa ilitate or implemcat the
deductions: Provided, That in the case of a privai employer the actyal and
reasonable cost for deducting and remitting may »e collected

f ‘The member may withdraw such consent at any time and for any season,
which shall also be put in writing. Any person who acts contrary to this
provision shall be held liable under this Code and other laws, as the case
may be.

SEC. 67. Primary Lien. — Notwithstanding the  rovision of any lay to the
contrary, a cooperative shall have primary lien upos the capital, deposits. or
interests of a member for any debt due to the cooperatie from such member,

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SEC, 68. Tax Treatment of Cooperatives. ~ Duy registered cooper itives
under this Code which do not transact any business vith non-members or the
al public shall not be subject to any taxes, fees. anc charges imposed under
the internal revenue Laws and other tax Laws.

gene

Cooperatives not falling under this Section shall be
provisions.

verned by the sucer eding

SEC. 69. Tax and Other Exemptions. - Dub registered cooper itives
insacting business with both members and non-memb ts shall not be subsect to
\on their transactions with members. Further, the trav sactions of members with
the cooperative shall not be subject to any tases. fees, aid charges including but
not limited to final taxes on members share capital and d. posits and correspcading
documentary stamp taxes

ta

Notwithstanding the provisions of any law or re culation to the conirary
cooperatives dealing with non-members shall be subject 0 the following:

a. Duly registered agricultural cooperatives and non-agricultural
cooperatives whose Reserve Funds have an | existing balance ol One
hundred million pesos (P100.000,000.00) a: d below. shall be e.empt
from all national internal revenue tase. fees. and charces of
whatever name and nature imposed under ‘he internal revenus laws
and other tax laws

Such cooperatives shall be exemp: from customs duties
advance sales or compensating taxes on their importation of
machineries, equipment. batteries. accesso: ies, and spare parts used
in the operations of the cooperatives and which are not avsilable
locally as certified by the DTT

AIL taxs and duty-free imports shill not be sold ner the
beneficial ownership thereof be transferred to any person unt! after
five (5) years. otherwise. the cooperativ. and the transferce or
ignce shall be solidarily liable to pay wice the amount of the
imposed tax or duties

a

b. Duly registered agricultural cooperatives and non-agricuitural
cooperatives whose Reserve Funds have an oxisting balance of more
than One hundred million pesos (P160.0:10,000.00) shall poy the
following taxes at the full rate:

1) Income Tax on income derived from transactions with non-
members: Provided. That the same tax is not consequently
imposed on interest individually received by members

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Provided, further, ‘That coope-atives regardless of
classification, are exempt from inco ne tax from the (Lite of
registration with the Authority. The tay base for all
cooperatives liable to pay income ax shall he the income
directly related from the business transactions with non-
member safier deducting the amoun‘s for the statutory funds

Value-Added Tas (VAT) on transac ions with non-members
Provided, however. That duly regist: red cooperatives shall be
exempt from the imposition of VAT. on the following:

i. Sales by Agricultural coopers ives duly registere:L with
the Authority to their membr :s as well as sale 0” their
produce, whether in its origin.| state or processe:\ form
to non-members. their import. tion of dircet farm iaputs
machineries and equipment including spare parts
thereof, to be used directly and exclusively in the
production and/or processing - their produce, anii their
resale to other Agricultural cc: »peratives

ii, Gross receipts from lending a: tivities by credit 0: multi-
purpose cooperatives duly reg stered with the Au hority:
and

iii, Sales by non-agriculture. nor-electric and non-credit
cooperatives duly register: with she | Authority:
Provided, That the share cspital contribution of all
members does not exceed On» hundred thousan:! pesos
(P100,000,00) cach and re; ardless of the ¢
capital and net savings rataoly distributed among the
members: Provided. That the -xempt transaction= in the
foregoing shall include sale. made Ly cooperatives
duly registered with the Authority organized and
operated by their members tc undertake the protuction
and processing of raw materials or of goods produced
by their members into finished or process products for
sale by the cooperatives to their members and non-
members: Provided. howe That any processed
product or its derivative aris ng from the raw materials
produced by their members. ~old in the name anc for the
account of the cooperative shall be deeraed a product of
the cooperative and its memb ors: Prov ided, furti or, That
at Jeast twenty-five percent (25%) of the net income of
the cooperatives is returned othe members in 1he form

geregale

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©.

a

of interest and/or patronage r funds: Provided, fivally.
That VAT shall not be impesed for the purchase of
modernized vehicles under t}e Public ‘Transpor'ation
Modernization Program (PTM!’)

' non-members

3) All sales of goods andlor services rendered fc
Ibe subject to the applicable per entage tay
made by commodities or ser

os excep! sales
coop: ratives: and

4) All other taxes unless otherwise prov ided herein.

Donations to duly accredited charitable. 1 search and
educational institutions and reinv« stment to socioec: nomic
projects within the area of operation of the cooperative may be
tax deductible.

All duly registered cooperatives shall be exempt from payment of local
taxes. fees and charges whether barangay. municipal, city, or
provincial taxes and taxes on transactions vith banks and insurance
companies. ‘The Authority shall furnish the Municipal. Cty, or
Provincial Assessor's Office a certified list. of duly registered
cooperatives as basis of their removal from the Assessment Reils;

In areas where there are no available 1 staries public, the judge,
exercising his/her ex-officio capacity as notary pubke, shall render
service, free of charge, to any person or group of persons requiring the
administration of oath or the acknowledgment of Articles of
Cooperation and instruments of loan from -ooperatives not es: ceding
Five Hundred Thousand Pesos (P500.000..:0)

Any register of deeds shall accept for regis ration, free of ehar ge, any
instrument relative to a loan made under this Code which (oes not
excced Two Hundred and Fifty Thousand Pesos (P250,000.00) or the
deeds of title of any property acquired by te cooperative or anv paper
or document drawn in connection with ny action brought by the
cooperative or with any court judgment rendered in its favor or any
instrument relative to a bond of any accountable offiecr of a
cooperative for the faithful performane of hisher duties and

obligations,

Cooperatives shall be exempt from the payment of all court and
sheriff's fees payable to the Philippins Government for and in
connection with all actions brought under this Code, or where such

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action is brought by the Authority before he court, to enforce the
payment of obligations contracted in favor «! the cooperative

e

All cooperatives shall be exempt from putting up a bond for bringing
an appeal against the decision of an inferior court or for seeking to set
aside any third party claim: Provided. That a certitication of the
Authority showing that the net assets of the cooperative are in xce
of the amount of the bond required by the court in similar ease~ shall
be accepted by the court as a sufficient bon:

ss

h. Any security issued by cooperatives sholl be exempt from the
provisions of Republic Act No. 8799. ot erwise known as “The
Securities Regulation Act.” provided suca security shall pot be

speculative.

Any public official or employee who violates or in any manner circunvents
this provision shall be dealt with in accordance with th + penal provisions of this
Code.

SEC. 70. Issuance of — Certificate of — Tax Exemption for
Cooperatives. ‘The Authority shall furnish the Bureau of Internal Revenuc (BIR)
tified endorsement of a list of cooperatives in goo: standing and compliant
with the reportorial requirements of the Authority thit serves as basis (or the
issuance of a Certificate of Tax Exemption. The BIR sha | formulate the necessary
guidelines in streamlining the issuance of Certificai > of Tax &xemption for
cooperatives: Provided, ‘That, individual tax. identifi-ation number (TiN) of
members of the cooperative shall not be a requiremont in the processing of
application and renewal of Certificate of Tax Exemption

SEC. 71. Privileges of Cooperatives. - Coopera wes registered under this
Code, notwithstanding the provisions of any law to the contrary. shall uiso be
accorded the following privileges

a, Cooperatives shall enjoy the privilege of de positing their sealel cash
boxes or containers, documents or any valu ible papers in the safes of
the — municipal, city, or provincial treasures, and other goverament
offices free of charge, and the custodian of such articles shall issue a
receipt acknowledging the articles rece ved, duly witnessed by
another person:

b. Cooperatives organized — among — government employees.
notwithstanding any law or regulation to the contrary. shall enioy the
free use of any available space in their egency, whether owned or
rented by the Government

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da

e.

Cooper
cold stor

tives rendering special types of sers ces and facilities such as
ge.ice plant, — electrici ransportation, — wate
communications. and similar services and facilities shall be given
preference in the grant of a franchise or cert ficate therefor: Pro: ided.
That such cooperatives shall open their m-mbership to all persons
qualified in their areas of operation. In case there are two (2) or more
applicants for the same public service franchise or certificate of public
convenience and necessity. all things being -qual, preference shall be
given (0 a cooperative engaged in public ser: ices:

In areas where there are agricultural cooperatives, at leas’ fifty
percent (50°) of the supply to government iustitutions. ageneie-. and
LGUs. of rice, corn, grains. fish and other marine products. meat
eggs. milk, vegetables, and other agricultial commodities such as
fertilizers. sceds and other agricultural inp its and implements and
related products, shall be sourced from such cooperatives:

Preferential and equitable treatment in the allocation or control of
bottomries of commercial shipping vessels in connection with the
shipment of goods and products of eooperati ‘es

Cooperatives and their federations engaged in the production sad/or
the marketing of products from agricult: re, fisheries and small
entrepreneurial industries. shall have exclu ive preferential rig ts in
the management of public markets. and lease of public market
facilities, stalls or spaces, slaughterhouse. and storage facilities:
Provided. That no cooperative forming a joint venture, partnership or
any other similar arrangement with a no a-cooperative entits can
utilize these rights:

Cooperatives engaged in credit services shall be entitled to loans
credit lines, rediscounting of their loan rotes. and other eligible
papers with the Development Bank of thy Philippines (DBP), the
nd Bank of the Philippines (LBP), and ot rer financial institutions
except the Bangko Sentral ng Pilipinas (BS!");

The Philippine Deposit Insurance Corpor ition (PDIC) and other
government agencies, government-ow aed ane controlled
corporations. and government financial inst tutions shall provide
technical assistance to federations engage | in savings and credit
operations to establish and strengthen thei! own cooperative deposit
insurance systems:

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bh. Public Uansport service cooperatives shal) be entitled to finsacing
support from Government Finaneial Instivitions for the acquisition
and maintenance of land. sea, and air (ans}ort equipment, facilities.
and parts, and shall be preferred in securin : a franchise for active or
potential routes for public transport. The: shall have preferential
rights (o the management and operation of | ublie term nals anc ports
whether land. sea. or air, and wharves where the cooperative
operates, as well as in the operation of irrastre and steveoring

services therein,

i. Cooperatives shall be given preference nthe procurement of
government projects subject to the existin: procurement laws rules

and regulations.

J. Cooperatives shall enjoy the privilege of veing represented by the
provincial or city fiscal, or the Office of the Solicitor General, ‘ree of
charge. except when the adverse party is the Republic of the
Philippines:

k. Cooperatives organized by faculty members and emplos:es of
educational institutions shall have the pr: ferential r ght to manage
the school canteen and other services relaied to the cperation of the
educational institution where they are emp oyed: Prov ded. That such
services are operated within the premises of the said educational
institution:

1. ‘The relevant regulatory agencies. and LOUs shall not discriminate
against duly registered cooperatives sceking accreditation as service
providers. or seeking to engage in a part ctlar business: Py vided
‘That they possess all other qualifications inder the Law. Any person
who acts contrary to this provision may be veld liable ander this
and all other relevant laws and issuances

xle

m, Cooperatives shall be entitled to financing support from the relevant
government agencies that shall allocate funds for the establi-hment
of projects and programs for the devel pment an: promotion of
cooperatives: and

hn. The relevant government agencies and government fiaancial
institutions shall create a special window ‘or financing. in the form of
blanket or long-term wholesale loans without need for individual
processing. to qualified cooperatives ensaged in housing projects.
Such shall offer interest rates and terms e (ual to, or Letter thin those
given for socialized housing projects.

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‘The Authority. in consultation with appropriate -overnment agencies and
the cooperative sector, shall issue rules and regulations n all matters cone: ening
housing cooperatives and socialized housing projects. Fur: hermore. the sector shall
ters of policy and implementation thet will affec: the rules and

be consulted in ma

regulations on cooperatives
CHAPTER XI

INSOLVENCY, SUSPENSION, DISSOLUTION, | IQUIDATION, AND
DELISTING OF COOPERATIN ES

SEC. 72. Proceeding Upon Insolvency. - In cae a cooperative is wnable
to fulfill its obligations to creditors due to insolvency, sth cooperative may apply
for such remedies as it may deem fit under the prov sions of RA. No. (O12.
otherwise known as the °Financial Rehabilitation and 1 solvency Act.

Nothing in this Article, however, precludes creditus from seeking prot ection
from said insolvency law

20, 73. Effect of Declaration of Insolvency »y a Competent Court. -
Should the cooperative be declared insolvent by thy court, its Certificate of
Rewistration shall be cancelled, and it shall be deli ved from the registry of
cooperatives of the Authority

SEC. 74. Suspension of Certificate of Reg stration. - \ penalty of
suspension. after due process, shall be imposed on a operative on any of the
following grounds

a, Willful refusal to submit annual progress reports with the necessary
attachments within the period mandated by this Code: Pryvided, That in
case of newly-registered cooperatives, this provi-ion shall only app! three
(3) years after they have registered

b. Willful refusal to comply with an interlocutory eeder, a fins and ex cutory
decision, or award from the CDA Board of Directors, or from any of its
Regional Offices or adjudication officers. or by a voluntary arbitrator in

relation to an investigation, voluntary arbitratio, or adjudication.

SEC. 75. Voluntary Dissolution Where no Cred tors are Affected. - If the
dissolution of a cooperative does not prejudice the righis of any ereditor having a
claim against it, the dissolution may be effected by am ajority vote of the Foard of
Directors, and by a resolution duly adopted by the affirmative vote of at leas three-
fourths (3/4) of all the members entitled to vote, presen’ and constituting 2 quorum
ina special General Assembly called by the directors ‘or such purpose: Povided
"Phat the notice of time, place, and object of the meeting shall be posted for three
(4) consecutive weeks in the principal office of said oo; erative. in a public place in

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the municipality. city, or province where the cooperative «perates, and in its official
website and social media accounts

The notice of such meeting shall be sent to each mi mber of record either by
personal delivery. registered mail, or through electronie neans at least thirty (30)
days prior to said meeting. A copy of the resolution authorizing the dissolution
Shall be certified to by a majority of the Board of Directors and countersigned by
the Cooperative Secretary

Upon compliance with all the requisites for voluntary lissolution. the Authority
shall issue the Certificate of Dissolution.

SEC. 76. Voluntary Dissolution Where Creditors Are Affected. - \n
case creditors of the cooperative are affected. the petition for dissolv tion, sized by
a majority of its Board of Directors or the Chief Exe utive Offiver or (oneral
Manager, as the case may be. and verified by the Chair-erson of the Board or the
Cooperative Secretary, shall be filed with the Authorit.. The petition shat! state
that the dissolution was affirmed by a vote of at least three-fourths (3/4) of all the
members entitled to vote, present and constituting a quorum in a special General
\ssembly called for the purpose. and shall set forth al the ¢
against the cooperative

aims and demands

If the petition is sufficient in form and substance the Authority shin issue
an order reciting the purpose of the petition and shall ! x a period for the bling of
“any oppositions thereto, which shall not be less than thir ‘y (30) nor more (hoasixty
(G0) days after the entry of the order. Before such perio |. a copy of the order shall
be published at least once in a newspaper of general crculation published in the
municipality or eity where the principal office of the cooperative is situated or in
the absence of such local newspaper, in a newspaper o! general circulation in the
Philippines at the expense of the cooperative, and a coy y shall likewise be posted
for three (3) consecutive weeks in three (3) public place- in the municipalit or city
where the cooperative’s office is located: Provid: l. ‘That the pubsieation
requirement shall not apply to micro and small coopers: ives.

Upon the expiry of such period, the Authority shall proceed to hear the
petition and try any issue raised in the opposition filed [there is no opposition or
cach is insulticient, and the material allegations in Use petition are proven, the
\uthority shall issue a Certification of Dissolution aid direct the dispo-ttion of
assets of the cooperative in accordance with existing cules and regulatioas. The
Certificate of Dissolution shall set forth:

a, The assets and Jiabiliti

of the cooperative:
b. ‘The claim of any creditor

c. ‘The number of members:

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(. The nature and extent of the interests of the mevbers of the cooperative:
and

6. ‘The appointment of the liquidators

‘The Authority shall issue a Certificate of Cancellation of Registration upon
approval of the final report of the liquidators.

SEC. 77. Cancellation by Order of the Authority. ~The \uthority may
cancel, after due notice and hearing. the cooperative's ( ertificate of Registvation
on any of the following grounds:

a. Having obtained its registration by fraud:

b. Engaging in an illegal or unauthorized purpos

© Willful violation, despite written notice b the Authority, of the
provisions of this Code or its Implementing Ru es and Regulations other
issuances of the Authority consistent with this Code, or By-laws of the
cooperative:

d. Willful refusal to comply with an order issued or given by the Autnority:

e. Willful fa

Jure to operate on a cooperative basis; and

{Failure to meet the required minimum capita’ and minimum number of
members in the cooperative

‘The decision of the Authority on the cancel ion of the Certificate of
Registration of a cooperative may be appealed to the Aw hority’s Board of Directors
within thirty (30) days from the receipt of thereof. The lecision of the Aw
Roard of Directors shall be final and exccutory unless elevated or appealed to a
regular court.

hority’s

‘ative lias not
te of

SEC. 78. Cancellation by Failure to Operate. - If a coope
commenced operations within three (8) years after the issuance of ts Cert!
Registration, or has not ca
\uthority shall issue a show cause order for the cooperative to explain its failure
to operate, Failure to provide justifiable cause shall au: horize the Authority, after
due notice. to cancel the Certificate of Registration and delist it from the registry

rried on its business for thre: (3) consecutive yeurs. the

SEC. 79. Liquidation of a Cooperative. - Evry cooperative whose term
of existonce expires by its own limitation, or whose oxistence is terminated by
ancellation of its Certific:te of Registration by the

voluntary dissolution or

\uthority shall cease to operate. However. it can continue to exist for three (3)

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years for winding up its affairs. prosecuting and defend ng suits by or
and the disposition, conveyance and distribution of its properties and 3

‘The cooperative is authorized to convey all of its iaterests in the properties
tu trustees for the benefit of its members. creditors, and sther perscns in ini orest
after which, all interests which the cooperative hav in the propertios
terminated

°

Upon the winding up of the cooperative affair set distributable to
any creditor, sharcholder. or member who is unknown o: cannot be found shall be
given to the federation or union to which the cooperative is affiliated with.

\ cooperative shall only distribute its assets o: properties upon jawful
jon, and after payment of all its debts and liabilr ies, except in the «ase of
se of share capital of the cooperative. and as othery ise allowe:l by this Jode.

dissolui

deer

SEC. 80. Delisting of Cooperatives. - Cooperatives may be delistes from

the Registry of Cooperatives due to the following causes

a. Voluntary Dissolution:

b. Involuntary Dissolution:

ation by Order of the Authority

lation by F

jure to Operate: and
©. Merger or Consolidation

SEC, 81. Rules and Regulations on the lisolvency, Suspension,
Dissolution, Liquidation, and De-listing Cooperat ves. ~The guidelines on
the implementation of this Chapter shall be included in the Implementing Rules
and Regulations of this Code. in consultation with the cooperative sector.
CHAPTER XII
CAPITAL, PROPERTY, AND FUNDS

SEC. 82. Capital and Funds, — The capitalizition of cooperatives and
federations. or funds in the case of unions. shall be gove ned by this Code and its

Implementing Rules and Regulations to be developed in consultation with the

cooperative sector.

SEC. 83. Capital Sources. - Cooperatives registred under this Cod may

derive their capital from any or all of the following soure :s

a. Member's share capital:

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b. Loans and borrowings:

© Deposits from members only. except for coopersiive banks which “eeept
deposits from both members and non-members, or the generel public

dL Revolving capital which consists of the deferre | payment of patronage
refunds. or interest on share capital:

riners:

o. doint venture p:

{ Subsidies, donations, legacies. grants, aids and such other assistaice or
investment from any local or foreign institution \-hether public or private:
Provided, Phat capital coming from such subs: ties, donasions. lezacies
grants, aids, investments, and other assistance shall not be divided into
individual share capital holdings at any time. but instead shall form yart of
the donated capital or fund of the cooperat:’e, Upon dissolution or
cancellation of the cooperative, such donated cspital shall be subject to
escheat; and

a

Reserve funds utilized for investment and as capi! dl for the operation: of the
cooperative as approved by the Board of Director: or General Assem! ly,

SEC. 84. Limitation on Share Capital Subscription - No member of
primary cooperative other than the cooperative itself shall own or hold more than
iwenty percent (20%) of the subscribed share capital of he cooperative

Where a member of a cooperative dies, his heir shall ve entitled to the shares of
the decedent: Provided. That the total sharcholding © the heir does not exceed
Lwenty percent (20%) of the share capital of the cooperat ve: Provided, furthy °,"That
the heir qualifies and is admitted as a member of the cov rerative: Provided, inally,
‘Phat where the heir fails to qualify as a member or vw} ere his total shareholding
excoeds twenty percent (20°) of the share capital. the shares in es
to the cooperative upon payment to the heir of the valu: of such stares

s will revert

For federations. the share capital holdings of any on: member-cooperati+e shall
net exceed forty percent (10%) of the subscribed shar: capital of the federation.
provided that the voting scheme shall be in accordance with Section 44.

\ foreign federation of cooperatives if admitted 1s associate member of a
Philippine federation of cooperatives may hold or own ip to forty percent | 10°e) of
the preferred share capital of said Philippine feder ition: Provided, ‘Thar the
redemption date of such preferred share capital shall br at least five () years after
effectivity of membership: Provided, further, That during the five-year period,
\vithdrawal of the preferred share capital shall not be «Howed,

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SKC. 85. Assignment of Share Capital Coniribution or Interest. -
Subject to the provisions of this Code and the approval o/ the majority of the Board
of Directors, no member shall transfer his/her shares or saterest in the cooperative
or any part thereof unless

a. The member has held such share capital contrib ition or interest for more
than one (1) yt

an

b. ‘The assignment is made to the cooperative or to a nember of she coop: rative
is within the field of the mem sership of the cooperative:

or toa person who
and

c. ‘Phe Board of Directors has approved such assign: vent.

SEC. 86. Capital Build-Up. « The By-laws of ev ry cooperative, ex: pt for
cooperative unions, shall prescribe a reasonable and 1 alistic member cay ital or
deposits build-up program to allow the continuing grow 1 of the contribution of the
members to the cooperative as their economic conditions -ontinue to improve, Upon
approval of the membership. the member shall execute a subscription agreement
on his equitable contribution to the cooperative, Upon full payment thereof, the
momber may apply for an additional share capital subs« “iption. and execut anew
subscription agreement

SEC. 87. Shares. - Shares refer to a unit of capital in a cooperative. except
for cooperative unions, the par value of which may be | xed at any figure ot less
than One hundred pesos (P100,00) but not more tian One thousand pesos
(11,000.00). ‘The share capital of the cooperative is the noney paid or required to
he paid by the members for the operations of the cooper itive.

Unless otherwise provided for in its policies, the co -perative shall issue Share
Cortifieates at the end of the calendar year based on (4e number of sharcs fully
paid for the said period

Cooperatives are prohibited from issuing mulUole types of shares with
different par values, and from increasing or decreasing the par value of th» share
capital without amending their Articles of Cooperation ind By-laws

\ share can either be a common share issued (a regular member, or a
preferred share issued to associate members.

SEC. 88. Fines. —'The policies of a cooperative ma. prescribe a fine on unpaid
subscribed share capital, Provided. That such fine is fa rand

SEC. 89. Investment of Capital. —.\ cooperative upon approval as provided
in its By-laws. may invest its capital in any of the following:

asonable.

a. Any reputable bank:

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b. Secu

ties issued or guaranteed by the Gove snment:

c. Real estate primarily for the use of the coop -rative or its member

(. Federation investment to a cooperative, or primary cooperative
investment to another primary cooperative. subject (> the
guidelines that will be developed by the .\uthori
with the cooperative sector: or

or
y in consul: ation

¢. Any other manner authorized in the By-law

SEC. 90. Revolving Capital. - The General \ss: mbly may authori’e the
Board of Directors to raise a revolving capital from the pr ceeds of products sold or
services rendered. or per unit of product or services h. adled, to strengthen its
capital structure.

CHAPTER NUL
AUDIT, INQUIRY, AND MEMBERS’ RIGHT TO EXAMINE
SEC, 91, Audit of Cooperatives. - Cooperatives rm zistered under this Code
shall be subject to an annual audit of its financial aril social performayce in

accordance with the Implementing Rules and Regulations to be promulgat -d by
the Authority in consultation with the cooperati

sector

‘The financial audit shall be conducted by an external auditor who shall
independent from the cooperative or any of its subsidiaric s, and musi be a member
in good standing of the Philippine Institute of Certijied Public Accounsants
(PICP.\), and is accredited by both the Board of Accountiney and the Author ty

However, if the total assets or total liabilities of a: ricultural. fisheric. and
other cooperatives is less than Three Million Pesos (P3.000,000.00), or such amount
1s maybe determined appropriate by the Department of Agriculture (D.\) and
concerned agencies. the financial statements may be cevtified under oath by the

bookkeeper, treasurer, and the president.

‘The social performance audit may be conducted by the audit commitive, by
the internal auditor of the cooperative. or by an indepersdent auditor engazed by
the cooperative. ‘The Authority, in consultation with the cooperative sector. shall
promulgate the rules and standards for the social audit «cooperatives,

‘The federation representative may assist the \uthority in the visit
inspections and investigation of their member cooperati e. to ensure compliance
with laws and regulations. and to protect their members snd the public in general.

SEC, 92. Audit Report. - The complete audit r ports shall be submitted
to the Board of Directors. which shall be presented to te General Assemb'y for

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approval, The Board of Directors shall be liable under section 179) of this Code
Should it fail to present such reports to the General Asse nbly

SEC. 93. Non-Liability for Defamations. - The iuditor shall not be held
liable in any action for defamation for acts done or for any statement made by
him/her in good faith in connection with the conduct of a idit of the cooperative.

SEC. 94. Right to Examine. - All members shall Lave the right to examine
the records of the cooperative under $ n 60 of this ode at ary time uring
reasonable hours of the operating days of the cooper: tive: Provided, That the
member submits a letter request three (3) days prior to he date of his dem.ind to
examine the records and stating therein the purpose of 1 ye request

ect

‘The Roard of Directors shall consider the purpose snd reason for the r quest
to examine the records to determine its propriety. The Board of Director: shall
have the right to refuse the request after proper consuli ation with the requesting
member. upon the following grounds

ny information secured throush any
amination of the records of such cooj-erative or of any other
tive: or

used i

a. The member has improp'

prior

cooper

b. ‘The member is not acting in good faith or for a leg timate purpose in making
the demand to examine records.

If the request to examine is denied based on the afvrementioned grounds, the
member shall have the burden of proving to the Board: hat such request is made
in good faith and for a legitimate purpose. If the denia is made in bad faih, the
directors who voted for such refusal shall be penalized under Section 17 of this
Cade.

SEC. 95. Safety of Records. - Exery cooperative vall, at its principa’ office,
koop and carefully preserve the records required by this Code to Le prepared and
praintained. ‘The By-laws shall also provide the cond tion and the accosntable
porsons for the safekeeping of the records in accordan e with applicable biws on
data privacy, ‘The cooperative shall take all necessary precautions to prevent its
Joss. destruction. or falsification,

CHAPTER XIV
ALLOCATION AND DISTRIBUTION OF NET SAVINGS.

SEC. 96. Net Savings. - Notwithstanding the pro isions of e sisting lyws, the
net savings of cooperatives shall be determined in ac-ordance with its | y-laws:
Every cooperative shall determine its net savings at “he close of every « alendar

year.

Any provision of law to the contrary notwithstanding. the net savings shall
not be construed as profit but as an excess of payment < made by the members for

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the loans borrowed. or the goods and services availed by 1 1em from the cooperative
or the difference of the rightful amount due to the memb-ts for their products sold
or services rendered to the cooperative including other i flows of assets resulting
rom its other operating activities and which shall be deer ed to have been ret arned
to them if the same is distributed as prescribed herein.

SKC. 97. Net Savings Allocation and Statutory Funds, ~The net savings
shall be subject to the allocation of the following statu: ory funds. which shall be
recorded in the books of account, for the cooperative’s growth and development:

a. The reserve fund which shall be at least ter percent (100%) of the net
savings for the stability of the cooperative aviL to cover net losse~ in its
operations. including losses, incurred duriig a pandemic, siate of
emergency. and other stich force majeure as may be approved or
confirmed by the General Assembly. as the «ise may be

The fund shall be recorded in the books of #-count of the cooperative,
and earmarked as such, and can also be made available for the

cooperative's operations and for investment ‘o enhance the grow'h and

development of the cooperative. upon the approval by at least
majority vote of all members entitled 0 vote: Provided ‘That
cooperative may use up to fifty percent (% 1%) of the reserve funds
Provided, further. that the liquidity of the ooperative shall be taken
into account when utilizing a portion of the reserve fund for
investment: Provided, finally, That when utilizing the portion of the
reserve funds for investment. the board of directors shall conduct due
diligence and only invest in short-term Jow- isk investment options

However, for cooperatives in their first five (5) years of operation, the
amount allocated shall not be less than thir y percent 30°) of she net

savings.

The general assembly may decrease the amount allocated to the
reserve fund when the reserve fund already exceeds the share apital.

Upon the dissolution of the cooperative. he reserve fund shall be
distributed in accordance with the rules an regulations on liquidation
to be issued by the Authority

b. ‘The Cooperative Education and Training Fund (CEH). equivalent to
at least five percent (5%) but not exceeding ten percent (10%). shall be
used for the training. development and similar other cooperative
activities geared towards the growth of the cooperative: moverent

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1) Half of the CETE shall be used to pro
training of its officers, members, :
other half shall be remitted to a feder
must redound to the benefit and dey
cooperatives, such as, but not limit:
and other related activities

Should a cooperative have multiple
the discretion on how to allocate the

While prima
ion, said half of the CETE

or feder

-y cooperatives are not required to join z

ide for the education and
rd employses; while the
ation and/er union. which
Jopment cf the member-
L to trainings, seminars

affiliations. it shali have
‘ETF.

ny union
tedtoa

hall still b> rem:

union and/or federation of their choic +.

2) Upon the dissolution of the coop
balance of the CE'TF shall be erc
education and training fund of the fi
which it is member or affiliate:
cooperative

‘The Community Development Fund (CDF), »
five percent (5%) of the net savings, she
activities that will benefit the communit
operates. However, the cooperative ma
marginalized communities or affected ar
operation in times of calamities. disaster, or 1
discretion of the General Assembly

In the case of cooperatives whose cor
is institutional, the community refers to 1
cooperative is operating, subject to the
in the preceding paragraph.

low

The cooperative shall allocate a certa:
but not to exceed 50% of the total CDF alloc:
or national emergency: Provided, ‘That

development fund should be allocated for eli:
environmental programs. including suppor
related agri-agra products of the cooperative

In the case of cooperatives whose com

is institutional. the community refers to 1
cooperative is operating.

The allocation for the CDF for the ev
utilized in the following year unless the

rative, the unexpended
lited to the cooperative
deration and or union in

as determined tv the

aich shall not be less than
+ be used or projets or

where the cooperative
extend assistance to
outside its area of
al emergency. at the

ation

non bond of membership
re institution where the
sd assistance as provided

a percentage of the CDF.
ed, for calamity. disaster
sart of the community
rate resiliene:

prop rams
in insuring crops and

mon bond of membership
ne institution where the

rrent year shall be fully
projects or activities as

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dd

approved by a majority of the members enti led to vote, present and
constituting a quorum in a Genoral Assemb!~ meeting. require /aulti-
year utilization. For multi-vear projects or orograms, the allocation
shall be fully utilized within the period as st:-ted in the plan

The utilization of the CDF shall be in accordance with the
guidelines to be promulgated by the Authorit

‘The optional fund, which shall not exceed sev sn percent (7%) of the net
savings. shall be used for the acquisition of land and construction of
building, and any other expenses anent to it Provided. it is approved
by at least three-fourths (%) of all members entitled to vote. jp esent
and constituting a quorum, which shall be in accord ince wish the
Implementing Rules and Regulations to se promulgated 1 the
Authority

‘This fund may also be used for the ben: fit of its members and
employees under exceptional circumstances such as the occurrence of
a pandemic, crisis, or forre majeure. However, if the optional fund is
insufficient. the cooperative may charge my deficiency to lirect
expenses

‘The remaining net savings shall be made available in full io the
members in the form of interest on share cap tal following the formula
for computation as provided by the Authori y: Provide 1. That ‘his is
approved by a majority of the members entitled to vot, present and
constituting a quorum.

‘The sum allocated for patronage refunds shai! be made svailable at the
same rate to all patrons of the cooperative in proportion to their
individual patronage: Provided. That

(1) In the case of a member patron w th paid-up share capital
contribution, his/her proportionate am wnt of patronage refund
shall be paid to him/her unless he agre:s to credit the ameunt to
his/her account as additional share capi al contribution;

(2) In the ease of a member patron with unpaid share capital
contribution, his/her proportionate am unt of patronage vefund
shall be credited to his/her account util hisfher accouns until
his/her share capital contribution has ben fully paid:

(3) In the case of a non-member pation, his/her propor} onate
amount of patronage refund shall be st aside in a fund created
for the purpose and shall be allocated +o individual non-m-mber

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patrons only upon request and presen’ation of evidence of the
amount of his/her patronage. The amount so allovated shall be
credited to such patrons toward payment of the minimum cpital
contribution for membership. When a sm equal to th
has accumulated at any time within 6x» (2) years from the start
of his/her patronage. such patron shall be deemed and become a
member of the cooperative if he so agrees or requests and complies
With the provisions of the By-laws for » Lmission to membership:
and

amount

(1) Any non-member patron who hos accumulited the sum
necessary for membership but who doc- not request nor acre to
become a member or fails to comply wit the provisions of the By-
Jaws for admission to membership. the mount so weumul::ted or
credited to their account together wit) any part of the general
fund for non-member patrons shall b+ credited to any of the
statutory funds as approved by a majoriy of the members entitled
to vote, present and constituting a quorim:

CHAPTER XV
AGRICULTURAL COOPERATIVES

SEC. 98. Definition and Coverage. - This (hapter shall apply to all

agricultural cooperatives. as defined in this Code: Provi ‘ed, That the provisions of

the other chapters of this Code shall apply suppletor ly

except insofar as this

Chapter otherwise provides.

registered agi

SEC. 99. Cooperative Business Activities and Allied Services. ~ \duly
ulture cooperative may engage in al! or any of the following

activities:

b.

d

°.

Raising andlor culture of plants. high-value ereos, animals. fish, poultry.
livestock, other agri-products as source of food, feed, and fiber, and other
i-fishery or non-food commodities:

Production of salt

Community and social forestry:

Provision of credit facilities for marginal farmer: and fishermen:

Facilitating the procurement and distribution + f farm inpats! implements
for its members

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Processing, marketing, and sale of members’ agri-roducts and/or pro:luce:

Maintenance and management of irrigation sysiems, water impounding.
and other agricultural fa

lities; and

h. Other allied services such as but not limited to varehousing, cold storage,
and other post-h services, hauling, and transport of members’
products/produce and such other similar busines ser
that will reduce cost and/or value addition of output.

es and activities

2C. 100. Pre-Cooperative Agricultural Organization. — Prior to registration
with the Authority, a group of natural persons intending to form an agriculture
cooperative may voluntarily form a Pre-Cooperative ..gricultural Organization
(PCAO) that shall have its own juridical personality to undertake activities that
shall determine the viability of the creation of a cooperative under this Code Prior
to registration, the PCAO must be registered as such with the Coop:rative
Development Officers (CDOs).

‘The Department of Agriculture (DA) and the Authority, in coordination with
the CDOs, shall assist PCAOs so that they can formall. organize as cooperatives
under this Code: Provided, that should the PCAO decid: to formaliy organize into
a cooperative, it must comply with the provisions of Sections 8 and 14 of thi- Code
Further, Section 18 hereof shall apply to all contracts ¢ ecuted by pre-cooperative
organizations prior to registration under this Code.

The DA and the Authority shall jointly issue guicelines on the mech nisms
PCAOs.

SEC. 101. Registration of Agricultural Cooperatives. Agricultural
cooperatives shall file their application for registration with the regional office of
the Authority that has jurisdiction over its area of op:ration, The requirements
and procedure for registration of agricultural cooperat ves shall be in accordance
\vith the rules and regulations to be promulgated by thy Authority in consi tation
with the cooperative sector.

No fees shall be assessed or charged to any agri: ultural cocperative by any
government entity, national or local, at any stage of its organization and
registration process

SEC. 102. Capital Requirements of Agriculiural Cooperatives. - The
capital requirements and registration of agriculturs cooperative shal! be in
accordance with Section Lt hereof: Provided, That che paid-up capitslization
requirement for primary cooperatives shall not be Iess than Fifteen Thousand
Pesos (P 15,000.00).

SEC. 103. Bond of Membership. -'The bond of membership of agricultural
cooperatives shall be any of the following:

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Residential — members are farmers, farm wor" er: fisherfolk who a
actually and physically residing within the area of operation:

ic

b. Occupational — members are those w ho are eng: ge in raising, culture of
plants, animals. as well as those from the ‘echnical and scientific
communities of the agriculture sector:

© Agsociational — members are from registered associations, groups. lubs,
cultural and other similar aggrupation of farners, m workers and
fisherfolk: and

d. Institutional - members consist of employees. workers and/or officers of a
particular institution who will undertake or are undertaking agricnttural
projects.

SEC. 104, Clustering and Consolidation. — In or er to pool ‘heir resources
for increased viability and market competitiveness, the DA, DAR, DTI, and CDA
shall jointly establish a program that will promote encourage agricultural
cooperatives and facilitate their cooperation into clusters that will encompass the
whole agricultural value chain. including but not limite: to Jand consolidation
postharvest. processing. distribution. logist rketing, and promotions.

Within sixty (60) days from the effectivity of the implementing rul-s and
ulations of this Code. the DA, DAR. DTL and CDA in consultation with the
sector, shall jointly issue the guidelines for the implen entation of the foregoing

im, and shall provide the necessary assi step of the clustering
and consolidation process. including the formulation of «luster development plans.

prow ance at «ve

SEC, 105. Partnership and Joint Venture with Private Entities. - Duly
reuistered private entities, such as those conducting — gricultural Research and
Development, among others. may enter into a partner-hip or joint venture with
ricultural cooperatives in order to provide the latver with investmenis and
technical support. such as. but not limited to technolog! al, logistics, and {cilities
Support, among others. Such partnership or joint venture shall be registered with
the necessary regulatory authorities. including the CLA, and enjoy the relevant
exemptions and privileges under this Code

‘The details of the joint venture or partnership with ; rivate entities shal: be left
to the discretion of the cooperatives. Further requirements shall be laid down in
the implementing rules and regulations of this Code.

‘This notwithstanding. the equity or contribution of s uch private entity shall not
exceed forty percent (10°) of the partnership or joint v-ature.

SEC. 106. Commitment of Finan
reserve not less than fifteen percent (

al Portfolic. ~ Federations and shall
5%) of their financial portfolio for the

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extension of loans, credit, savings facilities, and others, to agricuitural
cooperatives: Provided, that any federation that shall w llfully misrepresent facts
or circumstances in order to circumvent compliance wiih this provision shall be
held liable under this Code and all other applicable law s, rules, and regul:itions,
Cooperative banks shall comply with the thresholds set /-y the BSP

Credit and Credit and Savings cooperatives shall yeserve not less than ten
percent (10%) of their portfolio for the extension of loans credit, saving facilities,
and others to cooperative members in relation to agricui ural purposes.

SEC. 107. Role of National Coordinating Committee of Cooperatives
Development. - The Authority shall mobilize the National Coordinat
Committee on Cooperative Development (NCC-CD) for the premotion of the
erowth, viability, and development of Agricultural cooperatives.

Provided, That the NCC-CD shall coordinate with thy DA and the Farmers and
Visherfolk Enterprise Development Council (FFEDC) on matters related to the
growth, development, and sustainability of the a ricultural and fisheries
lives.

cooper
SEC. 108. Role of LGUs. - The Local Government | nits shall:

a. Ensure the appointment of Cooperative !evelopment Offic in

compliance with Republic Act No, 11535;

b. Create a Committee on Agricultural cooperstives Development in the
Local Government Legislative Council which shall focus on addressing
legislative concerns on Agricultural cooperati\ es:

cc. Legislate necessary ordinances for the promotion and development of
agricultural cooperatives:

d. Disseminate information to people and facili ate the establishment and
development of the management and operations of agricultural
cooperatives in their respective localities;

©. Expedite the issuance of the necessary permits for the implement ation of
programsand projects of the Authority and other natienal government
agencies for the benefit of agricultural cooper itives:

{Upon written request of the Authority, assis in the resolution of inter-
ultural coo eratives operating within

cooperative disputes among agr
their localities:

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g. Fae’ and conduct seminars. trainings, and or conferences necc ssary
for the organization, registration, managenent and operations of
agricultural cooperatives. in coordination w ith ‘ederations and unions:

h. Provide technical assistance and skills trasning for farmers, farm
workers, and fisherfolk to engage in income-geverating activities:

i. Provide access to land for agricultural and ‘isheries cooperatives for
farming and other purposes which include le:sing or allocating public
lands for cooperatives use:

J. Offer financial support to agricultural and fish: ries cooperatives through
grants, subsidies, or low-interest loans; and

k. Facilitate linkage between agricultural and {sheries cooperatives and
other institutions offering assistance/services

SEC. 109. Role of Cooperative Development Councils and
National Government Agencies. - The Authority shal) in collaboration with the
LGUs through the Regional, Provincial. City, anc Municipal Cooperative
Development Councils and the Cooperative Develoy ment Offivers, facilitate
programs and policies affecting agricultural cooperati es in accordance vith a
Joint Memorandum Circular to be promulgated by the. uthority and the 170,

\gricultural cooperatives shall be entitled to finaneing support from the
rolovant government agencies that shall allocate fund for the establishment of
projects. and programs for the development and promotion of agricultural
cooperatives

SEC. 110. Benefits and Privileges of Agricu tural cooperatives. - An
ariculture cooperative shall enjoy the following benefir. and privileges

a. Taxes, Duties. and Liens:

1. All benefits, privileges. and tax trea: ments of eoopet
defined and enumerated under Chapte: X of this Code shail apply
to agricultural cooperatives:

2. Agricultural cooperatives shall be exempt from customs duties.
advance sales or compensating taxes on their importation and
local purchase of machineries, equipment, accessories, batteries
and spare parts used by them: Provided, That all tax: ant duty
free imports and local purchases shall nt be sold nor the benef
ownership thereof be transferred (o an. person until after five
years, otherwise, the cooperative and the transferee or assignee

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shall be solidarily liable to pay twice th» amount of the imposed
tay and/or duties; and

3. All real properties owned. and thos directly used fi
operations, management, and  main‘enance of _agricu’
cooperatives shall be exempt from the sayment of real property

taxes imposed under existing laws.

}. ‘Trainings and Conferences - All trainings and con erences necessary for the
organization, registration, management and ope vations of in_agriculture
cooperative, rendered by the appropriate governmn shall be given
free of charge. including costs of venue, training materials. speakers and
resource persons, The CDOs shall be primary responsible for these

onferences within their respective ocalities:

trainings and

«Consolidation - Agricultural cooperatives may con: olidate agricultura: lands
owned by its members within in a contiguous area for purposes of
agricultural development; and

4d. Direct Purchase by National and Local Governm: at Agencies ~ To promote
and support agricultural cooperatives, nation: | and local gover iment
agencies shall directly purchase at least fifty pere nt (50°) of their targeted
agricultural products from accredited agricultur il cooperatives: Pr vided
That said products are necessary in the perforsaance of their res} ective
mandates.

For the purposes of this Code. the procure:nent by national «
and local government units of said agricultural products shall be «xempt
from the application of the bidding process prescribed ander r levant
government procurement laws: Provided, That sid agencies shall vadergo
a negotiated procurement under the appliable  guicelines of the
Government Procurement Policy Board

ce. Loans and Grants:

1) All loans applied for by agricult ral cooperatives sn any
government-owned or -controlled banks or government
financial institutions shall enjoy preferential treatment as to
the requirements, rates, securities, ind collaterals; and

2) ‘The DA shall coordinate with the BSP to lower the
requirements for all loans applied for and granted to
agricultural cooperatives

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SEC. 111. Merger and Consolidation of Agricultural Cooperatives.
‘The merger and consolidation of agricultural cooperativ s shall be in accor: lance
with the Implementing Rules and Regulations to be promulgated by the Authority.

SEC. 112. Inter-Cooperative Arrangements of — Agricuitural
Cooperatives. - Agricultural cooperatives shall be allowed to enter inte inter-
cooperative arrangements with and among other cooperstives and other entities to
pursue value and supply chain solutions and other sgribusiness development
programs. subject to the guidelines to be promulgated by the Author

SEC. 113. Local Development Hubs. -'The | and CDA shall vointly
establish LDHs in order to strengthen the market link: ges between farmers and
huvers, fostering agricultural development and economi: growth at the loca’ level
Further, they shall jointly issue the guidelines for the op rations and maint: nance
thereof.

SEC. 114. Annual Trade Fair and Awards.- The DA. in
coordination with the CDA and other stakeholders. shill establish and held the
Annual Agricultural cooperatives Trade Fair and wards to showease the
oemplary business achievement, latest innovations. ani other emerging trends in
the sector

CHAPTER XVI
AGRARIAN REFORM COOPERA LIVES:

SEC. 115. Coverage. -'The provisions of this Chater shall primarily govern
agrarian reform cooperatives. including \grarian Rei orm Beneficiaries ARBs)
Cooperative as defined in Department of Agrarian Reform (DAR) Administrative
Order No. 05, Series of 2009: Provided. That the provisi-ns of the orher chajpters of
this Code shall apply suppletorily except insofar a this Chapter otherwise

5

provides

ate agricultural lancs by modes of acquisition
for actual and direct use, such as large-scale farming, hall also not be subject to
the five (5)-hectare retention limit under this Section and Sections 70 and “3(a) of
Republic Act No. 6657, otherwise known as The Comp ehensive Agrarian Reform
Law of 1988" as amended

St 16. Purpose. - An agrarian reform coop rative as lefined shall be
organized for any of the following purposes:

Cooperatives acquiring pri

a. ‘To develop an appropriate system of land tenue. land development, land
consolidation or land management in areas cored by agrarian re‘orm:

b. ‘To coordinate and facilitate the disseminaticn of scienrifie met hods of

production, and provide assistance in the storage, transport, and

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wharves. ports.

%

SEC,
plantations. estates, or
the Comprehensive Agr
ker-beneficiaries under

marketing of farm products for ay

immediate family

n reforr

‘To provide financial facilities to ARBs for provide

at reasonable costs:

To

©

ange and facilitate the expeditious trar

suitable technology to ARBs and marginal farm:

Ost

‘To provide social secur

benefits, a

ity benefits. health. med

ind other social and economic benefits

welfare of the ARBs and marginal farmers:

‘To provide non-formal

livelihood programs to -

education, vocational an.
ARBs and marginal farm:

‘To act as conduits for external assistance and »

marginal farmers:

‘Vo undertake a comprehensive and integrated

agrarian reform and

dev

resettlement areas with
lopment of agro-based. marine-based, and cx

‘To represent the ARBs on any or all matters thar

‘To undertake such other economic or soci:
incidental in the pursuit of the foregoing purp:

. 117. Cooperative Estate. ~ |
siendas for the benefit of the w
rian Reform Prog
cooperativ

Ha

tiv

ndholdings a

m shall be

setup.

SEC. 118. Infrastructure. - In agrarian reform an
Government shall grant to agrarian reform cooperative
the construction, maintenance and management o

reservoirs. irrigation systems, waterw

infrastructures with government funding

For this purpose, the Government shall provide tech:
and equipment to such agrarian reform cooperatives.

SEC. 119. Lease of Public Lands. -'The Governms

any

rian reform coope

ative for a period not ¢

) beneficiaries and their

at or productive purposes

sfer of appropriat and
rs at the lowest possible

cal and social insurance
hat promete the x: neral

‘ technical traininy. and
est

vices to the ARDS and
levelopment progrim in
special concern fir the
tage-based industi es:

affect their interes): and

ties as may be nec

ses.

uired by “he Stat, like
erkers in accordane: with
ollectively owned ly the

{resettlement ares, the
preferential trea:ment
roads, bridges, cmals,

orks systems, and other

ical assist.ince, facilities.

at may lease public tands
ceeding twenty-fiv.+ (25)


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sears, subject (o renewal for another twenty-five (25) years only: Provided That
the application for renewal shall be made one (1) year b: fore the expiration of the
lease: Provided, further, That such lease shall be for the exclusive use and benefit
of the ARBs and the marginal farmers subject tthe provisions «f the
an Reform Program. as amended

Comprehensive Agra

SEC. 120. Preferential Right. - In agrarian reform weas. an agrarian reform
cooperative shall have the preferential right in the grant of franchis» and
certificate of public convenience and necessity for the 0 eration of public w ilities
and services: Provided, Phat it meets the requirements . nd conditions imposed by
the appropriate government agency granting the franchise or certificate of public
convenience and necessity. In cases where there is an vectric service prowder in
the area. it shall, upon the request of an agrarian reform cooperative, immediately
provide electric services to the agrarian reform areas, If the electric service
provider fails to provide the services requested within a period of ox¢ (1) yeur, the
age: ay undertak» to provile the electric
services in the area through its own resources, All inve tments made by the said
awrarian reform cooperative for the electrification of the agrarian  yeform
resettlement areas shall be the subject of sale to the ele tric service provider once:
it takes on the service:

jan reform cooperative concerned m

SEC, 121. Special Privileges. - Subject to su h reasonable terms and
conditions as the DAR and the Authority may mpose. agrarian -eform
cooperatives may be given the exclusive right to do any of the following economic
ictivities in agrarian reform and resettlement areas:

a. Supply and distribution of consumer, agricultural, aquacultural, and
industrial goods, production inputs. and raw materials and supplies,
machinery. equipment nd
requirements of the ARBs and marginal fa; mers at reasonable prices:

acilities, an! other services

‘sof the ARBs in local and

b. Marketing of the products and serv
foreign markets

Processing of the products of the members into finished consumer or
industria

| goods for domestic consumption or for export

d. Provision of essential public services at cos: such as power, irrigation,
potable water, passenger or cargo transvortation by land ar sea

communication services. and public health and medical care services:

e. Ma tion, and commerc:al development of sarine,
forestry, mineral. water. and other natural resources subiect to
compliance with the laws and regulations on environmen‘al and

ecological controls; and

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f. Provision of financial, technological, and ot yer services and facilities
required by the ARBs in their daily lives anc livelihoorl.

‘The foregoing notwithstanding. an agrarian refoim cooperative cannot. on
its own, by policy or any other means. disqualify a mesber as an ARB, whether
directly or constructively.

‘The Government shall provide the necessary financial and. techni
assistance to agrarian reform cooperatives to enable thon to effect-vely discharge
their purposes under this Chapter. The DAR. the Authority and the BSP shal! draw
up a joint program for the organization and financing of agrarian reform
cooperatives. The joint program shall be geared toward- the gradual assumption
of fall ownership and management control by ARBs of the agrarian yeform

conperatives.

SEC. 122. Organization and Registration. - Agrarian‘ eform
cooperatives may be organized and registered in accordance with the requirements
of this Code only upon prior certification by the DAR that said proposed coop: rative
is needed and that its organization is feasible and will be economically viable in its

ions.

ope

‘The Authority. in consultation with the concerned government agencns and

ot ning to the

perative sector, shall issue appropriate rules and rey ulations p'
provisions of this Chapter

CHAPTER XVII
COOPERATIVE BANKS
SEC. 123. Organization, Registration, and Membership. - ‘The
organization and membership of a Cooperative Bank shall be governed by the
following provisions
a, Organization - At least fifteen (15) cooperati: es duly established and
registered under this Code may register a ec sperative sank wih the

Authority, upon compliance with the requir-ments of and required
authorization from the BSP.

b. Registration - ‘The application for the regist-ation of the Articles of
Cooperation and By-laws, including its amendmeats, by a ccoperativ + bank
with the Authority shall be accompanied by a Cerificate of Authority issued
by the BSP.

Membership - Membership in a cooperative bank shall be oj en to

1) cooperatives of all types and categories:

2) foreign cooperatives:

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3) pre-cooperative organizations establ shed under Presidential

Decree No. 175; and

4) individuals.

Membership in a cooperative bank is either regular or assvci
Regular membership shall be limited to couperative organizations
individuals who are members of a domestic cooperative. or a foreign
cooperative. Associate members shall be pre-operative organizations
established under Presidential Decree No. 175, 2+ well as indi sand
other institutions. such as foreign cooperative institutions that he
subscribed to preferred shares only.

Us

‘The common shareholdings of a local cope? ative shall at all tines be
at least sixty percent (60%) of the total outstan ling voting shares of the
cooperative bank.

Common shares held by individuals who are members of a
cooper and foreign cooperatives shall not bo more than forty percent
(40%) of the total outstanding voting shares: Pr wided, ‘That the common
shareholdings of each individual who is a membe: of a cooperative shall not
he more than five percent (5°) of the total outsta iding voting shares

Other provisions of this Code shall apply s ippletorily insofe
are not inconsistent with this Chapter

ss they

SEC. 124. Powers and Functions of Coopers tive Banks. - Cooperative

banks shall primarily provide a wide range of financial services to cooperative

org:

nizations, their members, and to the public, A cooprative bank may perform

any of the following banking services

b.

©.

de

Extend loans and advances primarily for the purj-ose of meeting the normal
credit needs of cooperatives as well as farmers. farm workers, fishertolks, or
their families, merchants, and private and public omployees Provid: 1, That
loans and advances granted to cooperatives shall tot be subject to individual
ceilings on loans to directors. officers, stockhol:iers, and related interests

(DOSRD:

Accept savings and time deposits:

JAet as a corr

spondent bank of other financial institution

Discount and Rediscount paper with the LBP DBP or any other bank.
including its branches and agencies. Said banks shall specify the nature of
paper deemed acceptable for rediscounting. as wll as the rediscoun’ rate Co
be charged by any of these banks:



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Act as collection agent:

Act as a depository bank of LGUs and other zovernmert agencies or
instrumentalities:

Acquire readily marketable bonds and other debt .ecuriti

Buy and sell foreign exchange:
Acquire shares of publicly listed companies;
‘Act _as conduit bank for the disbursement of gover ament funds intensied for

lending to agriculture. small-medium enterprise: (SMEs) and projets for
local economic development

Eligible to participate in government program a locations for agricultural
londing, social housing. loans to rural micro enter) rises and other initiatives
towards inclusive growth

Offer financial technology services. such as digital lending an 1p:
digital wealth management, among others. subjc “t to prior appro
BSP

ment, and
a of the

rticipate in treasury and money market operations such 2s:
1. Repurchase Agreements with the BSP:

b. Reverse Repurchase Agreements with the 3SP:

¢. Overnight Lending Facility of the BSP:

d. Overnight Deposits with the BSP:

©. ‘Term Deposit Facility with the BSP: and,

Sales and Marketing of Financial Product

Offer credit card services:

‘Act as lending banks for credit surety fund coop: ratives. as provided under
Republic Act No. 10711, otherwise known as the “Credit Suri Fund
Cooperative Act of 2015:

Act as depository U funds, if
such banks exist

nk of cooperatives with regi -d to their reser
n their area of operations: and

Offer other banking services as provided in Sec ion of Republic \ct No.
$791. otherwise known as “General Banking La: (GBL) of 2000.

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4.

In addition to the powers granted to cooperative bani s by this Code and other
existing laws. any cooperative bank may perform any or : Il of the banking services.
offered by other types of banks subject to the prior approval of the BSP.

AC. 125. Establishment of Branches and (ther Offices. ~ The
establishment of branches, branch-lite units. or ot er banking offievs by
cooperative banks shall be governed by the rules and reculations of the BS}’, The
cooperative bank shall furnish the Authority with a copy of the Certificste of
\uthority issued by the BSP.

‘The CB shall furnish the Authority with a copy of th» Certificate of Aut hority
issued by the BSP. In no case shall a cooperative bank b+ prohibite:l or restricted
from establishing a branch in a province, city, or municip lity. solely on the ground
that another CB already exists in the

me area,

SEC. 126. Management of Cooperative Banks. - The management of the
cooperative banks shall be governed by the rules and reguiations to be promulgated
by the BSP. in consultation with the Authority. To maintain the quality of bank
management and accord appropriate protection to depesitors and the public in
general. the BSP shall prescribe the fit and proper qualit cations of vank directors
and officers for the purposes of this Article. giving due ecognition to the unique
nature and character of cooperative banks. The number. composition, and t rm of
the Board of Directors shall be defined in the Articles of tooperation and By-laws
of the cooperative bank. in accordance with the following guidelines

a. Board and Committe ive baik shall constitute at a
minimum, the Board of Directors. Election Committce. and \udit
Committee.

8. = The coope

The Board of Directors shall be composed of at east five
than fifteen (

but noi more
5) members. at least one (1) of whom is a1 independent
director. It shall be entrusted with the manag: ment of th» affairs of the
Cooperative Bank. It shall be responsible for the strategie planning.
direction-setting and policy formulation activities of the cooperative
bank. The members of the Board of Director. shall be »lected by the
General Assembly or Representative Assembly

The Election Committee shall be responsible for the formulation and
implementation of election rules and guidelin +s. It shall supervise the
conduct of election. election-related activities canvass end certify the
results of the election, and decide cases relatis ¢ 10 such ¢lection, “xcept
those involving the committee itself or its members. The members of the
Election Committee shall be elected by the General Assembly or
Representative Assembly

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The Audit Committee is a Board-level committee whose compesition
functions and responsibilities shall be in acco-dance with the existing
regulations of the BSP: Provided, That the Au-tit Committee shal! have
at least one-third (1/3) but not less than two (2: members of the Board of
ss. Other Bos rd-level committees may
be created as may be directed by the BSP.

Directors as independent directo

Other committees may be created by the Board
functions, and responsi

of Directors with powers.
ties which shall be difined in the By

Jaws; and

b. Key Management Officers. ~ The key ement officers shill be
appointed by the Board and shall include (re President, Treasurer
Internal Auditor, and Compliance Officer. or their equivalent ranks. The
BSP shall prescribe the qualifications and di qualifications of the key
management officers

SEC. 127. Vacancy in the Committees. - lv cas ney in the
committees, the Board of Directors of the cooperativ, bank. unless otherwis
provided in the By-laws. will appoint a person to fill the same, subject to the
provision that the person appointed shall serve only for the unexpired porrion of
the term

p of vaca

S|

*. 128. Compensation of Directors. - In th absence of any provision
in the By-laws fixing their compensation, the directors shall not rece e any
compensation except for reasonable per diems: Prov ded. however, That the
directors and officers shall not be entitled to any per diem when, in the preceding
Jondar year, the cooperative bank reported a net loss or had a dividend rete less
than the official inflation rate for the same year. Any compensation other than per
dlioms may be granted to directors by a majority vote o: the members with voting
hts at a regular or special general assembly meetin: specifically called for the
purpose: Provided. That no additional compensation oti er than pes diems shall be
paid during the first year of existence of the cooperative bank

In no case shall the total yearly compensation of directors exceed ten percent
(10%) of the net income of the cooperative bank during | he preceding year

SEC. 129. Dealings of Directors, Officers, Stockholders, and elated
Interests (DOSRD. - Dealings with dircetors and offic: rs of the Cooperative Bank
shall comply with the provisions of Section 36 of Republic Aet No. 8791, However.
the limits on Joans to dealings of directors. officers. stockholders, and related
interests shall not apply to loans, othe
extended by the cooperative bank to its member primary cooperatives

credit accor modations. or guarantees:

SEC. 130. Iegal Use of Confidential Information. -'Vhe liabi'ity of a
dvector or officer, or an associate of a director or officer who, for his/her benefit or

advantage or that of an associate. makes use of confilential information that, if

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generally known, might reasonably be expected to adversely affect ‘he operations
and viability of the cooperative bank shall adhere to the ; rovisions ef Section 57 of
this Code.

SEC. 131. Bond for Faithful Performance of luties and Obligations.
~The bond for the faithful performance of duties and cligations of accountable
officers of the cooperative bank shall adhere to the provi: ions of Section 64

SEC. 132. Quorum Requirement and Voting Rights of the Cooperative
Bank Board of Directors. - In meetings of the Bard of Directors f the
Cooperative Bank, the same provisions under Section 48 of this Code shall apply

SEC. 133. Composition of the General Assembly, - The Coneral
\ssembly shall be composed of regular members who are entitled to vote uncer the
Articles of Cooperation and By-laws of the cooperative bunk.

SEC. 134. Powers of the General Assembly. - The General Assembly
shall be the highest policy-making body of the cooperatis v bank and shall exercise
the same powers as enumerated in Section 40 of this Cove

SEC. 135. Meetings. -‘The conduct of meetings o' the General Assembly of
cooperative banks shall adhere to the provisions speciied in Section 11 of this
Code.

SEC. 136. Quorum and Voting System. - The quorum requirem: at for
General Assembly meetings of cooperative banks, wheth.-r special or regular shall
be one-half (4) plus one (1) of the number of voting siares of all the members
entitled to vote,

‘To amend its Articles of Cooperation and by-laws. it least three-fourths (3/4)
of all the members with voting rights. present and constituting a quorun: shall
be required. All other voting requirements shall be preseribed by the BSP. In the
alternative, the cooperative bank may opt to amend its .\rticles of Cooperation and
Kiy-laws through a referendum, subject to the guidelines to be issued by the
\uthority. However, the voting requirement shall be two-thirds (4) of all members
entitled to vote.

‘The voting rights of the members shall be propertionate to the nuniber of
their paid-up shares:

‘The cooperative bank may opt to amend its Artic es of Cooperation and By-
laws through a referendum, subject to the guidelines to he issued by the Aus hority
However. the vote requirement shall still be two-thirds (4) vote of all the mombers
entitled to vote

SEC. 137. Investment in Allied Underta:
requirements and restrictions as may be imposed by the Monetary Board under its

8. - Subject io the

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existing rules and regulations, Cooperative Banks may invest in equities of allied
undertakings which may include, but are not limited to tie following:

a. Banks, financial institutions and non-bank ‘inancial intermediaries
including but not limited to insurance cooperat ves and trust banks:

b. Warehousing and other post-harvest facilities:

c. Fertilizers, agricultural chemicals. and pesticides distribution:

d. Farm equipment distribution:

e. Trucking and transportation of agricultural pro ducts:

Marketing of agricultural products:

Leasing

h. Automated teller machine (ATM) networks:

Public t

ansportation:
j. Financial technology: and

k. Other undertakings as may be determined by #1 Monetary Board of the
BSP.

SEC. 138. Limitations on Lending Authority. Except as the Monetary
Hoard may otherwise prescribe, the direct indebtedness to Cooperative Banks of
any person, company, corporation, or firm. including the :ndebtedness of members
of a partnership and association, for money borrowed. shall in no time exceed
twenty-five percent (25°) of unimpaired capital and sovings of the cooperative
bank. However, the direct indebtedness mentioned shall exclude loans secured by
obligations of the BSP: loans fully guaranteed by th Government as ‘0 the
payment of principal and interes

loans to the extent ecvered by the hold-out on
gnment of, deposits maintained in the lending cooperative bank and held in
the Philippines; and other loans or credits as the Monetty Board ray, from time
to Lime, specify non-risk assets.

SEC. 139. Capital Requirement for Cooperative Banks. Acoop: rativ
bank shall have a minimum paid-up capital in such y be requived by
the BSP. The BSP may prescribe rules and regulations on the types of shares a
cooperative bank may issue, including the terms therec and rights appur'enant
thereto (o determine compliance with laws and regulations governing capital and
equity structure of banks. Provided, That Cooperative Pinks shall issue par value
shares only.

mount as ma

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SEC. 140. Samahang Nayon and Municipal Katipunan ng mga
amahang Nayon. - Samahang Nayon (SN) and Mun vipal Katipunan ne mga
‘avon (MKSN) which held common shares o cooperative bank» prior
to the effectivity of Republic Act No. 9520 shall apply for conversion to cooperatives
in order to maintain their status as regular members of cooperative banks:
Provided, That the cooperative banks shall exert efforts to inform and assist the
SN and MKSN to convert within a period of five (5) yeors from the effectivity of
this Code. Upon failure of the SN and MKSN to finally convert te a cooperative
id period, the funds held in the name of such SN and MKSN shall be
considered as preferred shares and shall remain as eapit.Lof the cooperative bank.
Within six (6) months from the conversion of preferrec shares, the Cooperative
Bank (CB) may, at its option, reclassify such shares as treasury shares at the same
value at which they were liquidated.

Samahang }

within sa

SEC. 141. Additional Source of Capital of the Cooperative Banks. -
“The funds or common shares in cooperative banks held i the name of cooperatives
Whose Certificates of Registration have already been cincelled by the Authority
shall remain as capital in said cooperative banks and sh ill be treated as preferred
shares

SEC. 142. Supervision and Regulation of Cooperative Banks — All
cooperative banks shall be under the supervision of the BSP: Provided, however.
that the Authority shall monitor the cooperative banks’ compliance with
tive laws, rules, and regulations. With respect to the governance of the
cooperative banks, the provisions of the banking laws, rules, and regulations shall
prevail, notwithstanding Section 71 of RA 8791.

cooper

SEC. 143. Promulgation of Guidelines. ~ The BSP and the Authority
may formulate guidelines to implement or clarify the j rovisions of this Chapter.
Provided, ‘That the BSP. as the regulator of banks, shati be the primary reculator
of cooperative banks consistent with the provisions of k A 8791: Provided, -urther,
‘That in order to minimize the burden of dually-regulatod entities. the BS!" shall,
in consultation with the Authority, in its promulgation f rules and regulations, to
the extent allowed in banking and other relevant laws and insofar as consistent
With its exercise of supervisory and regulatory powers over banks, in its
promulgation of rales and regulations. consider the requirements of this Code
and the Authority for cooperatives in general.

SEC. 144. Privileges of Cooperative Banks. - Cooperative banks:
registered under this Code shall have the following priv ileges and incentiy

a. Those privileges and incentives accorded to cooperatives uncer this
Code and other prior laws including ex: mption from all national,
provincial, city, municipal or barangay ‘axes, fees, and churges of
whatever nature and description. Provic ‘d, however, That when a
cooperative bank has reached an undivided net savings of more than

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One Hundred Million Pesos (P100,000,000.10), transactions to non-
members shall be taxable.

‘The foreclosure of mortgages covering loans granted by cooperative
banks and executions of judgment thereon involving real properties
levied upon by sheriff shall be exempt {vom the publications in
newspapers where the total amount of loan excluding interests due
and unpaid, does not exceed One Million Pesos (P1.900,000.00) or
such amount as the Monetary Board muy prescribe as may be
warranted by prevailing economic conditions. It shall be dvemed
sufficient publication in such cases where ‘he notices of foreciosure
nd execution of judgment are posted in th» most conspicuous ar
such as the municipal building. the muncipal puble market, the
Cooperative bank, and the barangay hall where the lan | mortgaged is
situated during the period of sixty (60) das immedistely preceding
the public auction or execution of judgment. Proof of publication as
required herein shall be accomplished via a affidavit of the she riff or
officer conducting the foreclosure sale or ¢ecution of judgment and
shall be attached with the records of the cae:

‘A cooperative bank shall be allowed to fore: lose lands mortgaged to it
subject to the provisions of RA 6657, as amended. For agrarian lands
foreclosed by 2 cooperative bank, the disposal of the same to nother
qualified beneficiary under RA 6657, as amended, shall be made
through the same cooperative bank. Furth r, the amortization of the
beneficiary in favor of DAR shall be coursed through the servicing
cooperative bank: Provided, however, that “operative banks shall be
exempt from the landholding limits as pres: ribed by D AR or any other
law requiring the same:

For cooperative banks granted by the BSP with accreditation» Rural
Financial Institution (RFI) under RA 10000, the following pr vileges
shall be awarded:

1) Unrestricted branching rights to set-up agriculture-oriented
branches in unbanked municipalities and predonunantly
agricultural communities, subject ‘0 existing regulations on
minimum capitalization for bank. and the size of branch
network:

2) Automatic eligibility with Philippine Guarantee Corporation
(with respect to agricultural credit :warantee). Philippine Crop
Insurance Corporation (PCIC). asd governmental sgencies

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providing services towards risk-miti: ation in the agriculture

sector:

3) Priority status as credit delivery partner or conduit of
government-directed programs for ag: icultural through (ie DA
and other government agencies: and

1) Entitlement to participate free of chay-ge in capability-buclding
activities in agriculture lending sucy as, but not limited to,
exchange of best-practice experiences, study tour, tech»ology
transfer among ASEAN member-:ates and other {ora of
international cooperation: and

c. Notwithstanding the — provisions here a, priv
incentives granted to rural banks pursuat to RA 73
known as the “Rural Act of 1992.” shall alse be grante¢ to coop: rative
banks duly registered under this Act

leges and
otherwise

CHAPTER XVIII
INSURANCE COOPERAT VE!

SEC. 145. Insurance Cooperative. - Existing operatives may organize
themselves into an insurance cooperative for the purpose of providing health, life.
and non-life insurance. as well as pre-need plans edu:
memorial plans) of cooperatives and their members

ion pension, and

SEC. 146. Types of Insurance Provided. — Under the cooperative
insurance program established and formed by the virtue of the provisions of this
Code, the insurance coopcrativeshall provide its constituting cooperativs and
their members different types of insurance coverage «onsisting ef life in-urance
with special group coverage. loan protection, retirement plans. endowment health
ident coverage, pre-need plans. fire insurance marine insurance: motor
20. bonding. crop and livestock protection and equipment ins-wrance.

and ¢
vehicle cove

among others.

EC. 147. Applicability of Insurance Laws, - The provisions of the
Insurance Code and all other laws and regulations rela:ive to the organization and
operation of an insurance company shall apply to insurince cooperatives organized
under this Code, The requirements on capitalization, iavestments and resorves of
insurance firms may be liberally modified upon const Itation with the \vthority
and the cooperative sector. but in no case may the requirement be reduce.! to less
than half of those provided for under the Insurance Cote and other relates! laws

as thes are not

Other provisions of this Code shall apply supplerorily insof:
inconsistent with this Chapter.

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SEC. 148. Implementing Rules for Insurance Cooperatives, ~ The
Insurance Commission and the Authority. in consulta'ion with the conc med
cooperative sector, shall issue the appropriate rules and r-gulations mpleme ating

the provisions of this Che

pter.

CHAPTER XIX

COOPERATIVES ENGAGED IN PUBLIC SERVICE!

SEC. 149. Definition and Coverage. - \ coop: rative engaged in public
cepviees refers to one organized to render public serviers, as authorized under a
franchise, certificate of public convenience. certificate of public convenien: and
nee te form of au horization or permu duly
_ Such servi -es may include bus 1s not

sity. concession, or any other approp

issued by the appropriate government agence
limited to the following

a. Health services:
b. Power generation, transmission, and/or dis: ribution
cc. lee plants and cold storage services:

d. Communication — services — including elephone and ligital
communications. and other value-added se: vices:

nd, water, and air transportation services for passengers ind/or

cargoes:

{. Public markets. slaughterhouses. manasement of land  Uscasport
terminals and ports, and other similar ser: ices:

2 Water supply and distribution system serv ices; and

h. Such other types of public services as yay be engaged in oy any

cooperative

Such cooperatives shall be primarily governed by this Chapter end the
aenoral provisions of this Code insofar as they may be applicable unless they are
inconsistent herewith.

EC, 150. Registration Requirements. - In addition tthe

requirements provided under Section 11 of this Code no cooperative ensaged in
public services shall be registered unless it satisfies thy following requiren vents

‘a. Its Articles of Cooperation and By-laws | rovide for the menibership
of the users and/or producers of the servic > of such cooperatis es: and

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b. Such other requirements as m
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SEC. 151. Regulation of Cooperatives Engaged in Public Services. -
‘The internal affairs of cooperatives engaged in public services, such os: i) the right
and privileges of members: ii) the rules and procedures for meetings of the General
‘Assembly, Board of Directors and committees: iii) the ele tion and qualifications of
officers, directors, and committee members: iv) allocation and distribution of
nd v) all other such matters, shall be governed by this Code.

savings’

All matters relating to the franchise. certifieat » of public convenience
cortificate of public convenience and necessity, concession or any other appropriate
form of authorization or permit of cooperatives engaged ‘n public servic
capitalization and investment requirements, equipment ond facilitics, frequencies,
rate-fising and such other matters affecting their publi: service operation shall
be governed by the proper government agency concerne¢

s such as

‘The Authority together with other concerned grvernment agencie~ shall
jointly issue rules and regulations necessary to implement this Chapter

CHAPTER XX
TRANSPORT SERVICE COOPER.\ TIVES

SEC, 152. Definition and Coverage. — Ths Chapter shall vovern
transport service cooperatives as defined in this Code, including those organized
under the provisions of Executive Order No. 898, seri: s of 1983, and by vehicle
ators defined or provided for under the PM) of the Department of
portation (DOTY)

SEC. 153. Engagement in Allied Business by Transport Service
Cooperatives, - Subject to pertinent national laws anc local ordi
transport service cooperatives including federations of cooperatives, may engage
in a business related to transportation service, includin s but not limited to

ope

“Trans

nees, primary

a. Importation, distribution, and marketing of petroleam products in
accordance with existing laws:

b. Operation of gasoline stations, automotive service
centers, and management of land transpo: t terminals and ports:

© Importation, distribution. marketing, ond sale of spare parts,

automotive supplies, and accessories:

d. Marketing of vehicle and drivers’ insura ice policies as an ogent or
liaison of a licensed insurance company

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stablishment and operation of fleet managy-ment services:

f Automotive maintenance credit facilities for the purpose of extending
loans for the maintenance and repair of pub ‘ic utility vehicles: end

Other auxiliary services related (0 the trar sport sector such 1s the
establishment and operation of food hubs aid canteens in terminals.

SKC. 154. Registration, Regulation, and Supervision of Transport
Service Cooperatives. - The DOTr-Office of Transport Cooperatives shall have
jurisdiction over the accreditation, regulation, and super ision of transport service
cooperatives. This notwithstanding, the relevant regul: tory agencies shal! have
jurisdiction over the technical operations of such cooperatives as transport service
entities

‘The Authority shall have jurisdiction over the registration of transport
service cooperatives only in relation to their organivation and management
including its compliance with this Act and other relevan: laws

SEC. 155. Renewal of Franchise and Vehicle Registration. — Revewals
of franchise and vehicle registration shall be grantec to transportation service
cooperatives: Provided, ‘That such cooperative presents a certificate of good
standing or Certificate of Compliance issued by the Authority, Office of Pra asport
Cooperatives of the DOTr, and the LGU concerned as proof that it has continuously
provided the required public transportation services,

‘The Authority, in consultation with the concernev government agencies and
cooperative sector, shall issue appropriate rules and regulations pertaining to
the provisions of this Chapter

SEC. 156. Oversight Committee. A multi-sectoral committee on trinsport
ce cooperatives, composed of representatives from the Authority, the DOTr,
the Department of the Interior and Local Govertment (DD.G), the Land
‘Transportation Franchising and Regulatory Board (LTFRB), the Land
‘Vransportation Office (L,TO), other concerned governinent agencies, as say be
y. and the federation of transport service ooperatives. the regional
dlustered organizations, the national alliance of cooperatives, and other
stakeholders shall be established and thereafter be charged with the monitoring,
recommendation of policies and programs affecting (e operations of transport
service cooperatives, and such other

serv

necessi

unctions,

A regional monitoring committee shall likewise be established at the
yogional offices of the Authority for the same purj ose. The functions of the
monitoring committees shall be prescribed in the Implementing Rules and
Regulations to be promulgated by the Authority, in eocrdination with the relevant
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SHC. 157. Government Assistance and Subsidy - Government financial
assistance provided to drivers/operators who eleet to mod -rnize shall not be lower
than twenty percent (20°) of the price per unit, Moreov or, the DOT shall work
with the public and private institutions such as cooperative Dan and other
Hrameial services cooperatives. to provide equitable finan: ing for these moder nized

vehicles
Moreover, the government shall extend subsidies and other incentives for

local manufacturers who will invest in the modernization of public utility vehicles.

“Phe Department of Trade and Industry DTD. the JOT and in consuliation
with concerned agencies and the cooperative sector, shill issue the appropriate
rules and regulations relating to government assistance ind subsidy

SEC. 158. LGU Support for Common Terminals. - Exch LGU s
catablish a common terminal along the route of public tre asportation service Said
Jing transport cooperatives during

terminal shall be provided free of charge to ava
ius first year of operation

CHAPTER NXI
CREDIT AND SAVINGS COOPER \TIVES
AND CREDIT COOPERATIN 8S,

nd

SEC. 159. Coverage. - This Chapter shall apply to credit cooperates
credit and. savings cooperatives. including multi-] arpose cooperatixes and
alerations. ‘The provisions of the other chapters of this Code shal apply
<uppletorily except ingofar as this Chapter otherwise p/ovides.

SEC. 160. Purposes and Objectives. - Coop ratives engaged svlely in
cos, owned an! operated by its members.

eredit or in both credit and savings ser
shall have the following purposes and objectives:

a. To encourage savings among its members

b. ‘To provide loans for productive or provident purposes to its members
and related services to enable its memb: rs to maximize the benefit

from such loans:

c. ‘Yo promote the cooperatives engaged in edit and credit am savings
as preferred financial institutions among Filipinos: and

ainable operations of

d. To promote the safe. sound, stable. ant sus
cooperatives engaged in credit and cred: and savings by Fe gulating
rand supervising their operations and cur ailing or preventing any act

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or practice which is prejudicial to the interests of their members and
the general public.

SEC. 161. Regulation and Supervision of Cooperatives Engaged in
Credit and Credit and Savings. ~ Pursuant to its powers, Hinetions and
responsibilities under RA 11364, the Authority shall ¢ orcise regulatory powers
ml supervision over the operations of the cooperativ« ~ engaged in credit, and
credit and savings

‘Phe Authority. shall, in consultation with thy concerne government
agencies and cooperative sector, iste appropriate rules sad regulations pert sining
to the provisions of this Chapter:

CHAPTER XXII
ELECTRIC COOPERATIVES

SEC. 162. Coverage. -'The provisions of this Coc shall apply to all electric
cooperatives registered with the Authority, This shall : Iso cover new distribution
utilities that will register with the Authority

Electric cooperatives may undertake power gens ration wulzing re! ewable
energy sources, including hybrid systems. aequt sition and operation of
cubtransmission or distribution as its primary purpost

SEC. 163. Registration of Electric Cooperatives. - The registra of an
cloctrie cooperative with the Authority under this Coco shall be submittel to the
‘nombers for approval through a referendum, called for the purpose 3 PFO ided for
under Articles 164 and 165 of this Code.

SEC. 164. Voting Requirement for Registre tion. ~ In compliance with
che referendum asa voting procedure, the required nui aber of votes for registration
a ith the Authority shall be a majority of all members ntitled (0 vote

SEC. 165 Documents to be Submitted for Registration « ith the
Authority, - For purposes of registration, electric c yperauives shall submit the
following documents:

a. Copy of the Board Resolution certifying to the result of the vote
approved through a referendum appre-ing the registratin of the
cooperative with the Authority in compliance with Section 1134 of this
Code:

b. Certified copy of the Articles of Incorporation or Ceoperation and By-
Jaws as required by the Authority

e. Duly audited financial statements for tie past (we @) years

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4. List of names of the incumbent Board of Dir ctors and their addresses
certified by the Board Secretary and attests by the Chairperson:

Within six (6) months from the registration, the Treasurer shall
cubmit a sworn statement of the authorized share capital, the
cubscribed share capital of members, and th» amount of paid-up sh

capital received by the Treasurer: and

f. Bonds of accountable officers.

SEC. 166. Registration Options of Electric Cooperatives. ~ | lectric
Cooperatives registered with the National Electrification Administration NEA)
under Presidential Decree (PD) No. 269, as amended, which opt not to regis rwith
the Authority are allowed co retain the word “coope: ative’ in their res stored
soe nes Provided, that they shall not be entitled to the be refits and privileges under
this Code.

SEC. 167. Role of the Energy Regulatory Commission. - All raves and
Laviffic of electric cooperatives registered under the Auth sity shall be sujet (© the
riles on application and approval of and by the Ener: y Regulatory Commission
(ERC) for distribution utilities.

SEC. 168. Effects of Registration with the Av thorit

a. Upon the effectivity of this Code, electric cooperatives that sre duly
peuistered with the Authority, and issued a Certificate of
Rexistration, shall be covered by the pro’ isions of this Code as well
as future rules and issuances of the Auth: rity: Provided, thas electric
cooperatives shall remain under the supc visors powers of the N
pursuant to PD No. 269
Provided, further, that provisions of this + ode consisrent with, PD No
269, as amended, shall apply suppletorily

as amended and other existing laws:

b. Electric cooperatives registered with th» Authority are ensitled to
congressional allocations. gr
vecivtance for rural electrification which can be coursed thr ugh the
Department of Energy. National Elect fi
local government. units. may be appropriate. The electric
cooperatives registered under this Cod: can avai: of the financial
cervices and technical assistance proviced by government Financ’
institutions and technical development # -encies on terms respecting
their independence as autonomous coop: ratives:

nts, subsiliaries and other financial

tion Administration, or

« Allcondoned loans. subsidies, grants. an Lother assistance shall form
part of the donated capital and funds of he electric coopers ives and.

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as such, it shall not be sold, traded, nor be « ivided inte shareholdings
at any time. The donated capital/fund sha 1 be valuated for the sole
purpose of determining the equity participation of the member
Provided, ‘That in the se of dissolution of the cooperativ«
donated capital shall be subject to escheat: and

said

d. Electric cooperatives registered and confirmed with the Authority
under Republic Act No, 6938 and Republi- Act No. 9520 are hereby
deemed registered under this Code.

SEC. 169. Share Capital in the Electric Cooperatives. ~ The electric
cooperatives registered with the Authority shall is-ue and distribute share
certificates under the name of each of their members. taking into consid:ration
their previous equity contributions, the amortization componeat through the
payments made, capital build-up and other capital cont ibutions.

‘The NEA shall, within ten (10) days upon final ©ompletion of reconciliation
of relevant loan accounts with the electric cooperative concerned, issue a
cortification on the aggregate amount of payments made on the principal
component of the amortizations, as the basis for the issuance of equi: share
cortificates by the electric cooperatives to its Member-Customer«wners ‘MCOs)
on record

‘The ERC shall, within forty-five (45) di from the close of each fiscal year,
issue a certificate to the electric cooperative conce: ned on the total amount
collected for capital contributions from the MCOs: for such period, for which equity
share certificate will be issued

No share capital certificate shall be issued to a subscriber until che full
amount of his/her subscription together with interest and expenses, if any is due.
has been paid. The distribution of share capital certific ates shall he done yanually
preferably during the General Assembly meeting.

In case of loss or destruction, the electric cooper ative may issue a duplicate
cortificate, if such certificate is proven to have becn lost, destroyed. lefaced.
mutilated. torn or is surrendered to the electric coop»rative upon execu'ion and
submission by a member of an Affidavit of Loss or such other documents ev dencing
defacementimutilation or surrender of such share cap tal certificate

SEC. 170. Cancellation of Registration with the Authority. ~ The
cancellation of the registration of an electric coopers ive shall Le granted by the
‘\uthority as provided under Chapter XI of this ‘ode, Upon caneeliation of
registration, the privileges and benefits afforded unter this Code shall also be
revoked.



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CHAPTER XXNUI

FOREIGN PARTNERSHIPS

SEC. 171. Engagement of Foreign Cooperatives with Loal
Federations. - Foreign cooperatives may invest, partner with, or enter into joint
vont ures with local federations: Provided, that they are re: ognized by international
coalitions of cooperatives or by the relevant authority in the country of origin, as
\vell as registered with the Authority: Provided, further." hat they comply wish all
relevant laws allowing them to do business in the Philippines. The details of their
jnvestment, participation, or membership shall be left to he discretion of the local
federation, Further details shall be laid down in the }mplementing Rules and
Regulations of this Code, in consultation with the cooperative sector: Pro ided,
Jinally, That their engagement with the local cooperatives shall be subject to an
tyrcement which shall be submitted for the approval of the Authority, pursuant to
its implementing rules.

Foreign cooperatives that shall transact with local federations must comply
with Philippine tasation laws, the Anti-Money Laundering Act, and other
pertinent laws. Further, foreign cooperatives shall rot interfere. directly or
indirectly, in the management and internal affairs of the federations in accordance
with the generally accepted cooperative principles independence sand autonomy,
notwithstanding that local cooperatives shall be one hundred percent (100%)
wholly owned and controlled by Filipinos

SEC. 172. Limitations. — The equity or shave capital of the loreign
conperative shall not exceed forty percent (10°) of the otal equity or subscribed
hare capital of the partnership or federation, as the cas may be,

CHAPTER XXV

MISCELLANEOUS PROVISION

SEC. 173. Compliance With Other Laws. - All cooperatives duly
registered under this Code shall, at all times, be subjec: to all relevant laws, rules
lind regulations, as well as issuances and directives issued by a uly authorized
government regulatory body in exercise of its jurisdiction

Moreover, cooperatives that are registered or applying for specific licenses
ith other regulatory agencies must comply with the governance requirements of
said agency to operate or function as such.

SEC. 174. Registry of Cooperatives, -'The Authority shall keep @ registry
Which shall contain a chronological entry of the rame of every cooperative
rougistered, suspended, dissolved. or cancelled under this Code together with other
t levant information. The Authority shall publish and post on its website a list of

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existing cooperatives. cooperatives under dissolution or suspension, and those
whose registration have been cancelled, together with other relevant information,
as may be prescribed in the Implementing Rules and Reg lations of this Code.

SEC. 175. Settlement of Disputes, Conciliation, Mediation, and
Arbitration Proceedings. - Disputes among members officers. directors. and
committee members, and intra-cooperative, inter-coopers tive. intra-federation or
inter-federation disputes shall. as far as practicable, be settled amicably in
accordance with the conciliation or mediation mechanis ns embodied in thy By-
laws of cooperatives and in such other applicable laws

The Conciliation-Mediation Committee of the — cooperative shall
facilitate the amicable settlement of int
members. officers, directors, and committee members.

s-cooperative disputes or disputes among

Should such conciliation or mediation proceeding ‘ail, the party may settle
the dispute through arbitration or adjudication: Provid d, however, That before
any party can validly file a complaint with the Authority for voluntary arbity ation
or adjudication, it must first secure a certification from i! s Coneiliation-Mediation
Committee and from the cooperative union or federatio: to which it is affiliated
that despite all efforts to settle the issues, the conciliat-on-mediation proce ding
failed,

Once the arbitrators or the appropriate adjadi ation division acswuires
jurisdiction over the case, it shall have exclusive jurisdi: tion. The decision of the
arbitrator shall be final and executory. For this purpose. ‘he Authority shall « reate
a database of qualified arbitrators which shall also be po ted in its official website

Decisions rendered by the Authority in the excreise of its adjudi: atory
of Appeals in accordance with the

powers shall be appealable to the
applicable rules.

In case of election-related issues. the aggrieved po rty may elevate thy case
for adjudication to the proper regional office of the \utsority in accordance: with
the CDA Omnibus Rules of Procedure without under: oing alternative dispute
resolution.

Settlement of disputes of electric cooperatives hall be governed by the
provisions of PD No. 269, as amended. and other applies le laws.

SEC. 176. Joint Congressional Oversight Corimittee on Cooperatives
(ICOCC). - There is hereby created a Joint Congressional Oversight Committee
composed of the Chairperson of the Senate Committee ©1 Cooperatives anid the
Chairperson of the House Committee on Cooperatives | evelopment, with four (1)
membors cach from both Houses. ‘The said members sha'| be duly appointed by the
Senate President and the Speaker of the House of {tepresentatives from the
members of the respective committee.

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jations. — ‘The amount nec ssary to carry ou: the
ations Act

SEC. 177. Approp'
provisions of this Code shall be included in the annual Ges eral Apprepr'

SEC. 178. Issuance of Injunctive Relief on th Authority. ~ Oniv the
Court of Appeals or Supreme Court may issue a restraining order or injunction
enjvining the Authority from examining and investigating cooperat ves subject to
its supervision or examination.

CHAPTER XXVI
FINAL PROVISIOD

SEC. 179. Penal Provisions. - The following avis or omissions aftecting

ives are hereby prohibited

eoopel

a. The use of the word “cooperative” shal! not be allowed unless
authorized under this Code: Provided, that » sid juridical entitic. have
interests, affiliation, collaboration. and or partnership with a
cooperative or the cooperative sector: Pro ided, furtier, That said
entity shall register with the SEC, as a aon-stock and non profit
entity, and shall affix the word “Incorporats l” or “Ine.” to its business
name: Provided, finally, Phat these organiz.\tions shall not be entitled
to the benefits and privileges under this cod :, In case of violation, the
penalty of imprisonment of not less than ts (2) years nor mor than
five (5) years and a fine of not less than Tw. hundred thousan: pesos
(P200,000,00) but not more than One millien pesos (P1,000.00¢ 00) or
both at the discretion of the court. shall be imposed, upon cons iction.
on the individual or, in the case of an org ini and

zation, its officers:

directors.

‘The Authority may, motu proprio, file com laints for violation of this

provision

b. Any person who willfully attempts in any nanner to evade or defeat
tay in violation of Articles 68 and 69 of thi. Code shall, in add tion to
the payment of double the amount of the ax due, be punished by a
fine of not less than Five hundred thousad pesos (P500,000. 90) but
hot more than ‘Ten million pesos (P10.000,000.00) and suffer
imprisonment of not less than six (6) years but not mere than ‘en (10)
voars: Provided, That the conviction or ac juittal obtained uncer this
Section shall not be a bar to the filing of » civil suit for the ceo!lection
of taxes:

c Direct or indirect violation or cireumye ition of the provisions of
Sections 68 and 69 of this Code committ-d by any public official or
employee of any bureau, office or agency of the government that

es, diminishes or in any manner hinders or restricts say duly

depri

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ative from the full enjovyme at of the exemption from
the payment of the taxes. fees and charges © 1umerated therein. shall
upon conviction. suffer a penalty of not less shan seven (7) years but
hot more than twelve (12) years imprisonment or a fine in the amount
of not less than Five hundred thousand pe> os (P500,000.00) bat not
more than One million pesos (P 1,000,000.00) or both at the discretion
of the court and shall further be disqualitiec to hold any other olfice:

registered coope

A. Direct or indirect interference or interventien by any publie offivial or
employee in the internal affairs of a cooper itive of which he is not a
member. such as. but not limited to, the fol owing

. directors.

1) Influencing the election or appointn ent of offic
committee members and employees hrough public or private
endorsement or campaign for or agai ist any person or group of
persons

ion within the

2) Requiring prior clearance for any po iey or de
cooperative

3) Requesting or demanding for the «reation of positieas or
organizational units, or recomn:-nding any person for
appointment, transfer. or removal fi 1m his/her position or

1) Any other acts inimical or adverse to the autonom: and
independence of cooperatives.

‘The public officer shall upon conviction sul er a fine of suffer a penalty
of not less than one (1) year nor more than five ©) years imorisonm: ntora
fine in the amount of not less than Two hundred thousand’ pesos
(P200,000.00) but not more than Five hundred th susand pesos(P500 100.00)
or both at the discretion of the court

© A director, officer or committee member sho violated the provisions
of Section 53 on the Liability of Directors, Officers and Committee
Members. Section 56 on the Disloyalty of a Director, and Section 57
on the Hlegal Use of Confidential Inform ition shall upon conviction
suffer a fine of not less than Five hundred thousan:) pesos
(P500,000.00) nor more than One million pesos (P1.000,0060.00) or
imprisonment of not less than five (5) y:ars but net more shan ten
(10) year: 's discretior

or both at the cou

‘The following are considered offenses ; unishable by a prnalty of
imprisonment of not less than one (1) yea’ nor more than five '5) years

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or a fine of not Jess than Fifty thousand (P 40,000.00) but not more
than One hundred thousand pesos (P100 00.00) or both ar the
discretion of the court:

1) Omission or refusal to furnish any information, report or other
document that is required under this ‘ode:

2) Providing information, reports or «ther documents tthe
Authority that are required under this Code whieh the person
knows to be false or misleading:

3) Omission or refusal to keep a book or registry under this Code
or to make the required entry thereit

1) Making an entry required under this ode ina book or reistry.
which the person knows to be false 0) misleadins:

5) Hindering an authorized person froia making an inspc tion,
audit, examination or investigation r-quired under this «ode:

6) Failure to comply with an order or written instructions issued
or given by the Authority:

7) Violation of the provisions regarding transactions with a
restricted party: and

8) Abetting, counseling. allowing. authorizing or comm:nding
another person to commit an offens« punishable by this Code:
Provided, That in case the violator i+ a cooperative or juridical
person, the penalty shall be impesed on its directors and
officers

Any violation of any provision of this Coce for which no penalty is
imposed shall be punished by imprisonment of not less than six (6)
months nor more than one (1) year and 8 fine of nov less than Ten
thousand pesos (P10,000,00) but more than Vifty thousand.
(P50,000.00), or both at the discretion of the court

‘The cooperative or any of its members con file a case against any
officer or employee of the BIR or of any othr government agen-y with
the Ombudsman. the Civil Service Commaission, other appropriate

government agencies. or the courts of Law

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In case of violation of any provision of this (ode, the individual or
individuals, and in the case of organizations or government agencies, its officers,
and directors shall, upon conviction by a Court, each suifer a penaity of not less
than two (2) Years but not more than five (5) years imprisonment o* a fine in the
amount of not less than Fifty thousand pesos (P50,000.00) but not more thar One
hundred thousand (P 100,000.00), or both at the discretion of the court. In the case
of public official or employee, the offender shall upon conviction, suffer the
accessory penalty of temporary absolute disqualification

SEC. 180. Administrative Sanctions. - The \uthority shall conduct
investigations, file necessary charges, discipline, suspend or remove erring officers
and members of the cooperative for violation of cooperatiy »laws, rules, regulations
iextuances of the Authority, the Articles of Cooperation and By-laws, after due
process, and direct the General Assembly to replace the suspended or removed

officers.

Any violations on the procedures of the rules on « ljudication shall likewise
be penalized under this Article. Such administrasive sanctions shall be
implemented in accordance with the rules and regulations to be promulgated by
the Authority.

SEC. 181. Printing and Distribution. -The Nav ional Printing Offic shall
publish this Code in the Official Gazette in full within sis ty (60) days from the date
of approval thereof, Copies of this Code shall be given to very department, agency
and instrumentality of the National Government, incliding regienal, provine
fics, and local governments including government-owned and con‘rolled
corporations

SEC. 182. Interpretation and Construction. In case of doubt as to the
meaning of any provision in this Code or the regulaiions issued in pursuance
thereof, the same shall be resolved liberally in favor of /he cooperatives ant their
members

20, 183. Implementing Rules and Regulations. - Within nincty 9)
days from the effectivity of this Act, the Authority shall ssue rules and regulations
tw implement this Code. including the amendments th reto, in consultation with
the relevant agencies, the cooperative sector. and other stakeholders.

Within the same period, the particular government agcneies expressly
designated under specific provisions in this Code shal! also issue the regulations
called for by such respective provisions.

SEC. 184. Transitory Provisions. ~

a. Ail cooperatives registered with the Authority under Republic Act No. 6938,
‘as amended by Republic Act No. 9520, are hereby deemed registeres under
this Code

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b. Registration of electric cooperatives with the Authority shall net be
considered a transfer of ownership of its assets ind liabilities nor shall it
constitute a change in the nature. structure, and -tatus of the cooper:itive,
Said registration shall not result in the revocaticn of the condoned loans
under Republic Act No. 9136. otherwise known as the “Hlectric Power
Industry Reform Act of 2000: Provided, That c-ectric cooperatives with
existing loans shall not be subject to the control and supervision of its
creditors and shall only be limited to the fulfillmen: of each civil oblige tions.

«. ‘Phe authority granted to non-cooperatives as Training Service Pro. iders
shall continue to be effective and may be renewed upon expiration,

2C, 185. [pso-Facto Clause. — Except as may e inconsistent wiih the
provisions of this Code, CD.-registered cooperatives are entitled to the priv:leges
benefits, and exemptions granted by Republic ¢ 160, and other evisting

laws.

SEC. 186. Separability Clause. If any part cf this Code is declared
unconstitutional, the remaining parts or provisions sha! remain in full force and
effect

SEC. 187. Repealing Clause. « Except as express y provided by this Code
Republic Act No. 6938. Republic Act No, 9520, and all ot rer laws, ov parts thereof
inconsistent with any provision of this Code shall be deemed repe led: Pr vided
‘Vhat the provisions of Revenue Regulation No. 20-2001, and all laws, decrees.
oxecutive orders. implementing rules and regulations, BIR circulars CDA
memorandum circulars. memorandum orders, lettrs of ins:ruction local
government ordinances, or parts thereof inconsistent with any vf the
provisions of this Act are hereby repealed, amended or modified accor lingly:
Provided, further. Phat nothing in this Code shall elim nate, diminish. or reduce
the powers. functions. authority, and responsibilities of the NE over «lectric
cooperatives under PD No, 269, as amended. and othe existing laws; Py vided,
nally, ‘That nothing in this Act shall be construed or } terpreted as diminishi
the jurisdiction of the Philippine Competition Commission under the (CA to
conduct inquiry. investigate, and hear and decide on ca-es involving any violation
of the PC.\ and other existing competition laws motu p-oprio or upon receipt of a
verified complaint from an interested party or upon -eferral by the converned

regulatory agency

SEC. 188. Effectivity Clause. - This Code shall U ke effect ffteen (1) days
1 its publication in the Official Gazette or ina newsp sper of general cirev lation.

Approved

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