Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
TWENTIETH CONGRESS 
First Regular Session 
HOUSE BILL NO. 2070 
Introduced by 
REPRESENTATIVE MARIA KRISTINA JIHAN B. GLEPA 
ONE COOP PARTYLIST 
EXPLANATORY NOTE 
The Philippine Cooperative Code of 2008 was enacted to fortify the cooperative sector, 
equip it for a rapidly evolving economic environment, and harness the power of 
information technology. Since its passage, thousands of cooperatives have successfully 
organized and expanded their enterprises, demonstrating the Code’s positive impact on 
collective growth. 
However, sixteen years later, profound social and economic transformations—including 
digital disruption, shifting global trade patterns, and new market challenges—necessitate 
concurrent amendments to ensure the Code remains relevant. In recent years, the impact 
of the pandemic, geopolitical conflicts, and global economic slowdown led to rising costs 
of goods and services which in turn hinders the different sectors, especially the 
agricultural sector, from maximizing production. 
The framework of Philippine Cooperatives makes it an ideal vehicle for empowering 
people to establish and grow their enterprises during economic downturns. They are 
more resilient and rely on the self-help concept to stay in business with members 
patronizing their own products and services. Furthermore, cooperatives as an entity can 
easily facilitate availment of grants and other assistance offered by the government to 
support their economic activities. 
Under the 1987 Constitution, cooperatives are expressly recognized as instruments of 
social justice and catalysts for balanced economic development. It is incumbent upon the 
legislature to align the Cooperative Code with this constitutional vision by streamlining 
procedures, enhancing regulatory oversight, and expanding member protections.  
In view of the foregoing, approval of this bill is earnestly sought. 
MARIA KRISTINA JIHAN B. GLEPA 
July 17, 2025
11:34 am


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
TWENTIETH CONGRESS 
First Regular Session 
HOUSE BILL NO. 2070 
Introduced by 
REPRESENTATIVE MARIA KRISTINA JIHAN B. GLEPA 
ONE COOP PARTYLIST 
AN ACT 
PROVIDING FOR THE REVISED COOPERATIVE CODE OF THE 
PHILIPPINES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
CHAPTER I. GENERAL PROVISIONS 
SECTION 1. Title. - This Act shall be known as the "Revised Cooperative 
Code of the Philippines”. 
SEC. 2. Declaration of Policy. - It is the policy of the State to foster the creation 
and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing 
people power towards the attainment of economic development and social justice. The 
State shall encourage the private sector to undertake the actual formation and organization 
of cooperatives and shall create an atmosphere that is conducive to the growth and development 
of these cooperatives. 
Towards this end, the State shall, through the different branches, subdivisions, 
instrumentalities, and agencies of the government, regulate the conduct of cooperatives and 
support their growth and development in partnership with the private sector. The 
State 
shall also ensure the provision of technical and financial assistance, and other services to enable 
the cooperatives to develop into viable and responsive economic enterprises towards a strong 
cooperative movement, free from conditions that infringe upon the objectives and character of 
cooperatives. 
Further, the State recognizes the principle of subsidiarity under which the 
cooperative sector initiates and fosters, within their own ranks, cooperative promotion, 
organization, training, information gathering, audit, and support services, with government 
assistance if necessary. 
SEC. 3. General Concepts. – 
a) A cooperative is an autonomous and duly registered association of persons
with a common bond of interest who have voluntarily joined together to
achieve their social, economic, and cultural needs and aspirations by
making equitable contributions to the capital required, patronizing their
products and services, and accepting a fair share of the risks and benefits of
the undertaking in accordance with universally accepted cooperative principles;
b) Cooperative principles - Every cooperative shall conduct its affairs in


accordance with Filipino culture, good values and experience, and the 
following universally accepted principles of cooperation: 
 
1. Voluntary and Open Membership  - Cooperatives are voluntary 
organizations, open to all persons able to use their services and 
willing to accept the responsibilities of membership, without gender, 
social, racial, cultural, political or religious discrimination. 
 
2. Democratic 
Member Control 
- Cooperatives are democratic 
organizations that are controlled by their members who actively 
participate in setting their policies and making decisions. Men and 
women serving as elected representatives, directors or officers are 
accountable to the membership. In primary cooperatives, members 
have equal voting rights of one member, one vote. Cooperatives at 
other levels are organized in the same democratic manner. 
 
3. Member Economic Participation – Members contribute equitably to, 
and democratically control, the capital of their cooperative. At least 
part of that capital is the common property of the cooperative. They 
shall receive limited compensation or limited interest, if any, on 
capital subscribed and paid as a condition of membership. Members 
allocate surpluses for any or all of the following purposes: developing the 
cooperative by setting up reserves, part of which should at least be 
indivisible; benefitting members in proportion to their patronage of the 
cooperative’s business; and, supporting other activities approved 
by the membership. 
 
4. Autonomy and Independence - Cooperatives are autonomous, self- 
help organizations controlled by their members. If they enter into 
agreements with other organizations, including government, or raise 
capital from external sources, they shall do so on terms that ensure 
democratic control of their members and maintain their cooperative 
autonomy. 
 
5. Education, Training, and Information - Cooperatives shall provide 
education and training for their members, elected and appointed 
representatives, managers, and employees, so that they can contribute 
effectively and efficiently to the development of their cooperatives. 
 
6. Cooperation Among Cooperatives - Cooperatives serve their members 
most effectively and strengthen the cooperative movement 
by working together through local, national, regional and international 
structures. 
 
7. Concern for Community - Cooperatives work for the sustainable 
development of their communities through policies approved by their 
members. 
 
c) Cooperative Values – Cooperatives are based on the values of self-help, self-
responsibility, democracy, equality, equity, and solidarity. Cooperative members 
believe in the ethical values 
of honesty, openness, social responsibility 
and caring for others. 
 
 
SEC. 4. Definition of Terms. - As used in this Act: 
a) Area of Operation refers to the place where the cooperative operates and conducts its 
business, as provided for in its Articles of Cooperation and By-laws; 
 
b)  Articles of Cooperation refers to the document registered with the Cooperative 
Development Authority, including its amendments, that defines and regulates the 


relations between the cooperative and the State; 
 
c) Authority refers to the Cooperative Development Authority; 
 
d) Board of Directors refers to the collegial body responsible for the strategic planning, 
direction-setting, and policy-formulation activities of the cooperative;  
 
e) Branch-lite unit refers to a cooperative bank that performs limited banking activities 
and records its transactions in the books of the head office or the branch to which it is 
annexed; 
 
f) By-laws refers to the document registered with the Authority, including its amendments, 
that defines and regulates the operations of the cooperative and governs the relations 
between the cooperative and its members and among themselves; 
 
g) Committees refer to the mandatory committees under this Code entrusted with 
specific functions and responsibilities and such other committees that the Board of 
Directors deem necessary for the governance of the business affairs of the cooperative; 
 
h) Cooperative Union refers to a cooperative whose members are registered cooperatives, 
federations, or both, organized purposely to represent the interest and welfare of all types 
of cooperatives at the city, provincial,regional, national, and sectoral levels; 
 
i) Federation of Cooperatives refers to an aggrupation of cooperatives registered with 
them Authority to undertake business activities in support of its primary and secondary 
member cooperatives to address common needs, engage in capacity-building activities 
and delegated supervision in support of its member cooperatives, organized at the 
municipal, city, provincial, regional, national, special metropolitan political subdivision, 
or economic zones created by law; 
 
j) General Assembly refers to the full membership of the cooperative duly assembled 
physically, via videoconferencing, or both, for the purpose of exercising all the rights and 
performing all the obligations pertaining to cooperatives, as provided by this Code, its 
Articles of Cooperation, and By-laws; 
 
k)  Honorarium refers to the token of appreciation granted for the expert service rendered 
in the specific field that does not receive compensation; 
 
l) Investment refers to equity participation in any enterprise formed, organized or 
existing under the laws of the Philippines; 
 
m) Interest on Share Capital refers to the amount earned by the members on their investment 
in the cooperative. The interest on share capital and the patronage refund shall be 
determined at the end of the calendar year after the net surplus shall have been computed 
in accordance with the Articles of Cooperation and By-laws or by the Board of Directors; 
 
n) Laboratory Cooperative refers to a cooperative affiliated with and registered by a 
primary cooperative, and whose membership consists of minors; 
 
o)  Member refers to a person either natural or juridical, who has been approved and 
admitted by the Board of Directors of the cooperative, federation, or union, after 
undergoing the Pre-Membership Education Seminar and has vowed to adhere to the 
Articles of Cooperation and its By-laws. Members shall be classified as regular or 
associate, as qualified by the cooperative; 
 
p)  Patronage Refund refers to the payment to the members of a percentage or portion of the 
amount availed of, the interest on loans paid, or other services availed from the 
cooperative. The amount will be determined at the end of the fiscal period after the 
computation of the net surplus. The percentage of the allocation will be in accordance 
with the provisions in its Articles of Cooperation, the By-laws, or by the Board of Directors. 


The formula and basis for the computation of the rate of patronage refund will be 
determined by the Authority; 
 
q)  Performance Audit refers to an audit conducted by the Authority on the efficiency, 
efficacy, and effectiveness of the cooperative’s overall performance as a 
whole, its management and officers, and its various responsibility centers as basis for 
improving individual, team, or overall performance, and for objectively informing the 
general membership of the cooperative on such performance; 
 
r) Primary Cooperative refers to a cooperative, registered with the Authority, the 
members of which are natural persons; 
 
s) Registration refers to the operative act granting juridical personality to a proposed 
cooperative and is evidenced by a Certificate of Registration; 
 
t) Representative Assembly refers to the full membership of a body of representatives 
elected by each of the sectors, chapters, or districts of the cooperative duly assembled 
for the purpose of exercising such powers in accordance with its By-laws; 
 
u)  Samahang Nayon and Municipal Katipunan ng mga Samahang Nayon refers to pre-
cooperative organizations established under Presidential Decree (PD) No. 175 entitled 
“Strengthening 
the Cooperative Movement”; 
 
v) Secondary Cooperative refers to a cooperative, the members of which are primary 
cooperatives, federations, or unions; 
 
w)  Single-Purpose Cooperative refers to a cooperative that undertakes only one economic 
activity, except one that is allowed to undertake allied economic activities; 
 
x) Share Capital refers to the equitable contribution of a member to the cooperative fund, 
the working capital fund of the cooperative, which shall have a par value of at least 
One Hundred Pesos (P100.00) and issued as common or preferred shares depending 
on the type of membership with the cooperative; 
 
y) Social Audit refers to an audit conducted to assess the social impact of the cooperative 
and its ethical performance vis-â-vis its stated mission, vision, goals, and code of social 
responsibility. It is a mechanism whereby it can account for the social performance of a 
cooperative and evaluate its impact on the community, making the cooperative 
accountable for its decisions and actions to its members;  
 
z) Subscription Agreement refers to the document executed by a member to signify the 
amount that the member intends to contribute to the cooperative fund; 
 
aa) Subsidiary Cooperative refers to a cooperative, all or majority of whose members or 
shareholders come from a parent cooperative, organized for any other purpose different 
from that of, and receives technical, managerial, and financial assistance from the latter, 
in accordance with the rules and regulations of the Authority; and 
 
bb) Worker Beneficiary refers to a natural person who renders service for value as an 
employee or laborer in an agricultural enterprise or farm within an agrarian reform 
cooperative. 
 
 
CHAPTER II. PURPOSES AND ORGANIZATION 
 
 
SEC. 5. Goals and Objectives of a Cooperative. - The primary objective of 
every cooperative is to help improve the quality of life of its members. Towards this end, the 
cooperative shall, among others, aim to: 


 
a) Increase income, savings, investments, productivity, and purchasing power of its 
members; and promote among themselves equitable distribution of net surplus through 
maximum utilization of economies of scale, cost sharing and risk-sharing; 
 
b)  Provide optimum social and economic benefits to its members; 
 
c) Providing trainings for its members on the efficient ways of processing tasks in a 
cooperative manner; 
 
d) Propagate best practices, innovative ideas in business undertakings and management 
through the utilization of new technologies; 
 
e) Empower the marginalized sector to gain opportunities through education and skills 
training; 
 
f) Actively collaborate with the government, other cooperatives, and people-oriented 
organizations to promote cooperatives as a practical means towards sustainable socio-
economic development; 
 
g) Adopt membership expansion mechanism to ensure the growth of the cooperative 
movement; 
 
h) Implement 
policy guidelines 
that 
will 
ensure transparency, accountability, 
and equitable access to its resources and services; and promote the interests of the 
members;  
 
i) Advance the competitiveness and innovativeness of cooperatives in various industries; 
 
j) Coordinate with other cooperatives through learning and information exchange to foster 
sustainable development;  
 
k) Advocate legal framework and enabling policies appropriate for the development of 
cooperatives;  
 
l) Be the voice and the institution of the marginalized for purposes of promoting people-
centered development; 
 
m) Encourage thrift and savings mobilization among the members; 
 
n) Generate funds and extend credit to the members for productive and provident purposes; 
 
o) Encourage among members systematic production and marketing; 
 
p) Provide goods and services and other requirements to the members; 
 
q)  Develop expertise and skills among its members; 
 
r) Acquire lands and provide housing benefits for the members; 
 
s) Provide insurance programs to cover the risk of financial losses in the operations of a 
cooperative; 
 
t) Promote and advance the economic, social, and educational status of the members; 
 
u) Establish, own, lease, or operate cooperative banks, cooperative wholesale and 
retail complexes, insurance, agricultural and industrial processing enterprises, and public 
markets; 
 


v) Coordinate and facilitate the activities of cooperatives; 
 
w)  Advocate for the cause of the cooperative movement; 
 
x) Ensure the viability of cooperatives through the utilization of new technologies; 
 
y) Encourage and promote self-help or self-employment as an engine for economic growth 
and poverty alleviation; 
 
z) Adopt such other plans which may help foster the welfare of the members, their 
families, and the community; and 
 
aa) Undertake any activity stated in the Articles of Cooperation and By-laws of the cooperative. 
 
 
SEC. 6. Cooperatives Not in Restraint of Trade. - No cooperative or method or 
act thereof which complies with this Code shall be deemed a conspiracy or combination in 
restraint of trade or an illegal monopoly, or an attempt to lessen competition or fix prices arbitrarily 
in violation of any laws of the Philippines. 
 
This 
notwithstanding, 
fair competition between 
cooperatives 
is 
paramount in their collective growth. Cooperatives shall support and foster a level playing field in 
their industries. Accordingly, Sections 6, 7, 21 and 111 of this Code shall be in consonance with 
Republic Act (RA) No.10667, otherwise known as the “Philippine Competition Act.” 
 
 
SEC. 7. Cooperative Powers and Capacities. - A cooperative registered 
under this Code shall have the following powers, rights and capacities: 
 
a) To the exclusive use of its registered name; 
 
b) To sue and be sued; 
 
c) Of succession; 
 
d) To amend its Articles of Cooperation in accordance with the provisions of this Code; 
 
e) To adopt By-laws not contrary to law, morals, or public policy, and amend or repeal 
the same in accordance with this Code; 
 
f) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, or 
otherwise deal with such real and personal property as the transaction of the lawful 
affairs of the cooperative may reasonably and necessarily require, subject to the 
limitations prescribed by law and the Constitution; 
 
g) To enter into joint venture agreement and partnership, or any other commercial activity 
with other cooperatives; 
 
h)  To enter into division, merger or consolidation, as provided in this Code;  
 
i) To form subsidiary cooperatives and join federations, unions, or Credit Surety Fund 
Cooperatives, as provided in this Code;  
 
j) To avail of loans, be entitled to credit, and accept and receive grants, donations, and 
assistance from foreign and domestic sources, subject to the conditions of the loans, 
credits, grants, donations or assistance that must not undermine the autonomy of the 
cooperative; 
 
k) To avail of preferential rights granted to cooperatives under RA 7160, otherwise known 
as the “Local Government Code of 1991,” and other laws, particularly the grant of 
franchises to establish, construct, operate and maintain ferries, wharves, markets or 


slaughterhouses and lease public utilities, including access to extension and on-site research 
services and facilities related to agriculture and fishery activities; 
 
l) To establish, own, and operate schools in all levels of the education system, subject 
to the rules and regulations of the Department of Education, Commission on Higher 
Education, and Technical Education and Skills Development Authority; 
 
m) To operate branch, satellite, and liaison offices within its area of operation, subject 
to the rules and regulation by the Authority. The Authority and the sector shall issue 
rules regarding the creation and operation of branch, satellite, and liaison offices of 
cooperatives; 
 
n) To provide training for their officers and members for continued development and 
personal 
improvement, in 
coordination 
with 
government 
agencies 
and 
experts from the private sector. In this regard, only cooperatives shall be accredited as 
Training Service Providers by the Authority. In the event that a cooperative is unable 
to provide training for its own members, it may engage the services of a federation or 
union: Provided, That a federation shall only provide training in accordance with its 
business or specialization while a union shall provide basic and other training that 
benefits the sector: Provided, further, That government agencies and experts from the 
private sector are authorized to assist in the organization, training, and development of a 
cooperative and its members, in coordination with federations and unions; and 
 
o) To exercise such other powers granted in this Code as shall be necessary to carry 
out its purposes stated in its Articles of Cooperation. 
 
 
SEC. 8. Organizing a Primary Cooperative. – At least fifteen (15) natural 
persons who are Filipino citizens, of legal age, having a common bond of interest, and are 
residing or working in the intended area of operation, may organize a primary cooperative 
under this Code. The cooperators shall attend and complete a Pre-Registration Seminar (PRS) 
as a prerequisite for registration. The details and requisites of the PRS must be included in the 
Implementing Rules and Regulations of this Code. 
 
 
 
No primary cooperative, except agricultural cooperatives, shall be organized 
as a multi-purpose cooperative unless it has been in operation for at least two (2) years and 
shall have complied with the minimum requirements for multi-purpose cooperatives as 
prescribed by the Authority. 
 
 
 
In order to encourage cooperativism among the youth, a primary cooperative 
shall organize a laboratory cooperative as defined under this Code. A laboratory cooperative 
shall have all the rights, privileges, and duties of a regular cooperative, and shall be governed 
by special guidelines to be promulgated by the Authority, in consultation with the cooperative 
sector. 
 
 
SEC. 9. Mandatory Personnel of the Cooperative. - All cooperatives shall have a 
General Manager and a Bookkeeper to be authorized to operate. 
 
 
SEC. 10. Liability of the Cooperative. – A cooperative duly registered 
under this Code shall have limited liability. 
 
 
SEC. 11. Term of existence of cooperative. - A cooperative shall  have 
perpetual existence from the date of registration unless voluntarily dissolved or the Certificate 
of Registration is cancelled for reasons provided under this Code and its Implementing Rules and 
Regulations. 
 
 
SEC. 12. Articles of Cooperation. - All primary cooperatives applying for 
registration shall present to the Authority the Certificate of Pre-Registration Seminar and the 


Articles of Cooperation, signed by all cooperators and acknowledged by them before a notary 
public. 
 
 
In case of cooperative banks, insurance cooperatives, federations, or unions, the 
Articles of Cooperation 
shall be acknowledged by its Chairpersons and Cooperative 
Secretaries before a notary public. The Articles of Cooperation shall contain the following 
provisions: 
a) Name of the cooperative, which shall include the word "Cooperative", “Coop”, “Koop”, 
or “Kooperatiba” and specify the type of cooperative; 
 
b) Purpose or purposes and the economic activities for which the cooperative is to 
be registered; 
 
c) Powers and capacities; 
 
d) Area of operation, the postal address of its principal office, and the official electronic 
mail address of the cooperative; 
 
e) Names, nationality, and the postal addresses of the cooperators; 
 
f) Common bond of membership; 
 
g) List of names of the directors; 
 
h) Amount of authorized, subscribed, and paid-up share capital, the number of shares, 
and the par-value of each share, and the names of the cooperators, except for cooperative 
unions; 
 
i) A statement as to whether the cooperative is primary or secondary; 
 
j) Other provisions consistent with this Code or any related law; and 
 
k) Certificate of Authority from the appropriate government agency 
 
 
SEC. 13. By-laws. – Every cooperative to be registered under this Code shall adopt 
By-laws consistent with the provisions of this Code, which shall be filed together with the Articles 
of Cooperation. The By-laws of each cooperative shall provide: 
 
a) The qualifications for admission to membership; 
 
b) The equitable contribution or interest to be acquired as a condition precedent for the 
exercise of the right of membership; 
 
c) The 
rights, privileges, duties, responsibilities, and liabilities of membership; 
 
d) The circumstances under which membership is acquired, maintained, and terminated, and 
the procedure to be followed; 
 
e) The conditions under which the transfer of a share or interest of the members shall be 
permitted; 
 
f) The general conduct of the affairs of the cooperative relative to agenda, time, place and 
manner of calling, convening, and conducting meetings, quorum requirements, voting 
systems of the General Assembly, the Board of Directors, committees and the 
officers, 
including 
their qualifications, disqualifications, powers, duties, and 
responsibilities; 
 
g) The manner in which the capital may be raised and the purposes for which it can be 
utilized; 


 
h) The accounting and auditing systems; 
 
i) The manner of contracting loans and borrowings including the limitations thereof; 
 
j) The allocation and distribution of net surplus; 
 
k) The manner of adopting and amending By-laws; 
 
l) The institution of a conciliation or mediation mechanism for the amicable settlement 
of disputes among members, directors, officers and committee members of the 
cooperative; and 
 
m) Other matters incident to the purposes and activities of the cooperative. 
 
 
CHAPTER III. REGISTRATION 
 
 
SEC. 14. Requirements for Registration. - The proposed Articles of Cooperation, 
By-laws, and such other required documents shall be submitted in accordance with the 
rules and regulations to be prescribed by the Authority. 
 
 
Except for cooperative unions as described under Section 30 hereof, no 
cooperative shall be registered unless the Articles of Cooperation is accompanied with the 
bonds of the accountable officers and a sworn statement of the Treasurer showing that at 
least twenty-five per centum (25%) of the authorized share capital has been subscribed and 
at least twenty-five per centum (25%) of the total subscription has been paid. 
 
 
The Authority shall initially fix the minimum paid-up share capital in the 
Implementing Rules and Regulations of this Code, periodically assess the required paid-up share 
capital, and may increase or decrease it through subsequent regulation whenever necessary 
upon consultation with the cooperative sector. 
 
 
The Authority may prescribe such other registration requirements as it may deem 
necessary. 
 
 
SEC. 15. Registration. - A cooperative formed and organized under this Code 
acquires juridical personality from the date the Authority issues a Certificate of Registration 
under its official seal. All applications for registration shall be finally disposed of by the 
Authority within a period of fifteen (15) days from the filing of the complete documentary 
requirements, both in form and in substance, otherwise the application is deemed 
approved, unless the cause of the delay is justified as the case may be: Provided, That in 
case of a denial of the application for registration, the applicant may file a Motion for 
Reconsideration within five (5) days from the receipt of such denial. The Motion for 
Reconsideration must be resolved within fifteen (15) days from the filing thereof. An appeal 
to the Board of Directors of the Authority may be filed within fifteen (15) days from receipt of 
notice of denial of the Motion for Reconsideration. The decision of the Board of Directors shall 
be final and executory but may be elevated to the Court of Appeals through a petition for review. 
 
 
The grounds for denial of the registration shall be prescribed in the Implementing 
Rules and Regulations of this Code. 
 
 
SEC. 16. Certificate of Registration. - A Certificate of Registration issued by the 
Authority under its official seal shall be conclusive evidence that the cooperative therein 
mentioned is duly registered unless it is proved that the registration thereof has been cancelled. 
 


 
 
SEC. 17. Amendment of Articles of Cooperation and By-laws.  Unless 
otherwise prescribed by this Code and for legitimate purposes, any provision or matter stated in 
the Articles of Cooperation and By-laws may be amended by two-thirds (⅔) vote of all the 
members entitled to vote, present and constituting a quorum, without prejudice to the right 
of the dissenting members to exercise their right to withdraw their membership under Section 
37 of this Code. 
 
 
Subject to the guidelines to be issued by the Authority, a cooperative may opt to 
amend its Articles of Cooperation and By-laws through a referendum by a vote of two-thirds 
(⅔) of all the members entitled to vote. 
 
 
Both the original and amended Articles of Cooperation By-laws shall contain all 
the provisions required by law. Amendments shall be indicated by underscoring or otherwise 
appropriately indicating the change or changes made. A copy of the amended Articles of 
Cooperation or By-laws shall be duly certified under oath by the Cooperative Secretary and 
majority of the directors, stating the fact that the amendment or amendments to the Articles of 
Cooperation and By-laws have been duly approved by the required vote of the members. All 
amendments to the Articles of Cooperation and By-laws shall be submitted to the Authority. 
 
 
An application for amendments shall be deemed approved by the Authority 
within a period of thirty (30) days from the filing thereof: Provided, That the documentary 
requirements are complete in form and substance, unless the cause of the delay is justified. 
 
 
SEC. 18. Contracts Executed Prior to Registration and Effects Thereof. - 
Subject to the execution of a formal written contract made in the cooperative's name or on its 
behalf prior to its registration, all contracts executed prior to its registration between 
private
 
persons and the cooperative shall remain valid and binding between the parties 
insofar as it redounds to the benefit of the cooperative. 
 
 
SEC. 19. Effects of Failure to Operate or Comply with Conditions on 
Registration. - The Certificate of Registration shall be deemed cancelled and the cooperative shall 
be delisted from the registry of cooperatives if the cooperative failed to commence its authorized 
business activity within three (3) years from the issuance of its Certificate of Registration. 
 
 
SEC. 20. Division of Cooperatives. - A registered cooperative, through a 
resolution approved by a vote of two-thirds (⅔) of all the members entitled to vote, present and 
constituting a quorum, may divide itself into two (2) or more cooperatives. Such division of the 
cooperative shall be valid: Provided, That the purpose of the division is not to defraud the creditors. 
 
 
The dissenting members shall have the right to exercise their right to withdraw their 
membership pursuant to Section 37 of this Code. The Authority shall prescribe the rules and 
regulations for the division of the cooperative: Provided, That all the requirements set forth in this 
Code have been complied with by the newly-formed cooperatives. 
 
 
CHAPTER IV. MERGER AND CONSOLIDATION OF COOPERATIVES 
 
 
SEC. 21. Merger or Consolidation of Cooperatives. – 
 
a) Two (2) or more cooperatives may merge or consolidate into a single cooperative. 
 
b) No merger or consolidation shall be valid unless approved by a two- thirds (⅔) vote 
of all the members entitled to vote, present and constituting a quorum of each of 
the constituent cooperatives at separate General Assembly meetings. The dissenting 
members shall have the right to exercise their right to withdraw their membership 
pursuant to Section 37 of this Code. 


 
c) The Authority shall issue the guidelines governing the procedure of merger or 
consolidation of cooperatives. The merger or consolidation shall be effective upon the 
issuance by the Authority of the Certificate of Merger, or in the case of a consolidation 
of cooperatives, a new Certificate of Registration. 
 
 
 
SEC. 22. Effects of Merger and Consolidation. - The merger and consolidation of 
cooperatives shall have the following effects: 
 
a) In case of merger of cooperatives, the constituent cooperatives shall become a single 
cooperative or, in the case of consolidation of cooperatives, the consolidated 
cooperative shall be the new cooperative; 
 
b)  The single cooperative or the consolidated cooperative shall possess all the assets, rights, 
privileges, immunities, and franchises and assume all the liabilities and obligations of each 
of the constituent cooperatives; 
 
c) Any claim, action, or proceeding instituted by or against the constituent cooperatives may be
 
continued by the single or consolidated cooperative; and 
 
d) The merger or consolidation shall not impair the rights of creditors nor any lien upon the 
property of the constituent cooperatives. 
 
 
CHAPTER V. TYPES AND CATEGORIES OF COOPERATIVES 
 
 
SEC. 23. Types and Categories of Cooperatives. –  
a) Clusters of C o o p e r a t i v e s  - Cooperatives may fall under any of the following 
clusters based on their business activity: 
1)  
Credit, Finance, Banking, and Insurance Cluster refers to cooperatives organized for 
the promotion of financial freedom and literacy among its members, and undertakes 
savings, lending, and other financial services to its members, such as: 
 
(i). 
Cooperative Banks. - Cooperative banks are organized for the 
primary purpose of providing a wide range of financial services to 
cooperatives and their members; 
(ii). 
Credit Cooperatives. – Credit cooperatives are engaged solely 
in lending services; 
(iii). 
Credit and Savings Cooperatives. – Credit and savings 
cooperatives promote and undertake savings and lending services 
among its members. They generate a common pool of funds in 
order to provide financial assistance to their members for 
productive and provident purposes; 
(iv). 
Credit Surety 
Fund 
Cooperatives. 
– 
Credit 
surety fund 
cooperatives, in partnership with Local Government Units (LGUs), are 
comprised 
of 
well-capitalized 
and 
well-managed 
member-
cooperatives or non-government organizations that meet the 
criteria and qualifications prescribed by the Authority, LGUs, 
Government Financial Institutions and other government agencies; 
(v). 
Insurance Cooperatives. – Insurance cooperatives are engaged 
in the business of insuring the life and property of cooperatives and 
their members; 
(vi). 
Savings 
and 
Deposits 
Cooperatives. –
 
Savings and deposits cooperatives are engaged solely in 
promoting and encouraging savings among its members; and 
(vii). 
Other cooperatives as may be determined by the Authority under 


this cluster in consultation with the cooperative sector. 
 
2)  Consumers, Marketing, Producers, and Logistics Cluster refers to cooperatives 
organized for the supply, procurement, and marketing of products of its members, 
industrial production, and non- agricultural business activity for the production and 
processing of raw materials or goods or its derivative, such as: 
(i). 
Consumers Cooperatives. – Consumer cooperatives are engaged 
primarily 
in 
procuring 
and 
distributing 
commodities to members and non-members; 
(ii). 
 Marketing Cooperatives. – Marketing cooperatives are engaged 
in the supply of production inputs to members and markets 
their 
products, 
including 
trading and processing; 
(iii). 
Logistics 
Cooperatives. – 
Logistics 
cooperatives
 
are engaged in operations involving facilities and supplies 
whose business is related to the supply chain; 
(iv). 
Producers Cooperatives. – Producers cooperatives are engaged 
in joint production whether agricultural or industrial. They are 
formed and operated by the members to undertake the production 
and processing of raw materials or goods produced by
 
the members into finished or processed products for sale 
by the cooperative. Any end product or its derivative arising from 
the raw materials produced by the members, sold in the name 
and for the account of the cooperative, shall be deemed a product 
of the cooperative and its members; and 
(v). 
Other cooperatives as may be determined by the Authority under 
this cluster in consultation with the cooperative sector. 
 
3) Human Services, Health, Housing, Workers, and Labor Service Cluster refers to 
cooperatives organized for providing employment and business opportunities to 
its members, housing, and services related to medical, dental, health and wellness, and 
death care, technology, including digital payment services, such as: 
(i). 
Health Services Cooperatives – Health services cooperatives are 
organized for the primary purpose of providing medical, dental, 
paramedic, diagnostic, and other health 
services, 
including 
cooperative health organizations, 
hospitals, 
clinics,
 
pharmacies, and transporting of patients; 
(ii). 
Housing Services Cooperatives – Housing services cooperatives are 
organized to assist or provide access to socialized housing for the 
benefit of the members who actively participate in the savings 
program for housing; 
(iii). 
Labor Services 
Cooperatives. – 
Labor services 
cooperatives are engaged in providing specific services to principal 
under a 
legitimate 
contracting 
or 
subcontracting 
arrangement, as defined under existing laws, and in accordance 
with the cooperative principles set forth under this Code; 
(iv). 
Technology 
Service 
Cooperatives. 
– 
Technology 
service 
cooperatives are organized to provide the members with services 
that are designed to facilitate the use of Information 
Technology
 
by end-users, or 
provide 
specialized 
technology-
oriented solutions by combining the processes and functions 
of 
software, 
hardware, networks, telecommunications, and 
electronics, among others; 
(v). 
Workers 
Cooperatives. – 
Workers 
cooperatives
 
are organized by workers, including the self-employed, 
who are at the same time the members and owners of the 
enterprise. The principal purpose of these cooperatives is to provide 
employment and business opportunities to the members and 
 
manage them in accordance with cooperative principles; and 
(vi). 
Other cooperatives as 
may 
be 
determined 
by the 


Authority under this cluster in consultation with the cooperative 
sector. 
 
4) Education and Advocacy Cluster refers to cooperatives organized for the promotion 
and advocacy of cooperativism among its members and the public through socially 
oriented projects, education and training, research and communication, such as: 
 
(i). 
Advocacy Cooperatives. – Advocacy cooperatives promote 
cooperativism and advocate policies for the general interest 
and welfare of 
the members, the sector, the movement, 
and 
the 
public 
through 
socially-oriented 
projects,
 
education 
and training, research and 
communication, 
campaigns, lobbying, and other similar activities to reach out to 
intended beneficiaries; 
 
(ii). 
Education Cooperatives. – Education cooperatives are organized 
for the primary 
purpose 
of 
owning and operating 
licensed educational institutions, subject to existing laws, rules 
and regulations; and 
 
(iii). 
Other cooperatives as 
may 
be 
determined 
by the 
Authority under this cluster in consultation with the cooperative 
sector. 
 
5) Agriculture, Agrarian, Aquaculture, Farmers, Dairy, and Fisherfolk Cluster refers to 
cooperatives engaged in the raising or culture of plants 
and 
animals,
 and the production 
and 
processing 
of agricultural 
produce 
and 
its 
derivatives, including cooperatives organized by agrarian reform beneficiaries and 
marginal farmers, for the purpose of developing a sustainable system of land tenure, 
land development, land consolidation, or land management, such as: 
 
(i). 
Agrarian Reform Cooperatives – Agrarian 
reform 
cooperatives 
are organized by marginal farmers, majority of whom are 
agrarian 
reform 
beneficiaries, 
for 
the purpose 
of 
developing 
an 
appropriate 
system 
of 
land tenure, 
land 
development, land consolidation or land management areas 
covered by agrarian reform; 
(ii). 
Agricultural Cooperatives. – Agriculture cooperatives are organized 
as 
agricultural-based 
economic 
enterprises 
voluntarily 
established through joint investment, joint ownership and joint 
management for the purpose of improving 
agricultural
 
production capacity, agro-industry, agri-business, or services 
related to agricultural production, which shall include agrarian 
reform, dairy, fishermen, community forestry, 
and
 
aquaculture cooperatives, 
as well as 
multi-purpose
 
cooperatives whose primary business activity is at least 
fifty per centum (50%) related to agricultural production, agro- 
industry, agri-business, or services related to agricultural production; 
(iii). 
Dairy Cooperatives. – Dairy cooperatives are engaged in the 
production and marketing of fresh milk which may be processed or 
marketed as dairy products; 
(iv). 
Farmers 
Cooperatives. – 
Farmers 
cooperatives
 
are organized by marginalized farmers, majority of whom are 
not agrarian reform beneficiaries, for the purpose of supporting 
their products, either fresh or processed; 
(v). 
Fisherfolk Cooperatives. – Fisherfolk cooperatives are organized 
by marginalized fisherfolk whose products are marketed 
either
 
as fresh 
or 
processed, 
for 
the 
mobilization of capital in the procurement of fishing boats, nets, 
gears, and accessories, production of aquatic products, and access 


to storage and agricultural facilities; 
(vi). 
Irrigators Cooperatives.  –  Irrigators cooperatives are 
engaged in providing sustainable irrigation services for farmers; 
and 
(vii). 
Other cooperatives as may be determined by the Authority under 
this cluster in consultation with the cooperative sector. 
 
6) Public Utilities Cluster refers to cooperatives organized for the purpose of undertaking 
electricity generation, utilizing renewable energy sources, including hybrid systems, 
acquisition and operation of sub-transmission or distribution; operation and 
management of water systems; land, air, and sea transportation services; and 
communications services, including telephone and digital communications, which 
require a franchise or certificate of public convenience and necessity such as: 
(i). 
Communications 
Cooperatives. – 
Communications 
cooperatives are organized to own, operate, and manage 
communication structures and arrangements, such as radio, 
cable TV, newspaper, and related industries, for the widespread 
dissemination of information for the members and the public; 
(ii). 
Electric Cooperatives. – 
Electric cooperatives are registered 
under this Code organized for the primary purpose 
of 
undertaking power 
generation, 
utilizing renewable 
energy 
sources, including hybrid systems, acquisition 
and
 
operation 
of sub transmission or distribution to the 
household members; 
(iii). 
Transport 
Service 
Cooperatives. – 
Transport
 
service cooperatives are organized to render public land, 
water, or air transportation services for the safe conveyance of 
passengers or cargoes, or are engaged in providing related or 
auxiliary services to the transport industry; 
(iv). 
Water Service Cooperatives. – Water service cooperatives are 
organized to own, operate, and manage water systems for the 
provision and distribution of potable water for the members and their 
households; and 
(v). 
Other cooperatives as 
may 
be 
determined 
by the 
Authority under this cluster in consultation with the cooperative 
sector. 
 
b) Categories of Cooperatives. Cooperatives are categorized as follows:  
 
1) In terms of membership, cooperatives may be categorized into: 
i. Primary Cooperatives; and 
ii. Secondary Cooperatives; 
 
2) In terms of territory, cooperatives are categorized according to areas of operations; 
and; 
3) In terms of assets, cooperatives shall follow the business size categories used 
by the Department of Trade and Industry (DTI). 
 
 
SEC. 24. Apex of Cooperatives. – The Apex of Cooperatives refers to the 
singular cooperative vested with a juridical personality and the mandate to represent the 
cooperative sector at the national and international levels, fully and voluntarily organized by the 
members of the cooperative sector. It shall have the mandate to engage in discussions and 
advise the appropriate authorities on all matters relating to cooperatives, as well as to promote 
the cooperative identity and culture. 
 
 
 


CHAPTER VI. FEDERATION OF COOPERATIVES 
 
 
SEC. 25. Area of Coverage. - A federation of cooperatives may be organized 
at the municipal or city level, district or provincial level, regional, inter-regional or national levels. 
 
 
SEC. 26. Members of a Federation of Cooperatives. - Members of a federation 
of cooperatives shall consist of cooperatives with common needs or purposes: Provided, That a 
member cooperative may freely withdraw membership from the federation. 
 
 
The minimum number of members shall be at least ten (10) primary or secondary 
cooperatives for a federation of cooperatives. 
 
 
SEC. 27. Authorized, Subscribed, and Paid-Up Capital of a Federation. - 
The authorized share capital of a cooperative shall be provided for in its Articles of Cooperation 
where at least twenty-five per centum (25%) of the authorized share capital shall be subscribed 
to by the members and at least twenty-five per centum (25%) of the subscribed share capital 
shall be paid up prior to its registration. 
 
 
The minimum paid-up share capital for a federation of cooperatives shall be One 
million pesos (P1,000,000.00). 
 
 
SEC. 28. Registration of Federation of Cooperatives - A federation of 
cooperatives shall be registered with the Authority. 
 
 
SEC. 29. Functions of a Federation of Cooperatives. - A federation of 
cooperatives shall undertake the following functions:  
a.) To carry on any cooperative enterprise authorized under Section 5 that complements, 
augments, 
or 
supplements but 
does 
not 
conflict, compete with, nor 
supplant the business or economic activities of its members; 
 
b.) To carry on, encourage, and assist educational and advisory work relating to the 
business activities of its members; 
 
c.) To render services designed to encourage simplicity, efficiency, and economy in the 
conduct of the business of its member cooperatives and to facilitate the implementation of 
their bookkeeping, accounting, and other systems and procedures; 
 
d.) To print, publish, and circulate any newspaper or other publication in the interest of its 
member-cooperatives and enterprises; 
 
e.)  To coordinate and facilitate the activities of its member-cooperatives; 
 
f.) To enter into joint ventures with local or international cooperatives in the manufacture 
and sale of products in the Philippines and abroad; 
 
g.) To mandatorily act as conciliator-mediator in inter-intra cooperative disputes among 
and between the members and officers of primary cooperatives; 
 
h.) To assist members in the submission of the required reports and other compliances to 
the Authority and other government or regulatory bodies; 
 
i.) To assist in the liquidation of the remaining assets of dissolved or cancelled primary 
cooperative members; 
 
j.) To develop programs on education, training, monitoring, coaching, 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- cooperatives with 
the laws, regulations, policies, and inspection or examination findings of government 
regulatory agencies. 
 
 
CHAPTER VII. COOPERATIVE UNIONS 
 
 
SEC. 30. Organization and Duties. - All registered cooperatives may organize or 
join cooperative unions to protect the interest and promote the welfare of all types of 
cooperatives: Provided, That a member cooperative may freely withdraw membership from the 
union. The cooperative unions shall represent the constituent cooperatives at the appropriate 
level and exercise the following duties and functions: 
 
a.) To represent its member organizations; 
b.) To acquire, analyze, and disseminate economic, statistical, and other information relating 
to its members and to all types of cooperatives within its area of operation; 
c.) To sponsor studies in the economic, legal, financial, social and other phases of 
cooperation, and publish the results thereof; 
d.)  To conduct trainings to member-cooperatives as an accredited training provider; 
e.) To promote the knowledge of cooperative principles and practices; 
f.) To develop the cooperative movement; 
g.) To assist the national and local government units in cooperative development 
activities within their respective jurisdiction; 
h.)  To assist in the dissemination and monitoring of the Philippine Cooperative Medium 
Term Plan; 
i.) To assist the members in the submission of the required reports and other compliances 
to the Authority and other government or regulatory bodies; 
j.) To assist the Authority, upon written request, in the performance of its power of inspection 
or examination by way of providing relevant information, such as research, reports, 
and financial records; 
k.) To advise the appropriate authorities on all questions relating to cooperatives at the 
municipal, city, district, provincial or regional levels; 
l.) To act as liquidators or rendering assistance in the liquidation of the remaining assets of 
dissolved primary cooperative members; and 
m.) To do and perform such other non-business activities 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 Apex Cooperative shall be sourced from the membership fees, dues and 
contributions, remitted cooperative education and training fund (CETF) 
from 
member-
cooperatives, training fees, fundraising activities, donations, grants, or subsidies from local and 
foreign sources, whether private or public. 
 
 
 
CHAPTER VIII. MEMBERSHIP 
 
 
SEC. 32. Membership. - A cooperative shall have regular members or associate 
members. 
 
 
A regular member is one who has complied with all the membership requirements, 
including the Pre-Membership Seminar, and entitled to all the rights and privileges of membership. 
An associate member is one who has no right to vote nor be voted upon and shall be entitled 
only to such rights and privileges as the bylaws may provide: Provided, That an associate 
member who meets all the requirements of regular membership, including the 
Pre-
Membership Education 
Seminar, continues to patronize the cooperative for two (2) years, 


and signifies the intention to remain a member shall be considered a regular member. 
 
 
SEC. 33. Qualifications of Membership. – Members of registered primary 
cooperatives must be natural persons, Filipino citizens or former natural-born Filipino citizens, 
of legal age, with capacity to enter into a contract, within the common bond of membership 
and area of operation, and must possess the qualifications and none of the disqualifications as 
provided for in the By-laws of the cooperative; Provided, that in case of former natural-born Filipino 
citizens, they must comply with Philippine taxation laws; Provided, further, that the age 
requirement shall not apply to laboratory cooperatives as defined in Section 8. A member must 
have completed the Pre- Membership Education Seminar. 
 
 
SEC. 34. Government Officers and Employees. – 
a.) All elective officials of the Government shall be ineligible to become officers 
of 
cooperatives: Provided, That the disqualification does not extend to a party list 
representative who represents the cooperative sector: Provided, further, That nothing 
precludes cooperatives from engaging in activities in support of party lists representing 
the sector, such as, but not limited to participating in campaigning or donating funds; 
 
b.) Employees of the Authority are allowed to become a member of any cooperative. 
However, they shall be disqualified to be elected or appointed as an officer, 
except for cooperatives organized among themselves; and 
 
c.) Any government employee or official may, in the discharge of the duties as a member in 
the cooperative, be allowed by the head of office concerned to use official time for 
attendance at the General Assembly, Board and 
committee 
meetings 
including 
cooperative 
seminars, conferences, workshops, technical meetings, and training 
courses locally or abroad. 
 
 
SEC. 35. Processing of Applications for Membership. – A n  application 
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. Otherwise, the application for membership shall be 
deemed approved, subject to the condition that the applicant has submitted the duly 
accomplished application and has paid the membership fees to the cooperative. 
 
 
In case the application for membership is denied by the Board of Directors, 
an appeal may be made to the Election Committee, sitting as the appeals and grievance body, 
within fifteen (15) days after receipt of the notice of denial and the decision of the Election 
Committee shall be final. If the Election Committee fails to decide within the prescribed period, the 
appeal is deemed approved in favor of the applicant. 
 
 
SEC. 36. Liability of Members. - A member shall be liable for the debts of the 
cooperative to the extent of the member’s subscription to the share capital of the cooperative. 
 
 
SEC. 37. Termination of Membership. – 
a.) A member of a cooperative may withdraw membership from the cooperative by 
giving written notice to the Board of Directors which shall be acted upon within thirty 
(30) days from receipt of said notice. 
 
b.) The death or insanity of a member in a primary cooperative, and the insolvency or 
dissolution, de-listing, or cancellation of the certificate of registration of a member in a 
secondary cooperative shall be considered valid grounds for termination of membership: 
Provided, That in the case of death or insanity of an agrarian reform beneficiary-member 
of a cooperative, the qualified next-of-kin may assume the duties and responsibilities 
of the original member; 
 
c.) Termination of membership in the cooperative shall be initiated through the filing 
of a complaint before the ethics committee of the cooperative. The committee shall 


recommend to the Board of Directors the termination of membership for any of the 
following causes:  
 
1) Failure 
to 
patronize 
any 
services 
of 
the 
cooperative for 
an unreasonable period of time as provided in the By-laws; 
 
2) Failure to comply with the obligations of membership as provided in the By-laws or 
policies of the cooperative; 
 
3) Violation of the By-laws of the cooperative; 
 
4) Commission of any act or omission injurious or prejudicial to the interest or the 
welfare of the cooperative; and 
 
5) Others, as may be provided in the By-laws of the cooperative. 
 
 
Such member shall be informed, in writing, and be given an opportunity 
to be heard by the grievance committee. The result of the investigation shall be referred to 
the Board of Directors for its consideration. Based on the recommendation of the grievance 
committee, the Board may terminate membership in the cooperative by a majority vote of 
all its members. The decision of the Board shall be in writing, and communicated either personally, 
or by registered or electronic mail. The decision may be appealed to the General Assembly 
within thirty (30) days from receipt thereof. 
 
 
The General Assembly shall decide on such appeal within thirty (30) days after 
receipt thereof. Failure of the General Assembly to decide within the prescribed period shall be 
deemed in favor of the member. The decision of the General Assembly decision shall be final 
and executor. Pending the final decision, the membership shall remain in force. This 
notwithstanding, the member may file a petition for review of the decision of the General 
Assembly with the Authority within fifteen (15) days from receipt thereof. 
 
 
SEC. 38. Refund of Interests. - All sums computed in accordance with the By-
laws due from the cooperative to a former member shall be paid in accordance with this Code and 
as prescribed in the Implementing Rules and Regulations: Provided, That such refund shall not be 
made if upon such payment, the value of the assets of the cooperative would be less than the 
aggregate amount of its debts and liabilities exclusive of the members’ share capital contribution. 
 
In the computation of the interest due to the former member, the current 
balance of such member in the ledger of accounts of the cooperativeshall be taken into account. 
 
 
CHAPTER IX. ADMINISTRATION 
 
 
SEC. 
39. 
Composition of 
the 
General 
Assembly 
and 
Representative Assembly. - The General Assembly shall be the full membership of the 
cooperative, exercising all the rights and performing all the obligations as provided in this Code, 
and in its Articles of Cooperation and By-laws. 
 
 
For cooperatives with numerous and dispersed membership, the General 
Assembly shall delegate the exercise of 
its powers to a Representative Assembly, the 
members of which are elected by each sector, chapter, or district of the cooperative: Provided, 
That in cases provided under this Code for the call of a regular or special General Assembly, or 
the approval or confirmation thereof, the Representative Assembly shall also suffice, where 
applicable. Such delegation shall be in accordance with the rules and regulations of the Authority. 
 
 
SEC. 40. Powers of the General Assembly. - The General Assembly shall be the 
highest policy-making body of the cooperative and shall exercise such powers as are stated in this 
Code, and in the Articles of Cooperation and By-laws of the cooperative. The General Assembly, 


through its members entitled to vote, shall have the following exclusive powers which cannot be 
delegated: 
a.) Determine and approve amendments to the Articles of Cooperation and By-laws; 
 
b.) Elect, appoint, or remove, the members of the Board of Directors. However, in the 
case of the electric cooperatives registered under the Authority, the election of the 
members of the Board shall be in accordance with its By-laws or election guidelines; 
 
c.) Approve the annual strategic and developmental plans, and the budget of the cooperative; 
 
d.) Approve or disapprove proposals from the Board of Directors pertaining to 
external 
borrowings, investments, grants, donations, and other financial assistance; and  
 
e.) Decide membership issues within the cooperative. 
 
 
Subject to such other provisions of this Code and only for purposes of prompt and 
intelligent decision-making, the General Assembly may by a three-fourths (3/4) vote of all its 
members entitled to vote, present and constituting a quorum, delegate some of its powers to the 
Board of Directors. These powers shall be enumerated under the By-laws of the cooperative. 
 
 
SEC. 41. Meetings. – 
 
a.) The General Assembly shall conduct a regular annual meeting on a date fixed in the 
By-laws, which shall be within ninety (90) days or one hundred eighty (180) days after 
the close of each calendar year, for primary or secondary cooperatives, respectively: 
Provided, That notice of regular meetings shall be sent in writing, by posting or publication, 
or through other electronic means to all members of record. 
 
b.) Whenever necessary, a special meeting of the General Assembly may be called at any 
time by a majority vote of the Board of Directors, or upon petition of at least ten per 
centum (10%) of the total members who are entitled to vote, or as provided for in the By-
laws: Provided, That a notice in writing shall be sent one (1) week prior to the meeting to 
all members who are entitled to vote. 
 
  
If the Board fails to call a regular or special meeting within the given period, the 
Authority, upon petition of ten per centum (10%) of members entitled to vote, or the 
quorum as stated in their By-laws, and for good cause shown, shall issue an order to the 
petitioners directing them to call a meeting of the General Assembly by giving proper 
notice as required in this Code or in the By-laws; 
 
c.) In the case of a newly registered cooperative, a special General Assembly meeting 
shall be called within sixty (60) days from such approval of its registration, for the 
following purposes: 
  
1) Presentation of approved Articles of Cooperation and By-laws; 
 
2) Approval of the annual strategic and development plans, and budget; and 
 
3) Other matters, as may be determined by the cooperative. 
 
4) The Authority shall compel the cooperative to call a General or Representative 
Assembly for the purpose of reporting to the members the result of any examination 
or other investigation of the cooperative affairs; and 
 
5) Notice of any meeting may be waived, expressly or impliedly, by any member. 
 
 
SEC. 42. Mode of Conducting Regular or Special Assembly Meetings. - 
Regular and special assembly meetings may be conducted in any of the following manner: 


 
a.) Duly assembled in one venue, wherein the meetings are held on the same day; or 
 
b.) Simultaneously, wherein the meetings are held on the same day but in different venues. 
 
  
As a general rule, assembly meetings shall be conducted in a manner provided in 
the By-laws of the cooperative. However, due to technological advancement, public 
health and safety measures, increased level of participation of members and other 
equally important considerations in favor of the viability and growth of cooperatives, 
cooperatives are allowed to conduct their 
assembly 
meetings 
through 
videoconferencing 
or a combination of physical attendance and videoconferencing, 
except for electric cooperatives: Provided, That cooperatives who opt to conduct 
 
  
General Assembly meetings through videoconferencing or a combination of 
physical attendance and videoconferencing as an alternative mode shall amend their 
By-laws adopting the same: Provided, further, That cooperatives shall adopt policies and 
procedures sufficiently addressing administrative, technical, and logistical concerns for an 
effective and efficient videoconference meeting. 
 
 
SEC. 43. Quorum. - Unless a higher requirement is provided in the By-laws of the 
cooperative, a quorum shall consist of at least twenty-five per centum (25%) of all the members 
entitled to vote: Provided, That electric cooperatives shall follow the minimum quorum 
requirement as may be prescribed by the National Electrification Administration (NEA): 
Provided, further, That the quorum for Representative Assembly shall in no case be lower than 
twenty-five per centum (25%) of the total membership entitled to vote. 
 
 
In the case of federations and unions, the quorum requirement shall be fifty per 
centum (50%) of the total number of members entitled to vote. 
 
 
SEC. 44. Voting System. - Each member of a primary cooperative shall have 
only one (1) vote regardless of the share capital of such member. In the case of federations, they 
may opt to adopt in their By-laws incentive voting or share voting. 
 
 
 
In the case of incentive voting, the member-cooperatives shall have one (1) 
basic vote and up to five (5) incentive votes, as provided in the By- laws. In case of share voting, 
the voting rights of the member-cooperatives shall be proportionate to the number of their paid-
up shares, subject to the limitation imposed under Section 84 of this Code: Provided, That at 
least one-third (1/3) of the 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 a cooperative, other than a 
primary cooperative, may provide for voting by proxy. Voting by proxy means allowing a delegate 
of a cooperative to represent or vote on behalf of another delegate of the same cooperative. 
 
 
SEC. 45. Composition and Term of the Board of Directors. – The 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, but not to exceed three (3) consecutive 
terms. The Board shall hold office until their successors are duly elected and qualified, or until 
duly removed for cause. 
 
 
For federations, a member-cooperative shall have only one representative eligible 
to run and be voted upon as a member of the Board, irrespective of the member-cooperative’s 
share capital holdings. 
 
 
SEC. 46. Powers of the Board of Directors. - The Board of Directors shall be 
responsible for the annual strategic planning, direction-setting and policy-formulation activities of 


the cooperatives. 
 
 
SEC. 47. Directors. – 
a.) Any member of a cooperative who has the right to vote and be voted upon, and who 
possesses all the qualifications and none of the disqualifications provided in this 
Code or in its By-laws shall be eligible for election as director, subject to the limitation 
imposed by the second paragraph of Section 45 of this Code. 
 
b.) The cooperative may, by resolution of its Board of Directors, admit as an ex officio 
director or committee member one appointed by any financing institution from which the 
cooperative received financial assistance, solely to provide technical knowledge not 
available within its membership. Such director or committee member need not be a 
member of the cooperative and shall have no powers, rights, nor responsibilities 
except to provide technical assistance as required by the cooperative. 
 
c.) The members of the Board of Directors shall not hold any other position 
directly 
involved 
in 
the 
day-to-day 
operation 
and 
management 
of 
the 
cooperative. 
 
d.) Any member engaged in a business similar to that of the cooperative or who, in any way, 
has a conflict of interest with it, is disqualified from being elected as a director. 
 
 
SEC. 48. Meeting of the Board and Quorum Requirement. – 
 
a.) In the case of primary cooperatives, regular meetings of the Board of Directors shall be 
held at least once a month. Special meetings may be held at any time: i) at the call of the 
Chairperson, upon prior written notice given at least three (3) days prior to the date of 
said meeting; ii) or at the call of a majority of the members of the Board, upon prior 
written notice given at least one (1) day before said meeting: Provided, that only two (2) 
special meetings may be held in one (1) month. Notices may be sent through electronic 
means, to the official contact number or email account of the officers. 
 
b.) A majority of the members of the Board shall constitute a quorum for the conduct of 
business. 
 
c.) Each member of the Board shall only have one vote, whether it be a primary or 
secondary cooperative, irrespective of the share capital holdings of the member-
cooperative.  
 
d.) Directors cannot attend or vote by proxy at Board meetings. 
 
e.)  Cooperatives may opt to allow meetings of the Board of Directors and members of the 
different committees of the cooperative to be conducted either through physical 
attendance or videoconferencing, or both, subject to the rules on sending of 
notices, quorum, and voting requirements as provided for in the By-laws. In the conduct 
of meetings 
 
 
SEC. 48. Meeting of the Board and Quorum Requirement. –  
a.) In the case of primary cooperatives, regular meetings of the Board of Directors shall be 
held at least once a month. Special meetings may be held at any time: i) at the call of the 
Chairperson, upon prior written notice given at least three (3) days prior to the date of 
said meeting; ii) or at the call of a majority of the members of the Board, upon prior 
written notice given at least one (1) day before said meeting: Provided, that only two (2) 
special meetings may be held in one (1) month. Notices may be sent through electronic 
means, to the official contact number or email account of the officers. 
 


b.) A majority of the members of the Board shall constitute a quorum for the conduct of 
business. 
 
c.) Each member of the Board shall only have one vote, whether it be a primary or 
secondary cooperative, irrespective of the share capital holdings of the member-
cooperative. 
 
d.) Directors cannot attend or vote by proxy at Board meetings. 
 
e.) Cooperatives may opt to allow meetings of the Board of Directors and members of the 
different committees of the cooperative to be conducted either through physical 
attendance or videoconferencing, or both, subject to the rules on sending of 
notices, quorum, and voting requirements as provided for in the By-laws. In the conduct 
of meetings through videoconferencing, cooperatives shall adopt their own policies and 
procedures which shall be included in their By-laws. 
 
 
SEC. 49. Vacancy in the Board of Directors. – In case of a vacancy, other than by 
expiration of term or an increase in the number of Board of Directors, the Board, if still constituting 
a quorum, may, in a special meeting called for the purpose, appoint, by majority vote, any 
member of the cooperative to fill such vacancy: Provided, That the director so appointed shall 
possess all of the qualifications and none of the disqualifications as prescribed under this 
Code and the By-laws of the cooperative. If the remaining members of the Board do not 
constitute a quorum, the vacancy shall be filled in an election conducted through a special 
General Assembly called for the purpose, held within thirty (30) days from the time the vacancy 
occurs, or during the regular General Assembly, whichever comes first. The director so appointed 
or elected shall serve only for the unexpired term of the predecessor in office. 
 
 
If the General Assembly fails to fill the vacancy, as directed in the preceding 
paragraph, or in case of the vacancy of the entire Board of Directors, the Authority shall 
compel the cooperative, through the Election Committee, to call for a special General Assembly 
for the purpose of electing a new Board of Directors. In the absence of the Election Committee, 
the General Assembly may appoint an Ad Hoc Committee that shall be responsible to 
call for such special General Assembly. 
 
 
SEC. 50. Officers of the Cooperative.  - The officers of the cooperative 
shall include the members of the Board of Directors, members of the different committees, 
General Manager or Chief Executive Officer, Secretary, Treasurer, and other officers as may 
be provided for in the By- laws. As such, they shall exercise their duties and responsibilities 
within the scope of their defined functions. 
 
 
The Board of Directors shall elect from among themselves the Chairperson 
and Vice-Chairperson and elect or appoint other officers of the cooperative from outside of the 
Board, in accordance with their By-laws. 
 
 
The Board of Directors is prohibited from appointing any person within the 
fourth civil degree of consanguinity or affinity of the members of the Board of Directors. Neither 
shall the appointive officers be related to each other up to the fourth civil degree of consanguinity 
or affinity. Further, no officer shall engage in a business similar to that of the cooperative nor in 
any other manner have interests in conflict with the cooperative. 
 
 
SEC. 51. Committees of Cooperatives. – 
 
a.) The By-laws may create an executive committee, 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 other committees, such as conciliation-
mediation, ethics, gender and development, education, and other committees as may 


be necessary for the conduct of the affairs of the cooperative. The members of the audit 
and election committee shall be elected by the General Assembly, while the members 
of the other remaining committees shall be appointed by the Board. 
 
Unless otherwise provided in the By-laws, the Board, in case of a vacancy in the 
committees, may appoint or call an election to fill the vacancy, as the case may 
be: Provided, that the person so appointed or elected shall serve only for the unexpired 
portion of the term. 
 
 
SEC. 52. Functions, Responsibilities and Training Requirements of Directors, 
Officers and Committee Members. - The functions and responsibilities of directors, officers, 
and committee members, as well as their training requirements, shall be prescribed in the 
By-laws of the cooperative, in accordance with the rules and regulations issued by the 
Authority. 
 
 
SEC. 53. Liability of Directors, Officers and Committee Members - Directors, officers, 
and committee members shall be jointly and severally liable 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 assenting to patently unlawful acts; 
 
b.) Gross negligence or bad faith in directing the affairs of the cooperative; or 
 
c.) Acquiring any personal or pecuniary interest in conflict with their duty. 
 
 
When directors, officers, or committee members attempt to or have acquired, in 
violation of their duties, any interest or equity adverse to the cooperative in respect to any 
matter which has been reposed in them in confidence, they shall, as a trustee for the cooperative, 
be liable for damages and shall be accountable for double the profits which otherwise would have 
accrued to the cooperative. 
 
 
 
SEC. 54. Compensation and Other Emoluments. – 
 
a.) In the absence of any provision in the By-laws fixing their compensation, the directors shall 
not receive any compensation except for reasonable per diems: Provided, That no 
additional compensation other than per diems shall be paid during the first year of 
existence of any cooperative; Provided, further, That only the General Assembly shall 
approve any additional compensation or the increase thereof. 
 
b.) The compensation of officers or committee members may be fixed in the By-laws. 
 
c.) Directors and officers shall not be entitled to any per diem if the cooperative 
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.) Unless already fixed in the By-laws, the compensation of all other employees shall 
be determined by the Board of Directors in accordancewith the Regional Tripartite and 
Wage Productivity Board. 
 
 
SEC. 55. Dealings of Directors, Officers, or Committee Members - A contract 
entered into by the cooperative with one (1) or more of its directors, or their spouses and 
relatives within the first civil degree of consanguinity or affinity, is voidable, at the option of the 
cooperative, unless the following conditions are present: 
 
a.) The presence of such director in the Board meeting wherein contract was approved 


was not necessary to constitute a quorum for such meeting; 
 
b.) The vote of such director was not necessary for the approval of the contract; and 
 
c.) The contract is fair, reasonable, and beneficial to the cooperative under the circumstances. 
 
 
In the case of contracts executed between the cooperative and its other officers or 
committee members, or their spouses or relatives within the first civil degree of consanguinity or 
affinity, such contracts are voidable, at the option of the cooperative, unless previously 
authorized by the General Assembly or by the Board of Directors, and the contract is fair, 
reasonable, and beneficial to the cooperative under the circumstances. 
 
 
The Board of Directors shall report any such contract to the General Assembly 
during its regular meeting for ratification. 
 
Where any of the first two conditions set forth in the preceding paragraph 
is absent, in the case of a contract with a director, such contract may be ratified by a three-fourths 
(3/4) vote of all the members entitled to vote, present and constituting a quorum in a meeting 
called for the purpose: Provided, That full disclosure of the adverse interest of the directors involved 
is made at such meeting, and that the contract is fair and reasonable under the circumstances. 
 
 
SEC. 56. Disloyalty of a Director and Other Officers of the Cooperative. 
- A director or other officer of the cooperative who, by virtue of such office, directly or indirectly 
acquires for themselves an opportunity which should belong to the cooperative, shall be liable for 
damages and must account for double the profits that otherwise would have accrued to the 
cooperative by refunding the same. This provision shall be applicable, notwithstanding the 
fact that the director or other officers of the cooperative used their own funds to acquire such 
opportunity. 
 
 
SEC. 57. Illegal Use of Confidential Information. –  
a.) A director, officer, or any person who, in conspiration or connivance therewith, makes 
use of confidential information to the benefit or advantage of such person, which, if 
generally known, may adversely affect the operation and viability of the cooperative, shall 
be held liable for the direct losses and for the unrealized benefit suffered by the 
cooperative, as a result of the transaction. 
 
b.)  The cooperative shall take the necessary steps to enforce the liabilities described in 
paragraph (a) herein. 
 
 
SEC. 58. Removal From Office. – No officer may be removed except for cause, 
as provided in the internal policies of the cooperative, after due notice and hearing. Loss of trust 
and confidence in the performance of duties shall be a valid ground for removal. 
 
 
All complaints for the removal of any elected officer shall be filed with the Board of 
Directors, except as otherwise provided herein. Upon finding prima facie evidence of guilt, the 
Board shall inform the officer concerned and present its recommendation for removal in a regular 
or special General Assembly called for the purpose, wherein such officer shall be given a final 
opportunity to present his case. The regular or special General Assembly, by a three-fourths 
(¾) votes of the members entitled to vote present and constituting a quorum, shall approve 
or disapprove the removal of the officer. 
 
 
In cases involving directors, the complaint shall be filed with the Ethics and 
Grievance committee, which shall follow the procedure set in the preceding paragraph. In cases 
involving the removal of any appointive officer, a complaint shall be filed with the Ethics and 
Grievance committee of the cooperative, which shall submit its recommendation to the Board of 
Directors for proper action. The decision of the Board of Directors may be appealed to the General 
Assembly. 
 
 
During the investigation, the Board of Directors or the Ethics and Grievance 


committee may, as the case may be, upon majority vote, place such officer under preventive 
suspension, as prescribed in the By-laws. 
 
 
The decision of the General Assembly may be appealed to the Authority. 
 
 
CHAPTER X. RESPONSIBILITIES, RIGHTS AND PRIVILEGES OF COOPERATIVES 
 
 
SEC. 59. Address. - Every cooperative shall have an official postal address 
where the principal office is located and an electronic mail address to which all communications, 
reports, notices, and summons may be served, and where all other documents required shall be 
submitted. The Articles of Cooperation and the By-laws shall be amended accordingly should 
there be a change in the official postal and electronic mail addresses of the cooperative. 
 
 
For this purpose, an electronic mail registry shall be created in accordance 
with the guidelines to be promulgated by the Authority. 
 
 
SEC. 60. Books to be Kept Open. –  
a.) Every cooperative shall have the following documents ready and accessible to its 
members and representatives of the Authority for inspection, examination, and 
investigation during reasonable office hours at its registered principal office: 
 
1. A copy of this Code and all other laws pertaining to cooperatives; 
 
2. A copy of the Implementing Rules and Regulations of this Code; 
 
3. A copy of the Articles of Cooperation and By-laws of the cooperative; 
 
4. A registry of members; 
 
5. The books of the minutes of the meetings of the General Assembly, 
Board of Directors and committees; 
 
6. A share and transfer book, except for unions; 
 
7. Financial statements and other financial records; and 
 
8. Such other documents as may be prescribed by the Authority, laws, and 
the By-laws. 
 
b.) The accountant or the  bookkeeper of the cooperative shall be responsible for the 
maintenance and safekeeping of the books and records of accounts of the cooperative 
in accordance with generally accepted accounting practices. The accountant or 
bookkeeper shall also be responsible for the production of the same at the time of audit, 
inspection, examination, or investigation.  
 
The Audit committee shall be responsible for the continuous and periodic review of the 
books and records of accounts to ensure that such records are in accordance with 
generally accepted accounting practices. It shall also be responsible for the production of 
the same at the time of audit or inspection. 
 
 
c.) Each cooperative shall maintain records of accounts such that the true and correct 
condition and the results of the operation of the cooperative may be ascertained therefrom 
at any time. The financial statements, audited according to generally accepted auditing 
standards, principles and practices, shall be published annually and shall be kept posted 
in conspicuous places in the principal office of the cooperative, its branches, and 
satellite offices. 
 


d.)  Subject to the pertinent provisions of the National Internal Revenue Code, as amended, 
and other laws, a cooperative may dispose, by burning or any method of complete 
destruction, any document, record or book pertaining to its financial and non-financial 
operations which are already more than five (5) years old except those relating to 
transactions which are the subject of civil, criminal, and administrative proceedings. An 
inventory of the audited documents, records and books to be disposed of shall be drawn up 
and certified to by the Cooperative Secretary and the Chairman of the audit committee 
and presented to the Board of Directors, which may thereupon approve the disposition 
of said records. 
 
 
SEC. 61. Annual Reports. - Every cooperative shall prepare an annual 
progress report with the necessary attachments as may be prescribed by the Authority 
at the end of every calendar year. The reports shall be made accessible to its members, 
and copies thereof shall be available upon request of members on record during reasonable 
office hours. These reports shall be filed with the Authority within one hundred twenty (120) days 
from the end of the calendar year. The form and contents of the reports shall be as prescribed 
by the rules of the Authority. Failure to file the required reports on time shall subject the 
accountable officer to fines and penalties as may be prescribed by the Authority. Failure to 
file the required reports despite notice shall be a ground for the suspension or cancellation 
of the Certificate of Registration of the cooperative, subject to the guidelines to be issued by the 
Authority. 
 
 
If a cooperative fails to make and file the reports required herein, or fails to include 
therein any matter required by the Code, the Authority shall, within thirty (30) days from the 
expiration of the prescribed period, send such cooperative a notice stating its non-compliance 
and the commensurate fines and penalties that will be imposed until such time that the cooperative 
has complied with the requirements. 
 
 
SEC. 62. Registry of Members as Prima Facie Evidence. – A registry of 
members kept by the cooperative shall be prima facie evidence of the following particulars: 
 
1. The date on which the name of any person was entered in such registry or list of members; 
and 
 
2. The date on which any such person ceased to be a member. 
 
 
However, other information may be required in accordance with the guidelines 
that shall be prescribed by the Authority. 
 
 
SEC. 63. Probative Value of Certified Copies of Entries. - A copy of any entry 
in any book, registry, or list regularly kept in the course of business of the cooperative shall, 
if duly certified in accordance with the rules of evidence, be admissible as evidence of the 
existence of entry and prima facie evidence of the matters and transactions therein recorded. 
 
 
No cooperative or person in possession of the books of such cooperative 
shall, in any legal proceedings to which the cooperative is not a party, be compelled to produce 
any of the books of the cooperative, unless by order of the Authority in the exercise of its 
adjudicatory powers or a competent court. 
 
 
SEC. 64. Bond of Accountable Officers. – All officers and employees handling 
funds, securities, or property on behalf of the cooperative shall be covered by a surety bond to 
be issued by a duly registered insurance 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. The cooperative may likewise secure other insurance policies for its protection 
against losses of monies, securities, and other properties. 


 
 
Within thirty (30) days upon approval of the registration of a cooperative, 
the bonds of the accountable officers shall be submitted to the Authority. The bond for the 
cooperative’s Treasurer shall be ten per centum (10%) of the sum of the initial paid-up capital 
and membership fees. The bonds for all accountable officers shall be renewed annually and 
adjusted accordingly. 
 
 
SEC. 65. Preference of Claims. – 
 
a.) Notwithstanding the provisions of existing laws, rules and regulations to the contrary, any 
debt due to the cooperative from the member shall constitute a first lien upon any raw 
materials, production, inputs, and products produced; or any land, building, facilities, 
equipment, goods or services acquired and held, by such member through the proceeds 
of the loan or credit granted by the cooperative to such member for as long as the same 
is not fully paid. 
 
b.) No property or interest on property which is subject to a lien under paragraph (a) 
herein shall be sold nor conveyed to third parties without the prior permission of the 
cooperative. The lien upon the property or interest shall continue to exist even after the 
sale or conveyance thereof until such lien has been duly extinguished. 
 
c.) Notwithstanding the provisions of any law to the contrary, any sale or conveyance made 
in contravention of the preceding paragraph shall be void. 
 
 
SEC. 66. Instrument for Salary or Wage Deduction. – 
a.) A member of a cooperative shall, notwithstanding the provisions of existing laws to 
the contrary, execute an instrument in favor of the cooperative authorizing the 
employer to deduct from the salary or wages, commutation of leave credits, and any 
other monetary benefits payable by the employer, and remit such amount as maybe 
specified in satisfaction of a debt, share capital contribution, or other demand due from the 
member to the cooperative. 
 
b.) Upon the execution of such instrument and as may be required by the cooperative 
contained in a written request, the employer shall make the deduction in accordance with 
the agreement and remit forthwith to the cooperative the amount so deducted within ten 
(10) days after the end of the payroll month. The employer shall make the deduction for as 
long as such debt or other demand remains unpaid by the employee. 
 
c.) The term “employer” as used in this Section shall include all private firms, national 
government agencies, including government-owned and controlled 
corporations, 
government instrumentalities with corporate powers, 
government 
corporate 
entities, 
or 
government 
financial institutions, and local government units 
that employ a member of a cooperative and have agreed to carry out the terms of the 
instrument mentioned in this Section. 
 
d.) The provisions of this Section shall apply to all similar agreements referred to in 
paragraph (a) herein and were enforced prior to the approval of this Code. 
 
e.) Notwithstanding the provisions of existing laws to the contrary, the responsibilities of 
the employer as stated in paragraphs (a) and (b) herein shall be mandatory and 
without the need for any prior conditions, accreditation or other similar processes 
to facilitate or implement the deductions: Provided, That in the case of a private 
employer, the actual and reasonable cost for deducting and remitting may be collected. 
 
f.) The member may withdraw such consent at any time and for any reason, 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 provision of any law to the 


 
contrary, a cooperative shall have primary lien upon the capital, deposits, or interests of a 
member for any debt due to the cooperative from such member. 
 
 
SEC. 68. Tax Treatment of Cooperatives. – Duly registered cooperatives 
under this Code which do not transact any business with non-members or the general public shall 
not be subject to any taxes, fees, and charges imposed under the internal revenue laws and 
other tax laws. Cooperatives not falling under this Section shall be governed by the 
succeeding provisions. 
 
 
SEC. 69. Tax and Other Exemptions. - Duly registered cooperatives transacting 
business with both members and non-members shall not be subject to tax on their transactions 
with members. Further, the transactions of members with the cooperative shall not be subject to 
any taxes, fees, and charges, including but not limited to final taxes on members’ share capital 
and deposits and corresponding documentary stamp taxes. 
 
 
Notwithstanding the provisions of any law or regulation to the contrary, 
cooperatives dealing with non-members shall be subject to the following: 
 
a.) Duly registered agricultural cooperatives whose Reserve Funds have an existing balance 
of One hundred million pesos (P100,000,000.00) and below, and non-agricultural 
cooperatives whose Reserve Funds have an existing balance of Fifty million pesos 
(P50,000,000.00) and below shall be exempt from all national internal revenue taxes, fees, 
and charges of whatever name and nature; 
 
Such cooperatives shall be exempt from customs duties, advance sales or compensating 
taxes on their importation of machineries, equipment, batteries, accessories, and spare 
parts used in the operations of the cooperatives and which are not available locally as 
certified by the DTI. All tax- and duty-free imports shall not be sold nor the beneficial 
ownership thereof be transferred to any person until after five (5) years, otherwise, the 
cooperative and the transferee or assignee shall be solidarily liable to pay twice the 
amount of the imposed tax or duties; 
 
b.) Duly registered agricultural cooperatives whose Reserve Funds have an existing balance of 
more than 
One 
hundred 
million pesos 
(P100,000,000.00), 
and 
non-
agricultural cooperatives whose Reserve Funds have an existing balance of more 
than Fifty million pesos (P50,000,000.00) shall pay 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. 
The tax base for all cooperatives liable to pay income tax shall be the income directly 
related from the business transactions 
with 
non-members after 
deducting the 
amounts for the statutory funds; 
 
2. Value-Added Tax (VAT) on transactions with non-members: Provided, however, That 
duly registered cooperatives shall be exempt from the imposition of VAT, on the 
following: 
 
(i). 
Sales by 
Agricultural 
cooperatives duly 
registered with 
the Authority to their members as well as sale of their produce, 
whether in its original state or processed form, to non-members; 
their 
importation of direct farm 
inputs, 
machineries 
and 
equipment, including spare parts thereof, to be used directly and 
exclusively in the production and/or processing of their produce, 
and their resale to other Agricultural cooperatives; 
(ii). 
Gross receipts from lending activities by credit or multi-purpose 
cooperatives duly registered with the Authority; and 
(iii). 
Sales by 
non-agricultural, 
non-electric 
and 
non-
credit cooperatives duly registered with the Authority: Provided, That 
the share capital contribution of all members does not exceed 


 
Fifteen thousand pesos (P15,000) each and regardless of the 
aggregate capital and net surplus ratably distributed among the 
members: 
 
Provided, That the exempt transactions in the foregoing shall 
include sales made by cooperatives duly registered with the 
Authority organized and operated by their members to undertake 
the production 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, however, That any processed product or its derivative 
arising from the raw materials produced by their members, sold in 
the name and for the account of the cooperative shall be deemed 
a product of the cooperative and its members: Provided, further, 
That at least twenty-five per centum (25%) of the net income of the 
cooperatives is returned to the members in the form of interest 
and/or patronage refunds: Provided, finally, That VAT shall not be 
imposed for the purchase of modernized vehicles under the Public 
Utility Vehicle Modernization Program; 
 
3. All sales of goods and/or services rendered for non-members shall be subject to the 
applicable percentage taxes except sales made by commodities or service 
cooperatives; and 
 
4. All other taxes unless otherwise provided herein. 
 
   
Donations to duly accredited charitable, research and educational institutions and 
reinvestment to socioeconomic projects within the area of operation of the cooperative 
may be tax deductible. 
 
 
c.) 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 
with banks and insurance companies. The Authority shall furnish the Municipal, City, or 
Provincial Assessor’s Office a certified list of duly registered cooperatives as basis of 
their removal from the Assessment Rolls; 
 
d.) In areas where there are no available notaries public, the judge, exercising his/her 
ex-officio capacity as notary public, 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 cooperatives not exceeding Five Hundred 
Thousand Pesos (P500,000.00). 
 
e.) Any register of deeds shall accept for registration, free of charge, any instrument relative 
to a loan made under this Code which does not exceed Two Hundred and Fifty 
Thousand Pesos (₱250,000.00) or the deeds of title of any property acquired by the 
cooperative or any paper or document drawn in connection with any action brought 
by the cooperative or with any court judgment rendered in its favor or any instrument 
relative to a bond of any accountable officer of a cooperative for the faithful performance of 
his/her duties and obligations. 
 
f.) Cooperatives shall be exempt from the payment of all court and sheriff’s fees payable to the 
Philippine Government for and in connection with all actions brought under this Code, 
or where such action is brought by the Authority before the court, to enforce the payment 
of obligations contracted in favor of the cooperative. 
 
g.) 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 certification of the Authority showing that the net assets of the cooperative are 
in excess of the amount of the bond required by the court in similar cases shall be 


 
accepted by the court as a sufficient bond. 
 
h.) Any security issued by cooperatives shall be exempt from the provisions of the 
Securities Act provided such security shall not be speculative. 
 
 
Any public official or employee who violates or in any manner circumvents this 
provision shall be dealt with in accordance with the penal provisions of this Code. 
 
 
SEC. 
70. 
Issuance 
of 
Certificate 
of 
Tax 
Exemption 
for 
Cooperatives. - The Authority shall furnish the Bureau of Internal Revenue (BIR) a certified 
endorsement of a list of cooperatives in good standing and compliant with the reportorial 
requirements of the Authority that serves as basis for the issuance of a Certificate of Tax 
Exemption. The BIR shall formulate the 
necessary guidelines in streamlining the issuance of 
Certificate of Tax Exemption for cooperatives. 
 
 
SEC. 71. Privileges of Cooperatives. - Cooperatives registered under this Code, 
notwithstanding the provisions of any law to the contrary, shall also be accorded the following 
privileges: 
 
a.) Cooperatives shall enjoy the privilege of depositing their sealed cash boxes or 
containers, documents or any valuable papers in the safes of the municipal, 
city, 
or 
provincial treasurers, and other government offices free of charge, and the custodian of 
such articles shall issue a receipt acknowledging the articles received, duly witnessed by 
another person; 
 
b.) Cooperatives organized 
among government 
employees, notwithstanding any law 
or regulation to the contrary, shall enjoy the free use of any available space in their agency, 
whether owned or rented by the Government; 
 
c.) Cooperatives rendering special types of services and facilities such as cold storage, ice 
plant, electricity, transportation, water, communications, and similar services and 
facilities shall be given preference in the grant of a franchise or certificate therefor: 
Provided, That such cooperatives shall open their membership 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 
equal, preference shall be given to a cooperative engaged in public services; 
 
d.) In areas where there are agricultural cooperatives, at least fifty per centum (50%) of 
the supply to government institutions, agencies, and LGUs, of rice, corn, grains, fish and 
other marine products, meat, eggs, milk, vegetables, and other agricultural commodities 
such as fertilizers, seeds and other agricultural inputs and implements, and related 
products, shall be sourced from such cooperatives; 
 
e.) 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 cooperatives; 
 
f.) Cooperatives and their federations engaged in the production and/or the marketing of 
products from agriculture, fisheries and small entrepreneurial industries, shall have 
exclusive preferential rights in the management of public markets, and lease of 
public market facilities, stalls or spaces, slaughterhouses, and storage facilities: 
Provided, That no cooperative forming a joint venture, partnership or any other similar 
arrangement with a non-cooperative entity can utilize these rights; 
 
g.) Cooperatives engaged in credit services shall be entitled to loans, credit lines, 
rediscounting of their loan notes, and other eligible papers with the Development Bank of 
the Philippines (DBP), the Land Bank of the Philippines (LBP), and other financial 
institutions except the Bangko Sentral ng Pilipinas (BSP); 


 
 
The Philippine Deposit Insurance Corporation (PDIC) and other government 
agencies, government-owned and controlled corporations, and 
government financial 
institutions 
shall 
provide technical assistance to federations engaged in savings and 
credit operations toestablish and strengthen their own cooperative deposit insurance 
systems; 
 
h.) Public transport service cooperatives shall be entitled to financing support from 
Government Financial Institutions for the acquisition and maintenance of land, sea, and air 
transport equipment, facilities, and parts, and shall be preferred in securing a franchise 
for active or potential routes for public transport. They shall have preferential rights to the 
management and operation of public terminals and ports whether land, sea, or air, 
and wharves, where the cooperative operates, as well as in the operation of arrastre and 
stevedoring services therein. 
 
i.) Cooperatives shall be given preference in the procurement of government projects subject 
to the existing procurement laws, rules and regulations. 
 
j.) Cooperatives shall enjoy the privilege of being represented by the provincial or city 
fiscal, or the Office of the Solicitor General, free of charge, except when the adverse 
party is the Republic of the Philippines; 
 
k.) Cooperatives organized by faculty members and employees of educational institutions 
shall have the preferential right to manage the school canteen and other services related 
to the operation of the educational institution where they are employed: Provided, That 
such services are operated within the premises of the said educational institution; 
 
l.) The relevant regulatory agencies, and LGUs shall not discriminate against duly 
registered cooperatives seeking accreditation as service providers or seeking to engage 
in a particular business: Provided, That they possess all other qualifications under the 
law. Any person who acts contrary to this provision may be held liable under this Code 
and all other relevant laws and issuances; 
 
m.) Cooperatives shall be entitled to financing support from the relevant government 
agencies that shall allocate funds for the establishment of projects and 
programs 
for 
the development and promotion of cooperatives; and 
 
n.)  The 
relevant 
government 
agencies 
and 
government 
financial 
institutions shall create a special window for financing, in the form of blanket or long-
term wholesale loans without need for individual processing, to qualified cooperatives 
engaged in housing projects. Such shall offer interest rates and terms equal to, or better 
than those given for socialized housing projects. 
 
 
The Authority, in consultation with appropriate government agencies and the 
cooperative sector, shall issue rules and regulations on all matters concerning housing 
cooperatives and socialized housing projects. Furthermore, the sector shall be consulted in 
matters of policy and implementation that will affect the rules and regulations on cooperatives. 
 
 
 
 
CHAPTER XI. INSOLVENCY, SUSPENSION, DISSOLUTION, LIQUIDATION, AND DELISTING 
OF COOPERATIVES 
 
 
SEC. 72. Proceeding Upon Insolvency. - In case a cooperative is unable to 
fulfill its obligations to creditors due to insolvency, such cooperative may apply for such 
remedies as it may deem fit under the provisions of R.A. No. 10142, otherwise known as the 
Financial Rehabilitation and Insolvency Act. 


 
 
 
Nothing in this Article, however, precludes creditors from seeking protection 
from said insolvency law. 
 
 
SEC. 73. Effect of Declaration of Insolvency by a Competent Court - 
Should the cooperative be declared insolvent by the court, its Certificate of Registration shall 
be cancelled, and it shall be delisted from the registry of cooperatives of the Authority. 
 
 
SEC. 74. Suspension of Certificate of Registration. - A penalty of suspension, 
after due process, shall be imposed on a cooperative on any of the following grounds: 
 
a.) Willful failure to submit annual progress reports with the necessary attachments within 
the period mandated by this Code: Provided, That in case of newly-registered 
cooperatives, this provision shall only apply three (3) years after they have registered; 
 
b.) Willful failure or refusal to comply with an interlocutory order, a final and executory 
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 arbitration, or adjudication. 
 
 
SEC. 75. Voluntary Dissolution Where no Creditors are Affected - If the 
dissolution of a cooperative does not prejudice the rights of any creditor having a claim 
against it, the dissolution may be effected by a majority vote of the Board of Directors, and by 
a resolution duly adopted by the affirmative vote of at least three-fourths (3/4) of all the members 
entitled to vote, present and constituting a quorum in a special General Assembly called by the 
directors for such purpose: Provided, That the notice of time, place, and object of the meeting 
shall be posted for three (3) consecutive weeks in the principal office of said cooperative, in 
a public place in the municipality, city, or province where the cooperative operates, and in its 
official website and social media accounts. 
 
 
The notice of such meeting shall be sent to each member of record either by 
personal delivery, registered mail, or through electronic means 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 dissolution, the Authority shall 
issue the Certificate of Dissolution. 
 
 
 
SEC. 76. Voluntary Dissolution Where Creditors Are Affected. - In case 
creditors of the cooperative are affected, the petition for dissolution, signed by a majority of its 
Board of Directors or the Chief Executive Officer or General Manager, as the case may be, and 
verified by the Chairperson of the Board or the Cooperative Secretary, shall be filed with the 
Authority. The petition shall 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 Assembly called for the purpose and shall set forth all the claims and demands 
against the cooperative. 
 
 
If the petition is sufficient in form and substance, the Authority shall issue an order 
reciting the purpose of the petition and shall fix a period for the filing of any oppositions thereto, 
which shall not be less than thirty (30) nor more than sixty (60) days after the entry of the order. 
Before such period, a copy of the order shall be published at least once in a newspaper of general 
circulation published in the municipality or city where the principal office of the cooperative is 
situated or in the absence of such local newspaper, in a newspaper of general circulation in the 
Philippines at the expense of the cooperative, and a copy shall likewise be posted for three (3) 
consecutive weeks in three (3) public places in the municipality or city where the 
cooperative’s office is located: Provided, That the publication requirementshall not apply to 
micro and small cooperatives. 
 


 
 
Upon the expiry of such period, the Authority shall proceed to hear the petition 
and try any issue raised in the opposition filed. If there is no opposition or such is insufficient, 
and the material allegations in the petition are proven, the Authority shall issue a Certification of 
Dissolution and direct the disposition of assets of the cooperative in accordance with existing rules 
and regulations. The Certificate of Dissolution shall set forth: 
a.) The assets and liabilities of the cooperative; 
 
b.) The claim of any creditor; 
 
c.) The number of members; 
 
d.) The nature and extent of the interests of the members of the cooperative; and 
 
e.) 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 Authority may cancel, 
after due notice and hearing, the cooperative’s Certificate of Registration on any of the following 
grounds: 
 
a.) Having obtained its registration by fraud; 
 
b.) Engaging in an illegal or unauthorized purpose; 
 
c.) Willful violation, despite written notice by the Authority, of the provisions of this 
Code or its Implementing Rules 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 Authority; 
 
e.) Willful failure to operate on a cooperative basis; and 
 
f.) Failure to meet the required minimum capital and minimum number of members in the 
cooperative. 
 
g.) The decision of the Authority on the cancellation of the Certificate of Registration of a 
cooperative may be appealed to the Authority’s Board of Directors within thirty (30) days 
from the receipt of thereof. The decision of the Authority’s Board of Directors shall be final 
and executory. 
 
 
SEC. 78. Cancellation by Failure to Operate. - If a cooperative has not 
commenced operations within three (3) years after the issuance of its Certificate of Registration 
or has not carried on its business for three (3) consecutive years, the Authority shall send a 
show cause order for the cooperative to explain its failure to operate. Failure to provide 
justifiable cause shall authorize the Authority, after due notice, to cancel the Certificate of 
Registration and delist it from the registry. 
 
 
SEC. 79. Liquidation of a Cooperative. - Every cooperative whose term of 
existence expires by its own limitation, or whose existence is terminated by voluntary 
dissolution or cancellation of its Certificate of Registration by the Authority shall cease to 
operate. However, it can continue to exist for three (3) years for winding up its affairs, 
prosecuting and defending suits by or against it, and the disposition, conveyance and distribution 
of its properties and assets. 
 
 
 
The cooperative is authorized to convey all of its interests in the properties 


 
to trustees for the benefit of its members, creditors, and other persons in interest, after which, 
all interests which the cooperative had in the properties are terminated. 
 
 
Upon the winding up of the cooperative affairs, any asset distributable to any 
creditor, shareholder, or member who is unknown or cannot be found shall be given to the 
federation or union to which the cooperative is affiliated with. 
 
 
A cooperative shall only distribute its assets or properties upon lawful dissolution, 
and after payment of all its debts and liabilities, except in the case of decrease of share capital of 
the cooperative, and as otherwise allowed by this Code. 
 
 
SEC. 80. Delisting of Cooperatives. - Cooperatives may be delisted from the 
Registry of Cooperatives due to the following causes: 
 
a.) Voluntary Dissolution; 
 
b.) Involuntary Dissolution; 
 
c.) Cancellation by Order of the Authority; 
 
d.) Cancellation by Failure to Operate; and 
 
e.) Merger or Consolidation. 
 
 
SEC. 81. Rules and Regulations on the Insolvency, Suspension, Dissolution, 
Liquidation, and De-listing Cooperatives. – The guidelines on the implementation of this Chapter 
shall be included in the Implementing Rules and Regulations of this Code. 
 
GLEPA_KRISTINA_HB_Revised Cooperative Code of the Philippines 
 
CHAPTER XII. CAPITAL, PROPERTY, AND FUNDS 
 
 
SEC. 82. Capital and Funds. – The capitalization of cooperatives and federations, or 
funds in the case of unions, shall be governed by this Code and its Implementing Rules and 
Regulations. 
 
 
SEC. 83. Capital Sources. - Cooperatives registered under this Code may derive 
their capital from any or all of the following sources: 
 
a.) Member’s share capital; 
 
b.) Loans and borrowings; 
 
c.) Deposits from members; 
 
d.) Revolving capital which consists of the deferred payment of patronage refunds, or interest 
on share capital; 
 
e.) Joint venture partners; 
 
f.) Subsidies, donations, legacies, grants, aids and such other assistance or investment from 
any local or foreign institution whether public or private: Provided, That capital coming 
from such subsidies, donations, legacies, grants, aids, investments, and other assistance 
shall not be divided into individual share capital holdings at any time, but instead shall 
form part of the donated capital or fund of the cooperative. Upon dissolution or 
cancellation of the cooperative, such donated capital shall be subject to escheat; and 
 


 
g.) Reserve funds utilized for investment and as capital for the operations of the cooperative 
as approved by the Board of Directors or General Assembly. 
 
 
SEC. 84. Limitation on Share Capital Subscription - No member of primary 
cooperative other than the cooperative itself shall own or hold more than twenty per centum 
(20%) of the subscribed share capital of the cooperative. 
 
 
Where a member of a cooperative dies, his heir shall be entitled to the shares of the 
decedent: Provided, That the total shareholding of the heir does not exceed twenty per 
centum (20%) of the share capital of the cooperative: Provided, further, That the heir 
qualifies and is admitted as a member of the cooperative: Provided, finally, That where the heir 
fails to qualify as a member or where his total shareholding exceeds twenty per centum (20%) 
of the share capital, the shares in excess will revert to the cooperative upon payment to the 
heir of the value of such shares. 
 
 
For federations, the share capital holdings of any one member-cooperative 
shall not exceed forty per centum (40%) of the subscribed share capital of the federation. 
 
 
SEC. 85. Assignment of Share Capital Contribution or Interest. - Subject to the 
provisions of this Code and the approval of the majority of the Board of Directors, no member shall 
transfer his/her shares or interest in the cooperative or any part thereof unless: 
 
a.) The member has held such share capital contribution or interest for more than one (1) 
year; 
 
b.) The assignment is made to the cooperative or to a member of the cooperative or to 
a person who falls within the field of the membership of the cooperative; and 
 
c.) The Board of Directors has approved such assignment 
 
 
 
SEC. 86. Capital Build-Up. - The By-laws of every cooperative, except for 
cooperative unions, shall prescribe a reasonable and realistic member capital or deposits build-
up program to allow the continuing growth of the contribution of the members to the cooperative 
as their economic conditions continue 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 member may apply for an additional share 
capital subscription, and execute a new subscription agreement. 
 
 
SEC. 87. Shares. - The term “share” refers to a unit of capital in a cooperative, 
except for cooperative unions, the par value of which may be fixed at any figure not less than 
One hundred pesos (P100.00) but not more than One thousand pesos (P1,000.00). The share 
capital of the cooperative is the money paid or required to be paid by the members for the 
operations of the cooperative. 
  
 
Unless otherwise provided for in its policies, the cooperative shall issue Share 
Certificates at the end of the calendar year based on the number of shares fully paid for the said 
period. 
 
 
Cooperatives are prohibited from issuing multiple types of shares with different par 
values, and from increasing or decreasing the par value of the share capital without amending 
their Articles of Cooperation and By-laws. 
 
 
A share can either be a common share issued to a regular member, or a preferred 
share issued to associate members. 
 
 
SEC. 88. Fines. – The policies of a cooperative may prescribe a fine on unpaid 


 
subscribed share capital. Provided, That such fine is fair and reasonable. 
 
 
SEC. 89. Investment of Capital. – A cooperative, upon approval as provided in 
its By-laws, may invest its capital in any of the following: 
 
a.) Any reputable bank; 
 
b.) Securities issued or guaranteed by the Government; 
 
c.) Real estate primarily for the use of the cooperative or its members; or 
 
d.) Any other manner authorized in the By-laws. 
 
 
SEC. 90. Revolving Capital. - The General Assembly may authorize the Board of 
Directors to raise a revolving capital from the proceeds of products sold or services 
rendered, or per unit of product or services handled, to strengthen its capital structure. 
 
 
CHAPTER XIII. AUDIT, INQUIRY, AND MEMBERS’ RIGHT TO EXAMINE 
 
 
SEC. 91. Audit of Cooperatives. - Cooperatives registered under this Code shall 
be subject to an annual audit of its financial and social performance in accordance with 
the Implementing Rules and Regulations to be promulgated by the Authority. The financial audit 
shall be conducted by an external auditor who shall independent from the cooperative or any of 
its subsidiaries, and must be a member in good standing of the Philippine Institute of 
Certified Public Accountants (PICPA), and is accredited by both the Board of Accountancy and 
the Authority. 
 
 
 The social performance audit may be conducted by the audit committee, 
by the internal auditor of the cooperative, or by an independent auditor engaged by the 
cooperative. 
 
 
SEC. 92. Audit Report. - The complete audit reports shall be submitted to 
the Board of Directors, which shall be presented to the General Assembly for approval. The Board 
of Directors shall be liable under Section 179 of this Code should it fail to present such 
reports to the General Assembly. 
 
 
SEC. 93. Non-Liability for Defamations. - The auditor 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 audit of the cooperative. 
 
 
SEC. 94. Right to Examine. - All members shall have the right to examine the 
records of the cooperative under Section 60 of this Code at any time during reasonable hours 
of the operating days of the cooperative: Provided, That the member submits a letter request 
three (3) days prior to the date of his demand to examine the records and stating therein 
the purpose of the request. 
 
 
 The Board of Directors shall consider the purpose and reason for the request to 
examine the records to determine its propriety. The Board of Directors shall have the right to 
refuse the request after proper consultation with the requesting member, upon the following 
grounds: 
 
a.) The member has improperly used any information secured through any prior 
examination of the records of such cooperative or of any other cooperative; or 
 
b.) The member is not acting in good faith or for a legitimate purpose in making the demand 


 
to examine records. 
 
 
If the request to examine is denied based on the aforementioned grounds, 
the member shall have the burden of proving to the Board that such request is made in good 
faith and for a legitimate purpose. If the denial is made in bad faith, the directors who voted 
for such refusal shall be penalized under Section 177 of this Code. 
 
 
SEC. 95. Safety of Records. - Every cooperative shall, at its principal office, keep 
and carefully preserve the records required by this Code to be prepared and maintained. The 
By-laws shall also provide the condition and the accountable persons for the safekeeping of 
the records in accordance with applicable laws on data privacy. The cooperative shall 
take all necessary precautions to prevent its loss, destruction, or falsification. 
 
 
CHAPTER XIV. ALLOCATION AND DISTRIBUTION OF NET SURPLUS 
 
 
SEC. 96. Net Surplus. - Notwithstanding the provisions of existing laws, the net 
surplus of cooperatives shall be determined in accordance with its By-laws. Every cooperative 
shall determine its net surplus at the close of every calendar year. 
 
 
Any provision of law to the contrary notwithstanding, the net surplus shall not be 
construed as profit but as an excess of payments made by the members for the loans borrowed, 
or the goods and services availed by them from the cooperative or the difference of the 
rightful amount due to the members for their products sold or services rendered to the 
cooperative including other inflows of assets resulting from its other operating activities and 
which shall be deemed to have been returned to them if the same is distributed as 
prescribed herein. 
 
 
SEC. 97. Net Surplus Allocation and Statutory Funds. - The net surplus shall 
be subject to the allocation of the following statutory 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 ten per centum (10%) of the net surplus for the 
stability of the cooperative and to cover net losses in its operations, including losses 
incurred during a pandemic, state of emergency, and other such force majeure, 
as may be approved or confirmed by the General Assembly, as the case may be.  
 
The fund shall be recorded in the books of account of the cooperative, and earmarked as 
such, and can be made available for investment to enhance the growth and development 
of the cooperative; Provided, That the utilization of the reserve fund for investment shall be 
at the option of the General Assembly; Provided, further, that the liquidity of the 
cooperative shall be taken into account when utilizing a portion of the reserve fund for 
investment. However, for cooperatives in their first five (5) years of operation, the amount 
allocated shall not be less than thirty per centum (30%) of the net surplus. 
 
The general assembly may decrease the amount allocated to the reserve fund when the 
reserve fund already exceeds the share capital. 
 
Upon the dissolution of the cooperative, the reserve fund shall be distributed in 
accordance with the rules and regulations on liquidation to be issued by the Authority. 
 
b.) The Cooperative Education and Training Fund (CETF), which shall not exceed ten per 
centum (10%) of the net surplus, shall be used for the training, development and similar 
other cooperative activities geared towards the growth of the cooperative movement: 
 
1. Half of the CETF shall be used to provide for the education and training of its 
officers, members, and employees; while the other half shall be remitted to a 


 
federation and/or union that the cooperative opted to join, which must redound to 
the benefit and development of the member-cooperatives, such as, but not 
limited to trainings, seminars, and other related activities. 
 
Should a cooperative have multiple affiliations, it shall have the discretion on 
how to allocate the CETF. 
 
2. Upon the dissolution of the cooperative, the unexpended balance of the CETF 
shall be utilized within the succeeding calendar year following its allocation. 
 
c.) The Community Development Fund (CDF), which shall not be less than three per centum 
(3%) of the net surplus, shall be used for projects or activities that will benefit the 
community where the cooperative operates. 
However, 
the 
cooperative 
may 
extend assistance 
to marginalized 
communities or 
affected areas 
outside its 
area 
of operation in times of calamities, disaster, or national emergency, 
at the discretion of the General Assembly. 
 
In the case of cooperatives whose common bond of membership is institutional, the 
community refers to the institution where the cooperative is operating. The allocation 
for the CDF for the current year shall be fully utilized in the following year unless the 
projects or activities as approved by a majority of the members entitled to vote, present 
and constituting a quorum in a General Assembly meeting, require multi-year utilization. 
For multi-year projects or programs, the allocation shall be fully utilized within the period as 
stated in the plan. 
 
d.) The optional fund, which shall not exceed seven per centum (7%) of the net surplus, 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 (¾) of all members entitled 
to vote, present and constituting a quorum, which shall be in accordance with the 
Implementing Rules and Regulations to be promulgated by the Authority. 
 
This fund may also be used for the benefit of its members and employees under 
exceptional circumstances such as the occurrence of a pandemic, crisis, or force 
majeure. However, if the optional fund is insufficient, the cooperative may charge 
any deficiency to direct expenses. 
 
e.) The remaining net surplus shall be made available in full to the members in the 
form of interest on share capital following the formula for computation as provided by the 
Authority: Provided, That this is approved by a majority of the members entitled to vote, 
present and constituting a quorum. 
 
f.) The sum allocated for patronage refunds shall be made available 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 with paid-up share capital contribution, 
his/her proportionate amount of patronage refund shall be paid to him/her 
unless he agrees to credit the amount to his/her account as additional share 
capital contribution; 
 
2. In the case of a member patron with unpaid share capital contribution, his/her 
proportionate amount of patronage refund shall be credited to his/her account 
until his/her account until his/her share capital contribution has been fully paid; 
 
3.  In the case of a non-member patron, his/her proportionate amount of patronage 
refund shall be set aside in a fund created for the purpose and shall be 
allocated to individual non-member patrons only upon request and presentation 
of evidence of the amount of his/her patronage. The amount so allocated shall be 
credited to such patrons toward payment of the minimum capital contribution 
for membership. When a sum equal to this amount has accumulated at any time 
within two (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 admission to 
membership; and 
 
4.  Any non-member patron who has accumulated the sum necessary for 
membership but who does not request nor agree to become a member or fails 
to comply with the provisions of the By-laws for admission to membership, the 
amount so accumulated or credited to their account together with any part of the 
general fund for non- member patrons shall be credited to any of the statutory 
funds as approved by a majority of the members entitled to vote, present and 
constituting a quorum. 
 
 
CHAPTER XV. AGRICULTURAL COOPERATIVES 
 
 
SEC. 98. Definition and Coverage. - This Chapter shall apply to all agricultural 
cooperatives, as defined in this Code: Provided, That the provisions of the other chapters 
of this Code shall apply suppletory except insofar as this Chapter otherwise provides. 
 
 
SEC. 99. Cooperative Business Activities and Allied Services. – A duly 
registered agriculture cooperative may engage in all or any of the following activities: 
a.) Raising and/or culture of plants, high-value crops, animals, fish, poultry, livestock, 
other agri-products as source of food, feed, and fiber, and other agri-fishery or non-food 
commodities;  
 
b.) Production of salt; 
 
c.) Community and social forestry; 
 
d.) Provision of credit facilities for marginal farmers and fishermen; 
 
e.) Facilitating the procurement and distribution of farm inputs/implements for its members; 
 
f.) Processing, marketing, and sale of members’ agri-products and/or produce; 
 
g.) Maintenance and management of irrigation systems, water 
impounding, 
and 
other 
agricultural facilities; and  
 
h.) Other allied services such as but not limited to warehousing, cold storage, and other 
post-harvest services, hauling, and transport of members’ products/produce and such 
other similar business services and activities that will reduce cost and/or value addition of 
output. 
 
 
SEC. 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 Agricultural 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 Cooperative Development Officers (CDOs). 
 
 
The Department of Agriculture (DA) and the Authority, in coordination with the 
CDOs, shall assist PCAOs so that they can formally organize as cooperatives under this Code; 
Provided, that should the PCAO decide to formally organize into a cooperative, it must comply 
with the provisions of Articles 8 and 14 of this Code. Further, Section 18 shall apply to all contracts 
executed by pre-cooperative organizations prior to registration under this Code. 
 
 
The DA and the Authority shall jointly issue guidelines on the mechanisms 


 
for 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 operation. The requirements and procedure for 
registration of agricultural cooperatives shall be in accordance with the rules and regulations 
to be promulgated by the Authority. 
 
 
No fees shall be assessed or charged to any agricultural cooperative by any 
government entity, national or local, at any stage of its organization and registration process. 
 
 
 
 
SEC. 102. Capital Requirements of Agricultural Cooperatives - The authorized 
share capital of an agriculture cooperative shall be stated in its Articles of Cooperation and that 
prior to its registration, at least twenty five per centum (25%) of the authorized share capital shall 
be subscribed to by the members and at least twenty five (25%) of the subscribed share 
capital shall be paid-up: Provided, That 
the paid-up capitalization requirement for primary 
cooperatives shall not be less than Fifteen Thousand Pesos (P15,000.00). 
 
 
SEC. 103. Bond of Membership. - The bond of membership of agricultural 
cooperatives shall be any of the following: 
 
a. Residential – members are farmers, farm workers, fisherfolk who are actually and 
physically residing within the area of operation; 
b. Occupational – members are those who are engage in raising, culture of plants, 
animals, as well as those from the technical and scientific communities of the 
agriculture sector; 
c. Associational – members are from registered associations, groups, clubs, cultural 
and other similar aggrupation of farmers, farm workers and fisherfolk; and 
d. Institutional - members consist of employees, workers and/or officers of a particular 
institution who will undertake or are undertaking agricultural projects. 
 
 
 
SEC. 104. Clustering and Consolidation. – In order to pool their 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 limited to land 
consolidation, postharvest processing, distribution, logistics, marketing, and promotions. 
 
 
Within sixty (60) days from the effectivity of this Code, The DA, DAR, DTI and CDA, in 
consultation with the sector, shall jointly issue the guidelines for the implementation of the 
foregoing program, and shall provide the necessary assistance at every step of the clustering and 
consolidation process, including the formulation of cluster development plans. 
 
 
SEC. 105. Partnership and Joint Venture with Private Entities. – Duly 
registered private entities may enter into a partnership or joint venture with agricultural 
cooperatives in order to provide the latter with investments and technical support, such as, but 
not limited to technological, logistics, and facilities support, among others. Such partnership or 
joint venture shall be registered with the necessary regulatory authorities, including the CDA, 
and enjoy the relevant exemptions and privileges under this Code. 
 
This notwithstanding, the equity or contribution of such private entity shall not 
exceed forty per centum (40%) of the partnership or joint venture. 
 
SEC. 106. Commitment of Financial Portfolio. – Federations and shall reserve not less 
than fifteen per centum (15%) of their financial portfolio for the extension of loans, credit, savings 
facilities, and others, to agricultural cooperatives; Provided, that any federation that shall willfully 
misrepresent facts or circumstances in order to circumvent compliance with this provision shall 


 
be held liable under this Code and all other applicable laws, rules, and regulations. Cooperative 
banks shall comply with the thresholds set by the BSP. 
 
Credit and Credit and Savings cooperatives shall reserve not less than ten per centum 
(10%) of their portfolio for the extension of loans, credit, saving 
facilities, and others to 
cooperative members in 
relation to agricultural purposes. 
 
SEC. 107. 
Role 
of 
National 
Coordinating Committee 
on 
Cooperatives Development. - The Authority shall mobilize the National Coordinating Committee 
on Cooperative Development (NCC-CD) for the promotion of the growth, viability, and
 
development of Agricultural cooperatives. 
 
SEC. 108. Role of LGUs. - The Local Government Units shall:  
 
a. Ensure the appointment of Cooperative Development Officers, in compliance with 
Republic Act No. 11535; 
b. Create a Committee on Agricultural cooperatives Development in the Local Government 
Legislative Council which shall focus on addressing legislative concerns on Agricultural 
cooperatives; 
c. Legislate necessary ordinances for the promotion and development of agricultural 
cooperatives; 
d. Disseminate information to people and facilitate 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 implementation of programs and 
projects of the Authority and other national government agencies for the benefit of 
agricultural cooperatives; 
e. Upon written request of the Authority, assist in the resolution of inter- cooperative disputes 
among agricultural cooperatives operating within their localities; 
f. 
Facilitate 
and 
conduct 
seminars, 
trainings, 
and/or conferences 
necessary 
for 
the 
organization, registration, 
management and operations 
of agricultural cooperatives, in coordination with federations and unions; and 
g. Provide technical assistance and skills training for farmers, farm workers, and fisherfolk to 
engage in income-generating activities. 
 
SEC. 109. 
Role 
of Cooperative Development Councils and National 
Government Agencies. - The Authority shall, in collaboration with the LGUs through the 
Regional, Provincial, City, and Municipal Cooperative Development Councils and the Cooperative 
Development Officers, facilitate programs and policies affecting agricultural cooperatives in 
accordance with a Joint Memorandum Circular to be promulgated by the Authority and the LGU. 
 
Agricultural cooperatives shall be entitled to financing support from the relevant 
government agencies that shall 
allocate funds for the  establishment of projects and 
programs for the development and promotion of agricultural cooperatives. 
  
SEC. 110. Benefits and Privileges of Agricultural cooperatives. – An 
agriculture cooperative shall enjoy the following benefits and privileges: 
 
a. Taxes, Duties, and Liens: 
1) All benefits, privileges, and tax treatments of cooperatives as defined and enumerated 
under Chapter X of this Code shall 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- and duty-free imports and local purchases shall not be sold nor the beneficial 
ownership thereof be transferred to any person until after five (5) years, otherwise, the 
cooperative and the transferee or assignee shall be solidarily liable to pay twice the 
amount of the imposed tax and/or duties; and 
3) All real properties owned, and those directly used for the operations, management, 
and maintenance of agricultural cooperatives shall be exempt from the payment of real 
property taxes imposed under existing laws. 
 


 
b. Trainings and Conferences - All trainings and conferences necessary for the organization, 
registration, management and operations of an agriculture cooperative, rendered by the 
appropriate government agency, shall be given free of charge, including costs of venue, 
training materials, speakers and resource persons. The CDOs shall be primarily 
responsible for these trainings and conferences within their respective localities; 
 
c. Consolidation - Agricultural cooperatives may consolidate agricultural lands owned by its 
members within in a contiguous area for purposes of agricultural development; and 
 
d. Direct Purchase by National and Local Government Agencies – To promote and support 
agricultural cooperatives, national and local government agencies shall directly purchase 
agricultural products from accredited agricultural cooperatives; Provided, that said 
products are necessary in the performance of their respective mandates. 
 
For the purposes of this Code, the procurement by national and local government 
agencies of said agricultural products shall be exempt from the application of the bidding 
process prescribed under relevant government procurement laws; Provided, that said 
agencies shall undergo a negotiated procurement under the applicable guidelines of the 
Government Procurement Policy Board. 
 
e. Loans and Grants: 
1) All loans applied for by agricultural cooperatives in any government-owned or -
controlled banks or government financial institutions shall enjoy preferential treatment 
as to the requirements, rates, securities, and collaterals; and 
2) The DA shall coordinate with the BSP to lower the requirements for all loans applied 
for and granted to agricultural cooperatives. 
 
SEC. 111. 
Merger and Consolidation of Agricultural Cooperatives. - 
Notwithstanding the provisions of this Code, the merger and consolidation of agricultural 
cooperatives shall be in accordance with the Implementing Rules and Regulations to be 
promulgated by the Authority. 
 
SEC. 112. Inter-Cooperative Arrangements of Agricultural Cooperatives. - 
Agricultural cooperatives shall be allowed to enter into inter-cooperative arrangements with and 
among other cooperatives and other entities to pursue value and supply chain solutions and other 
agribusiness development programs, subject to the guidelines to be promulgated by the Authority. 
 
SEC. 113. Local Development Hubs. - Local Development Hub (LDH) 
refers to a farming zone or transport infrastructure, which is generally far from formal markets, 
and serves a minimum of one hundred (100) farmers, linking them to buyers, who may be, among 
others, traders, processors, and export companies. The DA and CDA shall jointly establish LDHs 
in order to strengthen the market linkages between farmers and buyers, fostering agricultural 
development and economic growth at the local level. Further, they shall jointly issue the guidelines 
for the operations and maintenance thereof. 
 
SEC. 114. 
Annual Trade Fair 
and Awards. - The DA, in coordination with 
the CDA, shall establish and hold the Annual Agricultural cooperatives Trade Fair and Awards to 
showcase the exemplary business achievement, latest innovations, and other emerging trends in 
the sector. 
 
 
CHAPTER XVI. AGRARIAN REFORM COOPERATIVES 
 
SEC. 115. Coverage. - The provisions of this Chapter shall primarily govern 
agrarian reform cooperatives, including 
Agrarian Reform Beneficiaries (ARBs) Cooperative 
as defined in Department of Agrarian Reform (DAR) Administrative Order No. 05, Series of 2009: 
Provided, That the provisions of the other chapters of this Code shall apply suppletorily except 
insofar as this Chapter otherwise provides. 
 
SEC. 116. Purpose. - An agrarian reform cooperative as defined shall be 
organized for any of the following purposes: 


 
1) To develop an appropriate system of land tenure, land development, land consolidation or 
land management in areas covered by agrarian reform; 
2) To coordinate and facilitate the dissemination of scientific methods of production, and 
provide assistance in the storage, transport, and marketing of farm products for agrarian 
reform beneficiaries and their immediate family; 
3) To provide financial facilities to ARBs for provident or productive purposes at reasonable 
costs; 
4) To arrange and facilitate the expeditious transfer of appropriate and suitable technology 
to ARBs and marginal farmers at the lowest possible cost; 
5) To provide social security benefits, health, medical and social insurance benefits, and 
other social and economic benefits that promote the general welfare of the ARBs and 
marginal farmers; 
6) To provide non-formal education, vocational and technical training, and livelihood 
programs to ARBs and marginal farmers;  
7) To act as conduits for external assistance and services to the ARBs and marginal farmers; 
8) To undertake a comprehensive and integrated development program in agrarian reform 
and resettlement areas with special concern for the development of 
agro-based, 
marine-based, and 
cottage-based industries; 
9) To represent the ARBs on any or all matters that affect their interest; and 
10) To undertake such other economic or social activities as may be 
11) necessary or incidental in the pursuit of the foregoing purposes. 
 
SEC. 117. Cooperative Estate. – Landholdings acquired by the State, like 
plantations, estates, or haciendas for the benefit of the workers in accordance with the 
Comprehensive Agrarian Reform Program shall be collectively owned by the worker-beneficiaries 
under a cooperative set-up. 
 
SEC. 118. 
Infrastructure. - In agrarian reform and resettlement areas, the
 
Government shall 
grant to 
agrarian 
reform cooperatives 
preferential 
treatment in the construction, maintenance and management of roads, bridges, canals, wharves, 
ports, reservoirs, irrigation systems, waterworks systems, and other infrastructures with 
government funding. 
 
For this purpose, the Government shall provide technical assistance, facilities, and 
equipment to such agrarian reform cooperatives. 
 
SEC. 119. Lease of Public Lands. - The Government may lease public lands to 
any agrarian reform cooperative for a period not exceeding twenty-five (25) years, subject to 
renewal for another twenty-five (25) years only: Provided, That the application for renewal shall 
be made one (1) year before 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 to the provisions 
of the Comprehensive Agrarian Reform Program, as amended. 
 
SEC. 120. 
Preferential Right. - In agrarian reform areas, an agrarian reform 
cooperative shall have the preferential right in the grant of franchise and certificate of public 
convenience and necessity for the operation of public utilities and services: Provided, That it 
meets the requirements and conditions imposed by the appropriate government agency granting 
the franchise or certificate of public convenience and necessity. In cases where there is an electric 
service provider 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 one (1) year, the agrarian reform 
cooperative concerned may undertake to provide the electric services in the area through its own 
resources. All investments made by the said agrarian reform cooperative for the electrification of 
the agrarian reform resettlement areas shall be the subject of sale to the electric service provider 
once it takes on the service. 
 
SEC. 121. Special Privileges. - Subject to such reasonable terms and conditions 
as the DAR and the Authority may impose, agrarian reform cooperatives may be given the 
exclusive right to do any of the following economic activities 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, facilities, and 
other services and requirements of the ARBs and marginal farmers at reasonable prices; 
b.) Marketing of the products and services of the ARBs in local and foreign markets; 
c.) Processing of the products of the members into finished consumer or industrial goods for 
domestic consumption or for export; 
d.) Provision of essential public services at cost, such as power, irrigation, potable water, 
passenger or cargo transportation by land or sea, communication services, and public 
health and medical care services; 
e.) Management, conservation, and commercial development of marine, forestry, mineral, 
water, and other natural resources subject to compliance with the laws and regulations on 
environmental and ecological controls; and  
f.) Provision of financial, technological, and other services and facilities required by the ARBs 
in their daily lives and livelihood.  
 
The foregoing notwithstanding, an agrarian reform cooperative cannot, on its own, 
by policy or any other means, disqualify a member as an ARB, whether directly or 
constructively. The Government shall provide the necessary financial and technical 
assistance to agrarian reform cooperatives to enable them to effectively discharge their 
purposes under this Chapter. The DAR, the Authority and the BSP shall draw up a joint 
program for the organization and financing of agrarian reform cooperatives. The joint 
program shall be geared towards the gradual assumption of full ownership and 
management control by ARBs of the agrarian reform cooperatives. 
  
SEC. 122. Organization and Registration. - Agrarian reform cooperatives may 
be organized and registered in accordance with the requirements of this Code only upon prior 
certification by the DAR that said proposed cooperative is needed and that its organization is 
feasible and will be economically viable in its operations. 
 
The Authority, in consultation with the concerned government agencies and 
cooperative sector, shall issue appropriate rules 
and regulations pertaining to the 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) cooperatives duly established and registered under this 
Code may register a cooperative bank with the Authority. 
 
b) Registration - The application for the registration of the Articles of Cooperation and By-
laws, including its amendments, by a cooperative bank with the Authority shall be 
accompanied by a Certificate of Authority issued by the BSP. 
 
c) Membership - Membership in a cooperative bank shall be open to: 
1) 
cooperatives of all types and categories; 
2) 
natural persons who are members of a cooperative; 
3) 
foreign cooperatives; 
4) 
pre-cooperative organizations established under Presidential Decree No. 175; and 
individuals. 
 
Membership in a cooperative bank is either regular or associate. Regular membership
 
shall 
be 
limited to 
cooperative 
organizations, individuals who are members 
of a domestic cooperative, or a foreign cooperative. Associate members shall be pre-cooperative 
organizations established under Presidential Decree No. 175, as well as individuals and other 
institutions, such as foreign cooperative institutions that have 


 
 subscribed to preferred shares only. 
 
The common shareholdings of a local cooperative shall at all times be at least sixty per 
centum (60%) of the total outstanding voting shares of the cooperative bank. Common shares 
held by individuals who are members of a cooperative, and foreign cooperatives shall not be more 
than forty per centum (40%) of the total outstanding voting shares: Provided, That the
 
common shareholdings of each individual who is a member of a cooperative shall not be 
more than five per centum (5%) of the total outstanding voting shares. 
 
Other provisions of this Code shall apply suppletorily insofar as they are not inconsistent 
with this Chapter. 
 
 
SEC. 
124. 
Powers 
and 
Functions 
of 
Cooperative 
Banks - Cooperative banks shall primarily provide a wide range of financial services to 
cooperative organizations, their members, and to the public. A cooperative bank may perform any 
of the following banking services: 
 
a) Extend loans and advances primarily for the purpose of meeting the normal credit needs 
of cooperatives as well as farmers, farm workers, fisherfolks, or their families, merchants, 
and private and public employees: Provided, That loans and advances granted to 
cooperatives shall not be subject to individual ceilings on loans to directors, officers, 
stockholders, and related interests (DOSRI); 
 
b) Accept savings and time deposits; 
 
c) Act as a correspondent bank of other financial institutions; 
 
d) 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 well as the rediscount rate to be charged by any of these banks; 
 
e) Act as collection agent; 
 
f) Act as a depository bank of LGUs and other government agencies or instrumentalities;  
 
g) Acquire readily marketable bonds and other debt securities;  
 
h) Buy and sell foreign exchange; 
 
i) Act as conduit bank for the disbursement of government funds intended for lending to 
agriculture, small-medium enterprises (SMEs) and projects for local economic 
development; 
 
j) Eligible to participate in government program allocations for agricultural lending, social 
housing, loans to rural micro enterprises and other initiatives towards inclusive growth; 
 
k) Offer financial technology services, such as digital lending and payment, and digital wealth 
management, among others, subject to prior approval of the BSP; and 
 
l) Offer other banking services as provided in Section 53 of Republic Act No. 8791. 
 
In addition to the powers granted to cooperative banks by this Code and other existing laws, 
any cooperative bank may perform any or all of the banking services offered by other types of 
banks subject to the prior approval of the BSP. 
 
 
SEC. 125. Establishment of Branches and Other Offices. – The establishment 
of branches, branch-lite units, or other banking offices by cooperative banks shall be governed by 
the rules and regulations of the BSP. The cooperative bank shall furnish the Authority with a copy 
of the Certificate of Authority issued by the BSP. 


 
 
 
SEC. 126. Management of Cooperative Banks. - The management of the 
cooperative banks shall be governed by the rules and regulations to be promulgated by the BSP, 
in consultation with the Authority. To maintain the quality of bank management and accord 
appropriate protection to depositors and the public in general, the BSP shall prescribe the fit and 
proper qualifications of bank directors and officers for the purposes of this Article, giving due 
recognition to the unique nature and character of cooperative banks. The number, composition, 
and term of the Board of Directors shall be defined in the Articles of Cooperation and By-laws of 
the cooperative bank, in accordance with the following guidelines: 
 
a) Board and Committees. - The cooperative bank shall constitute, at a minimum, the Board 
of Directors, Election Committee, and Audit Committee.  
i. 
The Board of Directors shall be composed of at least five (5) but not more 
than fifteen (15) members, at least one (1) of whom is an independent 
director. It shall be entrusted with the management of the affairs of the 
Cooperative Bank. It shall be responsible for the strategic planning, 
direction-setting and policy formulation activities of the cooperative bank. 
The members of the Board of Directors shall be elected by the General 
Assembly or Representative Assembly. 
 
ii. 
The Election Committee shall be responsible for the formulation and 
implementation of election rules and guidelines. It shall supervise the 
conduct of election, election-related activities, canvass and certify the 
results of the election, and decide cases relative to such election, except 
those involving the committee itself or its members. The members of the 
Election Committee shall be elected by the General Assembly or 
Representative Assembly. 
 
iii. 
The Audit Committee is a Board-level committee whose composition, 
functions and responsibilities shall be in accordance with the existing 
regulations of the BSP. Other Board-level committees may be created as 
may be directed by the BSP. 
 
iv. 
Other committees may be created by the Board of Directors with powers, 
functions, and responsibilities which shall be defined in the By-laws; and 
 
b) Key Management Officers. - The key management officers shall be appointed by the Board 
and shall include the President, Treasurer, Internal Auditor, and Compliance Officer, or 
their equivalent ranks. The BSP shall prescribe the qualifications and disqualifications of 
the key management officers. 
 
SEC. 127. Vacancy in the Committees. - In case of vacancy in the committees, 
the Board of Directors of the cooperative bank, unless otherwise 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 portion of the term. 
SEC. 128. Compensation of Directors. - In the absence of any provision in the 
By-laws fixing their compensation, the directors shall not receive any compensation except for 
reasonable per diems: Provided, however, That the directors and officers shall not be entitled to 
any per diem when, in the preceding calendar year, the cooperative bank reported a net loss or 
had a dividend rate less than the official inflation rate for the same year. Any compensation other 
than per diems may be granted to directors by a majority vote of the members with voting rights 
at a regular or special general assembly meeting specifically called for the purpose: Provided, 
That no additional compensation other than per 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 per centum (10%) 
of the net income of the cooperative bank during the preceding year. 
 
 


 
SEC. 129. Dealings of Directors, Officers, Stockholders, and Related 
Interests (DOSRI). - Dealings with directors and officers of the Cooperative Bank shall comply 
with the provisions of Section 36 of RA 8791, otherwise known as General Banking Law (GBL) of 
2000. However, the limits on loans to dealings of directors, officers, stockholders, and related 
interests shall not apply to loans, other credit accommodations, or guarantees extended by the 
cooperative bank to its member primary cooperatives. 
 
SEC. 130. Illegal Use of Confidential Information. - The liability of a director 
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 confidential information that, if generally known, might reasonably be 
expected to adversely affect the operations and viability of the cooperative bank shall adhere to 
the provisions of Section 57 of this Code. 
 
SEC. 131. Bond for Faithful Performance 
of Duties and Obligations. - 
The bond for the faithful performance of duties and obligations of accountable officers of the 
cooperative bank shall adhere to the provisions of Section 64. 
 
SEC. 132. Quorum Requirement and Voting Rights of the Cooperative Bank 
Board of Directors. - In meetings of the Board of Directors of the Cooperative Bank, the same 
provisions under Section 48 of this Code shall apply. 
 
SEC. 133. Composition of the General Assembly. - The General Assembly 
shall be composed of regular members who are entitled to vote under the Articles of Cooperation 
and By-laws of the cooperative bank. 
 
SEC. 134. Powers of the General Assembly. - The General Assembly shall be 
the highest policy-making body of the cooperative bank and shall exercise the same powers as 
enumerated in Section 40 of this Code. 
 
SEC. 135. Meetings. - The conduct of meetings of the General Assembly of 
cooperative banks shall adhere to the provisions specified in Section 41 of this Code. 
 
SEC. 136. Quorum and Voting System. - The quorum requirement for General 
Assembly meetings of cooperative banks, whether special or regular, shall be one-half (½) plus 
one (1) of the number of voting shares of all the members entitled to vote. 
 
To amend its Articles of Cooperation and by-laws, at least three- fourths (3/4) vote of all 
the members with voting rights, present and constituting a quorum shall be required. All other 
voting requirements shall be prescribed by the BSP. 
 
The voting rights of the members shall be proportionate to the number of their paid-up 
shares. The cooperative bank may opt to amend its Articles of Cooperation and By-laws through 
a referendum, subject to the guidelines to be issued by the Authority. However, the vote 
requirement shall still be two-thirds (⅔) vote of all the members entitled to vote. 
 
SEC. 137. Investment in Allied Undertakings. - Subject to the requirements 
and restrictions as may be imposed by the Monetary Board under its existing rules and 
regulations, Cooperative Banks may invest in equities of allied undertakings which may include, 
but are not limited to the following: 
 
a) Banks, financial institutions and non-bank financial intermediaries; 
b) Warehousing and other post-harvest facilities; 
c) Fertilizers, agricultural chemicals, and pesticides distribution; 
d) Farm equipment distribution; 
e) Trucking and transportation of agricultural products; 
f) Marketing of agricultural products; 
g) Leasing; 
h) Automated teller machine (ATM) networks; 
i) Public transportation; 
j) Financial technology; and 
k) Other undertakings as may be determined by the Monetary Board of the BSP. 
 


 
SEC. 138. Limitations on Lending Authority. - Except as the Monetary Board 
may otherwise prescribe, the direct indebtedness to Cooperative Banks of any person, company, 
corporation, or firm, including the indebtedness of members of a partnership and association, for 
money borrowed, shall in no time exceed twenty five per centum (25%) of unimpaired capital and 
surplus of the cooperative bank. However, the direct indebtedness mentioned shall exclude loans 
secured by obligations of the BSP; loans fully guaranteed by the Government as to the payment 
of principal and interest; loans to the extent covered by the hold-out on, or assignment of, deposits 
maintained in the lending cooperative bank and held in the Philippines; and other loans or credits 
as the Monetary Board may, from time to time, specify non-risk assets. 
 
SEC. 139. Capital Requirement for Cooperative Banks. – A cooperative 
bank shall have a minimum paid-up capital in such amount as may be required by the BSP. The 
BSP may prescribe rules and regulations on the types of shares a cooperative bank may issue, 
including the terms thereof and rights appurtenant thereto to determine compliance with laws and 
regulations governing capital and equity structure of banks. Provided, That Cooperative Banks 
shall issue par value shares only. 
 
SEC. 140. Samahang Nayon and Municipal Katipunan ng mga Samahang 
Nayon. - Samahang Nayon (SN) and Municipal Katipunan ng mga Samahang Nayon (MKSN) 
which held common shares of cooperative banks prior to the effectivity of RA 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 three (3) years from the effectivity of this Code. Upon failure 
of the SN and MKSN to finally convert to a cooperative within said period, the funds held in the 
name of such SN and MKSN shall be considered as preferred shares and shall remain as capital 
of the cooperative bank. 
 
SEC. 141. Additional Source of Capital of the Cooperative Banks - The 
funds or common shares in cooperative banks held in the name of cooperatives whose Certificates 
of Registration have already been cancelled by the Authority and which failed to liquidate such 
funds or shares during its liquidation shall remain as capital in said cooperative banks and shall 
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 cooperative 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. 
 
SEC. 143. Promulgation of Guidelines. – The BSP and the Authority may 
formulate guidelines to implement or clarify the provisions of this Chapter. Provided, That the BSP, 
as the regulator of banks, shall be the primary regulator of cooperative banks consistent with the 
provisions of RA 8791: Provided, further, That in order to minimize the burden of dually- regulated 
entities, the BSP shall, in consultation with the Authority, in its promulgation of 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 rules 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 privileges and incentives: 
 
a) Those privileges and incentives accorded to cooperatives under this Code and other 
prior laws including exemption from all national, provincial, city, municipal or barangay 
taxes, fees, and charges of whatever nature and description. Provided, however, That 
when a cooperative bank has reached an undivided net savings of more than One 
Hundred Million Pesos (P100,000,000.00), transactions to non- members shall be 
taxable. 
 
b) 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 from the publications in newspapers where the total amount of loan, 
excluding interests due and unpaid, does not exceed One Million Pesos 
(P1,000,000.00) or such amount as the Monetary Board may prescribe as may be 


 
warranted by prevailing 
economic 
conditions. 
It 
shall 
by 
deemed 
sufficient publication in such cases where the notices of foreclosure and execution of 
judgment are posted in the most conspicuous areas such as the municipal building, 
the municipal public market, the cooperative bank, and the barangay hall where the 
land mortgaged is situated during the period of sixty (60) days immediately preceding 
the public auction or execution of judgment. Proof of publication as required herein 
shall be accomplished via an affidavit of the sheriff or officer conducting the foreclosure 
sale or execution of judgment and shall be attached with the records of the case; 
 
c) A cooperative bank shall be allowed to foreclose lands mortgaged to it subject to the 
provisions of RA 6657, as amended. For agrarian lands foreclosed by a cooperative 
bank, the disposal of the same to another qualified beneficiary under RA 6657, as 
amended, shall be made through the same cooperative bank. Further, the amortization 
of the beneficiary in favor of DAR shall be coursed through the servicing cooperative 
bank: Provided, however, that cooperative banks shall be exempt from the landholding 
limits as prescribed by DAR or any other law requiring the same; 
 
d) For cooperative banks granted by the BSP with accreditation as Rural Financial 
Institution (RFI) under RA 10000, the following privileges shall be awarded: 
i. 
Unrestricted branching rights to set-up agriculture-oriented branches in unbanked 
municipalities and predominantly agricultural 
communities 
subject 
to 
existing regulations on minimum capitalization for banks and the size of branch 
network; 
 
ii. 
Automatic eligibility with Philippine Guarantee Corporation (with respect to 
agricultural credit guarantee), Philippine Crop Insurance Corporation (PCIC), and 
governmental agencies providing services towards risk-mitigation in the 
agriculture sector; 
 
iii. 
Priority status as credit delivery partner or conduit of government- directed 
programs for agricultural through the DA and other government agencies; and  
 
iv. 
Entitlement to participate free of charge in capability-building activities in 
agriculture lending such as, but not limited to, exchange of best-practice 
experiences, study tour, technology transfer among ASEAN member-states and 
other fora of international cooperation; and 
 
e) Notwithstanding the provisions herein, privileges and incentives granted to rural banks 
pursuant to RA 7353, otherwise known as the “Rural Act of 1992,” shall also be granted 
to cooperative banks duly registered under this Act. 
 
 
CHAPTER XVIII. INSURANCE COOPERATIVES 
 
SEC. 145. Insurance Cooperative. - Existing cooperatives may organize 
themselves into an insurance cooperative for the purpose of engaging in the business of insuring 
life, non-life, health, and property of cooperatives and their members. 
 
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 
cooperative 
shall 
provide 
its 
constituting cooperatives and 
their members different types of insurance coverage consisting of life insurance with special group 
coverage, loan protection, retirement plans, endowment, health and accident coverage, pre-need 
plans, fire insurance, marine insurance, motor vehicle coverage, bonding, crop and livestock 
protection, and equipment insurance, among others. 
 
SEC. 147. Applicability of Insurance Laws. - The provisions of the Insurance 
Code and all other laws and regulations relative to the organization and operation of an insurance 
company shall apply to insurance cooperatives organized under this Code. The requirements on 


 
capitalization, investments and reserves of insurance firms may be liberally modified upon 
consultation with the Authority and the cooperative sector, but in no case may the requirement 
be reduced to less than half of those provided for under the Insurance Code and other related 
laws. Other provisions of this Code shall apply suppletorily insofar as they are not inconsistent 
with this Chapter. 
 
SEC. 148. Implementing Rules for Insurance Cooperatives. – The 
Insurance Commission and the Authority, in consultation with 
the concerned cooperative 
sector, shall issue the appropriate rules and regulations implementing the provisions of this 
Chapter. 
 
 
CHAPTER XIX. COOPERATIVES ENGAGED IN PUBLIC SERVICES 
  
SEC. 149. Definition and Coverage. - A cooperative engaged in public 
services refers to one organized to render public services, as authorized under a franchise, 
certificate of public convenience, certificate of public convenience and necessity, concession, or 
any other appropriate form of authorization or permit duly issued by the appropriate government 
agency. Such services may include but is not limited to the following: 
 
1) Health services; 
2) Power generation, transmission, and/or distribution; 
3) Ice plants and cold storage services; 
4) Communication services including 
telephone 
and 
digital 
communications, and other value-added services; 
5) Land, water, and air transportation services for passengers and/or 
cargoes; 
6) Public markets, slaughterhouses, management of land transport 
terminals and ports, and other similar services; Water supply and 
distribution system services; and 
Such other types of public services as may be engaged in by any cooperative. Such 
cooperatives shall be primarily governed by this Chapter and the general provisions of this Code 
insofar as they may be applicable unless they are inconsistent herewith. 
 
 
SEC. 150. Registration Requirements - In 
addition 
to 
the 
requirements provided under Section 14 of this Code, no cooperative engaged in public services 
shall be registered unless it satisfies the following requirements: 
 
a.) Its Articles of Cooperation and By-laws provide for the membership of the users and/or 
producers of the service of such cooperatives; and 
b.) Such other requirements as may be imposed by the other pertinent government agencies 
concerned. 
 
SEC. 151. Regulation 
of Cooperatives Engaged 
in Public Services. - 
The internal affairs of cooperatives engaged in public services, such as:  
i) 
the rights and privileges of members;  
ii) 
the rules and procedures for meetings of the General Assembly, 
Board of Directors and committees;  
iii) 
the election and qualifications of officers, directors, and committee 
members;  
iv) 
allocation and distribution of surpluses; and  
v) 
all other such matters, shall be governed by this Code. 
 
All matters relating to the franchise, certificate of public convenience, certificate of public 
convenience and necessity, concession, or any other appropriate form of authorization or permit 
of cooperatives engaged in public services such as capitalization and 
investment 
requirements, equipment and facilities, frequencies, rate-fixing and such other matters affecting 
their public service operations shall be governed by the proper government agency concerned. 
 


 
The Authority together with other concerned government agencies shall jointly issue rules 
and regulations necessary to implement this Chapter. 
 
 
CHAPTER XX. TRANSPORT SERVICE COOPERATIVES 
 
SEC. 152. Definition and Coverage. – This Chapter shall govern transport 
service cooperatives as defined in this Code, including those organized under the provisions of 
Executive Order No. 898, series of 1983 and by vehicle operators defined or provided for under 
the PUVMP of the Department of Transportation (DOTr). 
 
SEC. 153. Engagement in Allied Business by Transport Service 
Cooperatives. - Subject to pertinent national laws and local ordinances, primary transport service 
cooperatives including federations of cooperatives, may engage in a business related to 
transportation service, including but not limited to: 
 
a.) Importation, distribution, and marketing of petroleum products in accordance with existing 
laws; 
b.) Operation of gasoline stations, automotive service centers, and management of land 
transport terminals and ports; 
c.) Importation, distribution, marketing, and sale of spare parts, automotive supplies, and 
accessories; 
d.) Marketing of vehicle and drivers insurance policies as an agent or liaison of a licensed 
insurance company; 
e.) Establishment and operation of fleet management services; and 
f.) Automotive maintenance credit facilities for the purpose of extending loans for the 
maintenance and repair of public utility vehicles. 
 
 
SEC. 154. 
Registration, Regulation, 
and 
Supervision 
of 
Transport Service Cooperatives. - The Authority shall have jurisdiction over the registration, 
regulation, and supervision of transport service cooperatives only in relation to their organization 
and management. This notwithstanding, the relevant regulatory agencies shall have jurisdiction 
over the technical operations of such cooperatives as transport service entities. 
 
SEC. 155. Renewal of Franchise and Vehicle Registration – Renewals of 
franchise and vehicle registration shall be granted to transportation service cooperatives:
 
Provided, That such cooperative presents a certificate of good standing issued by the 
Authority, Office of Transport 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 concerned 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 transport 
service cooperatives, composed of representatives from the Authority, the DOTr, the Department 
of the Interior and Local Government (DILG), the Land Transportation Franchising and Regulatory 
Board (LTFRB), the Land Transportation Office (LTO), other concerned government agencies, as 
may be necessary, and the federation of transport service cooperatives, the regional clustered 
organizations, and the national alliance of cooperatives, shall be established and thereafter be 
charged with the 
monitoring, 
recommendation 
of 
policies 
and 
programs 
affecting the 
operations of transport service cooperatives, and such other functions. A regional monitoring 
committee shall likewise be established at the regional offices of the Authority for the same 
purpose. The functions of the monitoring committees shall be prescribed in the Implementing 
Rules and Regulations to be promulgated by the Authority, in coordination with the relevant 
government agencies. 
 
 
CHAPTER XXI. CREDIT AND SAVINGS COOPERATIVES AND CREDIT COOPERATIVES 
 


 
SEC. 157. Coverage. - This Chapter shall apply to credit cooperatives and 
credit and savings cooperatives, including multi-purpose cooperatives and federations. The 
provisions of the other chapters of this Code shall apply suppletorily except insofar as this Chapter 
otherwise provides. 
 
SEC. 158. Purposes and Objectives. - Cooperatives engaged solely in 
credit or in both credit and savings services, owned and operated by its members, 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 members to maximize the benefit from such loans; 
c.) To promote the cooperatives engaged in credit and credit and savings as preferred 
financial institutions among Filipinos; and 
d.) To promote the safe, sound, stable, and sustainable operations of cooperatives engaged 
in credit and credit and savings by regulating and supervising their operations and 
curtailing or preventing any act or practice which is prejudicial to the interests of their 
members and the general public. 
 
SEC. 159. Regulation and Supervision of Cooperatives Engaged 
in Credit and Credit and Savings. - Pursuant to its powers, functions, and responsibilities under 
RA 11364, the Authority shall exercise regulatory powers and supervision over the operations of 
the cooperatives engaged in credit, and credit and savings. The Authority shall, in consultation 
with the concerned government agencies and cooperative sector, issue appropriate rules and 
regulations pertaining to the provisions of this Chapter. 
 
 
CHAPTER XXII. ELECTRIC COOPERATIVES 
 
SEC. 160. Coverage. - The provisions of this Code shall apply to all electric 
cooperatives registered with the Authority. This shall also cover new distribution utilities that will 
register with the Authority. 
 
Electric cooperatives may undertake power generation utilizing renewable energy 
sources, including hybrid systems, acquisition and operation of sub transmission or distribution 
as its primary purposes. 
 
SEC. 161. Registration of Electric Cooperatives. - The registration 
of an electric cooperative with the Authority under this Code shall be submitted to the members 
for approval through a referendum, called for the purpose as provided for under Articles 162 and 
163 of this Code. 
 
SEC. 162. Voting Requirement for Registration. – In compliance with the 
referendum as a voting procedure, the required number of votes for registration with the Authority 
shall be a majority of all members entitled to vote. 
 
SEC. 163. Documents to be Submitted for Registration with the 
Authority. - For purposes of registration, electric cooperatives shall submit the following 
documents: 
 
a.) Copy of the Board Resolution certifying to the result of the vote approved through a 
referendum approving the registration of the cooperative with the Authority in compliance 
with Section 162 of this Code; 
b.) Certified copy of the Articles of Incorporation or Cooperation and By-laws as required by 
the Authority; 
c.) Duly audited financial statements for the past two (2) years; 
d.) List of names of the incumbent Board of Directors and their addresses certified by the 
Board Secretary and attested by the Chairperson; 
e.) Within six (6) months from the registration, the Treasurer shall submit a sworn statement 
of the authorized share capital, the subscribed share capital of members, and the amount 
of paid-up share capital received by the Treasurer; and 
f.) Bonds of accountable officers. 


 
 
SEC. 164. Registration Options of Electric Cooperatives. - Electric 
Cooperatives registered with the National Electrification Administration (NEA) under Presidential 
Decree No. 269, as amended, which opt not to register with the Authority are allowed to retain the 
word “cooperative” in their registered names: Provided, that they shall not be entitled to the 
benefits and privileges under this Code. 
 
SEC. 165. Role of the Energy Regulatory Commission. - All rates and tariffs 
of electric cooperatives registered under the Authority shall be subject to the rules on application 
and approval of and by the Energy Regulatory Commission (ERC) for distribution utilities. 
 
SEC. 166. Effects of Registration with the Authority. - 
 
a.) Upon the effectivity of this Code, electric cooperatives that are duly registered with the 
Authority, and issued a Certificate of Registration, shall be covered by the provisions of 
this Code as well as future rules and issuances of the Authority; Provided, that electric 
cooperatives shall remain under the supervisory powers of the NEA, pursuant to 
Presidential Decree (PD) No. 269, as amended, and other existing laws; Provided, further, 
that provisions of this Code consistent with PD No. 269, as amended, shall apply 
suppletory 
b.) Electric cooperatives registered with the Authority are entitled to congressional 
allocations, grants, subsidiaries and other financial assistance for rural electrification which 
can be coursed through the Department of Energy, National Electrification Administration, 
or local government units, as may be appropriate. The electric cooperatives registered 
under this Code can avail of the financial services and technical assistance provided by 
government financial institutions and technical development agencies on terms respecting 
their independence as autonomous cooperatives; 
c.) All condoned loans, subsidies, grants, and other assistance shall form part of the donated 
capital and funds of the electric cooperatives and, as such, it shall not be sold, traded, nor 
be divided into shareholdings at any time. The donated capital/fund shall be valuated for 
the sole purpose of determining the equity participation of the members: Provided, That 
in the case of dissolution of the cooperative, said donated capital shall be subject to 
escheat; and 
d.) Electric cooperatives registered and confirmed with the Authority under Republic Act No. 
6938 and Republic Act No. 9520 are hereby deemed registered under this Code. 
 
SEC. 167. Share Capital in the Electric Cooperatives. – The electric 
cooperatives registered with the Authority shall issue and distribute share certificates under the 
name of each of their members, taking into consideration their previous equity contributions,
 
the amortization component through the payments made, capital build-up and other capital 
contributions. 
 
The NEA shall, within ten (10) days upon final completion of reconciliation of relevant loan 
accounts with the electric cooperative concerned, issue a certification on the aggregate amount 
of payments made on the principal component of the amortizations, as the basis for the issuance 
of equity share certificates by the electric cooperatives to its Member-Customer-Owners (MCOs) 
on record. 
 
The ERC shall, within forty-five (45) days from the close of each fiscal year, issue a 
certificate to the electric cooperative concerned 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 the full amount of his/her 
subscription together with interest and expenses, if any is due, has been paid. The distribution of 
share capital certificates shall be done annually preferably during the General Assembly meeting. 
 
In case of loss or destruction, the electric cooperative may issue a duplicate certificate, if 
such certificate is proven to have been lost, destroyed, defaced, mutilated, torn or is surrendered 
to the electric cooperative upon execution and submission by a member of an Affidavit of Loss or 
such other documents evidencing defacement/mutilation or surrender of such share capital 
certificate. 
 


 
SEC. 168. Cancellation of Registration with the Authority. – The 
 cancellation of the registration of an electric cooperative shall be granted by the Authority as 
provided under Chapter XI of this Code. 
 
The Authority, in consultation with the concerned cooperative sector, shall issue 
appropriate rules and regulations pertaining to the provisions of this Chapter. 
 
CHAPTER XXIII. FOREIGN PARTNERSHIPS 
 
SEC. 169. Membership of Foreign Cooperatives in Federations. - 
Foreign cooperatives may invest, partner with, or become members of federations: Provided, that 
they are recognized by international coalitions of cooperatives or by the relevant authority in the 
country of origin, as well as registered with the Authority; Provided, further, That they comply with 
all relevant laws allowing them to do business in the Philippines. The details of their investment, 
participation, or membership shall be left to the discretion of 
the 
local 
federation.  
 
Further details shall be laid down in the Implementing Rules and Regulations of this Code. 
Foreign cooperatives that shall transact with local federations must comply with Philippine taxation 
laws, the Anti-Money Laundering Act, and other pertinent laws. Further, foreign cooperatives shall 
not interfere, directly or indirectly, in the management and internal affairs of the federations in 
accordance with the generally accepted cooperative principles of independence and autonomy, 
notwithstanding those local cooperatives shall be one hundred per centum (100%) wholly owned 
and controlled by Filipinos. 
 
SEC. 170. Limitations. – The equity or share capital of the foreign 
cooperative shall not exceed forty per centum (40%) of the total equity or subscribed share capital 
of the partnership or federation, as the case may be. 
 
 
CHAPTER XXV. MISCELLANEOUS PROVISIONS 
 
SEC. 171. Compliance With Other Laws. - All cooperatives duly registered 
under this Code shall, at all times, be subject to all relevant laws, rules and regulations, as well as 
issuances and directives issued by a duly authorized government regulatory body in exercise of 
its jurisdiction. This notwithstanding, cooperatives that are registered or applying for specific 
licenses with other regulatory agencies must comply with the governance requirements of said 
agency to operate or function as such. 
 
SEC. 172. Registry of Cooperatives. - The Authority shall keep a registry 
which shall contain a chronological entry of the name of every cooperative registered, suspended, 
dissolved, or cancelled under this Code together with other relevant information. The Authority 
shall publish and post on its website a list of 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 Regulations of this 
Code. 
 
SEC. 173. Settlement of Disputes, Conciliation, Mediation, and 
Arbitration Proceedings. - Disputes among members, officers, directors, and committee 
members, and intra-cooperative, inter-cooperative, intra-federation or inter-federation disputes 
shall, as far as practicable, be settled amicably in accordance with the conciliation or mediation 
mechanisms embodied in the By-laws of cooperatives and in such other applicable laws. 
 
The Conciliation-Mediation Committee of the cooperative shall facilitate the amicable 
settlement of intra-cooperative disputes or disputes among members, officers, directors, and 
committee members. 
 
Should such conciliation or mediation proceeding fail, the party may settle the dispute 
through arbitration or adjudication: Provided, however, That before any party can validly file a 
complaint with the Authority for voluntary arbitration or adjudication, it must first secure a 
certification from its Conciliation-Mediation Committee and from the cooperative union or 
federation to which it is affiliated that despite all efforts to settle the issues, the conciliation-
mediation proceeding failed. 
 


 
Once the arbitrators or the appropriate adjudication division acquires jurisdiction over the 
case, it shall have exclusive jurisdiction. The decision of the arbitrator shall be final and executory. 
For this purpose, the Authority shall create a database of qualified arbitrators which shall also be 
posted in its official website. 
 
Decisions rendered by the Authority in the exercise of its adjudicatory powers shall be 
appealable to the Court of Appeals in accordance with the applicable rules. In case of election-
related issues, the aggrieved party may elevate the case for adjudication to the proper regional 
office of the Authority in accordance with the CDA Omnibus Rules of Procedure without 
undergoing alternative dispute resolution. 
 
Settlement of disputes of electric cooperatives shall be governed by the provisions of PD 
No. 269, as amended, and other applicable laws. 
 
SEC. 174. 
Joint Congressional 
Oversight 
Committee 
on Cooperatives (JCOCC). - There is hereby created a Joint Congressional Oversight 
Committee composed of the Chairperson of the Senate Committee on 
Cooperatives and the 
Chairperson 
of 
the 
House Committee 
on Cooperatives Development, with four (4) 
members each from both Houses. The said members shall be duly appointed by the Senate 
President and the Speaker of the House of Representatives from the members of the respective 
committee. 
  
SEC. 175. Appropriations. – The amount necessary to carry out the 
provisions 
of 
this 
Code shall 
be 
included 
in 
the 
annual 
General Appropriations Act. 
 
SEC. 176. Issuance of Injunctive Relief on the Authority. – Only the 
Court of Appeals or Supreme Court may issue a restraining order or injunction enjoining the 
Authority from examining and investigating cooperatives subject to its supervision or examination. 
 
 
CHAPTER XXVI. FINAL PROVISIONS 
 
SEC. 177. Penal Provisions. - The following acts or omissions affecting 
cooperatives are hereby prohibited: 
 
a.) The use of the word “cooperative” shall not be allowed unless authorized under this Code. 
In case of violation, the penalty of imprisonment of not less than two (2) years nor more 
than five (5) years and a fine not exceeding Two hundred thousand pesos (P200,000.00) 
or both at the discretion of the court, shall be imposed, upon conviction, on the individual 
or, in the case of an organization, its officers and directors. The Authority may, motu 
proprio, file complaints for violation of this provision. 
 
b.) Any person who willfully attempts in any manner to evade or defeat tax in violation of 
Articles 68 and 69 of this Code shall, in addition to the payment of double the amount of 
the tax due, be punished by a fine of not less than Five hundred thousand pesos 
(P500,000.00) but not more than Ten million pesos (P10,000,000.00) and suffer 
imprisonment of not less than six (6) years but not more than ten (10) years: Provided, 
That the conviction or acquittal obtained under this Section shall not be a bar to the filing 
of a civil suit for the collection of taxes; 
 
c.) Direct or indirect violation or circumvention of the provisions of Sections 68 and 69 of this 
Code committed by any public official or employee of any bureau, office or agency of the 
government that deprives, diminishes or in any manner hinders or restricts any duly 
registered cooperative from the full enjoyment of the exemption from the payment of the 
taxes, fees and charges enumerated therein, shall upon conviction, suffer a penalty of not 
less than seven (7) years but not more than twelve (12) years imprisonment or a fine in 
the amount of not less than Five hundred thousand pesos (P500,000.00) but not more than 
One million pesos (P1,000,000.00) or both at the discretion of the court and shall further 
be disqualified to hold any other office; 
 


 
d.) Direct or indirect interference or intervention by any public official or employee in the 
internal affairs of a cooperative of which he is not a member, such as, but not limited to, 
the following: 
 
i. 
Influencing the election or appointment of officers, directors 
committee 
members and employees through public or private endorsement or campaign for 
or against any person or group of persons; 
 
ii. 
Requiring prior clearance for any policy or decision within the cooperative; 
 
iii. 
Requesting or demanding for the creation of position or organizational units, or 
recommending any person for appointment, transfer, or removal from his/her 
position; or 
 
iv. 
 Any other acts inimical or adverse to the autonomy and independence of 
cooperatives. 
 
e.) A director, officer or committee member who 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 Illegal Use of Confidential Information shall upon conviction 
suffer a fine of not less than Five hundred thousand pesos (P500,000.00) nor more than 
One million pesos (P1,000,000.00) or imprisonment of not less than five (5) years but not 
more than ten (10) years or both at the court’s discretion; 
 
f.) The following are considered offenses punishable by a penalty of imprisonment of not less 
than one (1) year nor more than five (5) years or a fine of not more than One hundred 
thousand pesos (P100,000.00) or both at the discretion of the court: 
 
1) Omission or refusal to furnish any information, report or other document that is 
required under this Code; 
 
2)  Providing information, reports or other documents to the Authority that are 
required under this Code which 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 therein; 
 
4) Making an entry required under this Code in a book or registry, which the person 
knows to be false or misleading; 
 
5) Hindering an authorized person from making an inspection, audit, examination or 
investigation required under this Code; 
 
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 commanding another person to 
commit an offense punishable by this Code: Provided, That in case the violator is 
a cooperative or juridical person, the penalty shall be imposed on its directors and 
officers. 
 
9) Any violation of any provision of this Code 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 a fine of not less than Ten thousand pesos (P10,000.00), or both at the 
discretion of the court. The cooperative or any of its members can file a case 
against any officer or employee of the BIR or of any other government agency with 
the Ombudsman, the Civil Service Commission, other appropriate government 
agency or the courts of law. 


 
 
In case of violation of any provision of this Code, the individual or 
individuals, and in the case of organizations or government agencies, its officers, 
and directors shall, upon conviction by a Court, each suffer a penalty of not less 
than two (2) years but not more than five (5) years imprisonment or a fine in the 
amount of not less than Fifty thousand pesos (P50,000.00), or both at the discretion 
of the court. In the case of a public official or employee, the offender shall upon 
conviction, suffer the accessory penalty of temporary absolute disqualification. 
 
 
SEC. 178. Administrative Sanctions. - The Authority shall conduct investigations, 
file necessary charges, discipline, suspend or remove erring officers and members of the 
cooperative for violation of cooperative laws, rules, regulations, issuances 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 adjudication shall likewise be penalized 
under this Article. Such administrative sanctions shall be implemented in accordance with the 
rules and regulations to be promulgated by the Authority. 
 
SEC. 179. Printing and Distribution. - The National Printing Office shall publish 
this Code in the Official Gazette in full within sixty (60) days from the date of approval thereof. 
Copies of this Code shall be given to every department, agency, and instrumentality of the National 
Government, including regional, provincial offices, and local governments including government-
owned and controlled corporations.  
 
SEC. 180. Interpretation and Construction. - In case of doubt as to the meaning 
of any provision in this Code or the regulations issued in pursuance thereof, the same shall be 
resolved liberally in favor of the cooperatives and their members. 
 
SEC. 181. Implementing Rules and Regulations. - Within ninety (90) days from 
the effectivity of this Act, the Authority shall issue rules and regulations to implement this Code, 
including the amendments thereto. Within the same period, the particular government agencies 
expressly designated under specific provisions in this Code shall also issue the regulations called 
for by such respective provisions. 
 
SEC. 182. Transitory Provisions.  
 
a.) All cooperatives registered with the Authority under RA 6938, as amended by RA 9520, 
are hereby deemed registered under this Code. 
 
b.) Registration of electric cooperatives with the Authority shall not be considered as a transfer 
of ownership of its assets and liabilities nor shall it constitute a change in the nature, 
structure, and status of the cooperative. Said registration shall not result in the revocation 
of the condoned loans under RA 9136, otherwise known as the “Electric Power Industry 
Reform Act of 2001,”: Provided, That electric cooperatives with existing loans shall not be 
subject to the control and supervision of its creditors and shall only be limited to the 
fulfillment of each civil obligations. 
 
c.) The authority granted to non-cooperatives as Training Service Providers shall continue to 
be effective until their expiration or six (6) months from the promulgation of the 
implementing rules and regulations of this Code, whichever comes later. 
 
 SEC. 183. Ipso-Facto Clause. –Except as may be inconsistent with the provisions 
of this Code, cooperatives are entitled to the privileges, benefits, and exemptions granted by RA 
7160, and other existing laws 
 
SEC. 184. Separability Clause. –If any part of this Code is declared 
unconstitutional, the remaining parts or provisions shall remain in full force and effect. 
 
SEC. 185. Repealing Clause. - Except as expressly provided by this Code, RA 
6938, RA 9520, and all other laws, or parts thereof, inconsistent with any provision of this Code 
shall be deemed repealed: Provided, That the provisions of Revenue Regulation No. 20-2001, and 


 
all laws, decrees, executive orders, implementing rules and regulations, BIR circulars, CDA 
memorandum circulars, memorandum orders, letters of instruction, local government ordinances, 
or parts thereof inconsistent with any of the provisions of this Act are hereby repealed, amended 
or modified accordingly; Provided, further, that nothing in this Code shall eliminate, diminish, or 
reduce the powers, functions, authority, and responsibilities of the NEA over electric cooperatives 
under PD No. 269, as amended, and other existing laws; Provided, finally, that nothing in this Act 
shall be construed or interpreted as diminishing the jurisdiction of the Philippine Competition 
Commission under the PCA to conduct inquiry, investigate, and hear and decide on cases 
involving any violation of the PCA and other existing competition laws motu proprio or upon 
receipt of a verified complaint from an interested party or upon referral by the concerned 
regulatory agency. 
 
SEC. 186. Effectivity Clause. - This Code shall take effect fifteen (15) days after 
its publication in the Official Gazette or in a newspaper of general circulation. 
 
Approved,