FOURTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
First Regular Session 
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S E N A T E  
Senate Bill No. 
4 4 4 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
Cooperatives have demonstrated their value and significant role in the 
economic development of our people, particularly in the countryside. Since the 
approval of the Cooperative Code of the Philippines, R.A. No. 6938 and of the 
Cooperative Development Authority Act, R.A. 6938 on March 10, 1990, the 
movement for cooperativism has become rooted and flourished in the culture and 
daily lives of our people. As of 1991, no less than 7,877 cooperatives have been 
registered. Of this number, 6,934 or about 82% are multi-purpose cooperatives 
in the agricultural sector and 1,052 cooperatives or 13% are multi-purpose non- 
agricultural cooperatives. There is no question that within the plan period, the 
growth and strengthening of cooperatives as 
instruments of 
people 
empowerment and of sustained balanced development of rural areas and the 
urban centers will be a helping and supporting factor in achieving national goals 
of poverty incidence reduction, improvement of the quality of fife, and of attaining 
social and distributive justice with greater equality and equity in enjoyment of 
development benefits. 
These proposed amendments have grown out of the rich experience and 
accumulated knowledge and information about and related to cooperatives and 
cooperativism. Many have come out from suggestions of a Legislative Agenda 
Task Force on Cooperatives with suggestions from cooperative leaders from 
CAR, Iloilo, Naga, Kidapawan, Dagupan, and other key places where 
cooperatives flourish and help the economy. Since the approval of the law on 
the Cooperative Code and the Cooperative Development Authority, Congress 
has approved measures which add to the preferential rights and enhance 
cooperativism as a way of economic and social upliftment of our people, 
particularly those in the local government. 
For the first time, as suggested by youth leaders who see in cooperativism 
an avenue for youth in values inculcation within the economic area of life, 
cooperatives will utilize their education and training fund and other resources to 
provide work experience for youth and involvement in the business and 
entrepreneurial life of the area of operation of the cooperative. Youth will 
ultimately provide the continuity for cooperativism and will take on the leadership 
of the cooperative when they have gained understanding, work experience and 
have participated in cooperative activities. 
The amendments touch on policy, the requirements for registration, the 
leadership of the cooperative, and making the cooperative membership 20 for a 
primary one with a paid-up share capital of not less than P20,OOO or only about 
P I  ,000 per natural person who organizes a primary cooperative. Chances for 


good management are improved with restrictions as to membership of relatives 
up to the 3rd civil degree of consanguinity or affinity in the board, officer group 
and management staff. Accountability of bounded officers has been buttressed 
with requisites therefore prior to registration and monitored through the annual 
report. A key amendment is the right of cooperatives to as for assistance to meet 
the conditions and payments of loans, credit, donations, grants and other 
assistance. Preferential rights are underscored, overlapping avoided through 
defined areas of operation assures that a viable existing cooperative will not have 
undue competition from a new cooperative of the same type, category and 
primary purpose within the same area of operation. 
Approval of this measure for the sake of thousands who are members of 
the registered cooperatives and thousands more of expected new cooperatives 
are urgent, necessary and crucial for sustained development and people 
empowerment. 


Senate Bill No. 4 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
TO STRENGTHEN THE STRUCTURE, CAPABILITY FOR EFFICIENT AND 
EFFECTIVE 
PROGRAM 
IMPLEMENTATION AND 
ORGANIZATIONAL 
MANAGEMENT, AND ALIGN THE DIRECTION OF EXISTING AND FUTURE 
COOPERATIVES TOWARDS PEOPLE EMPOWERMENT AND BALANCED 
SUSTAINED ECONOMIC DEVELOPMENT OF ALL 
COOPERATIVES, 
AMENDING 
FOR 
THAT 
PURPOSE 
REPUBLIC 
ACT 
6938, 
THE 
COOPERATIVE CODE OF THE PHILIPPINES, AND FOR OTHER PURPOSE 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Title. - This Act shall be known as “An Act to Strengthen the 
Structure and Capability of Cooperatives Towards People Empowerment and 
Balanced Sustained Economic Development”. 
TITLE 1. POLICY, ORGANIZATION, MEMBERSHIP, AREAS OF 
OPERATION 
SEC 2. Policy. - Article 2 of R.A. 6938 is hereby amended by adding a 
new paragraph thereto, as follows: 
“Art 2. Declaration of Policy. - “FINALLY, IT IS HEREBY 
DECLARED TO BE THE POLICY OF THE STATE TO STRENGTHEN 
THE STRUCTURE, CAPABILITY FOR EFFICIENT AND EFFECTIVE 
PROGRAM IMPLEMENTATION AND ORGANIZATION MANAGEMENT, 
AND TO ALIGN THE DIRECTION OF EXISTING AND FUTURE 
COOPERATIVES 
TOWARDS 
PEOPLE 
EMPOWERMENT 
AND 
BALANCED SUSTAINED ECONOMIC DEVELOPMENT OF ALL 
COOPERATIVES.” 
SEC 3. Organization, Membership, Areas of Operation. - Articles 6, I O ,  
24, and 26 of R.A. 6938 are hereby amended as follows: 
3-A Organization and Areas of Operation 
“Art, 6, 
Organization of Cooperatives AND AREAS OF 
OPERATION. - A cooperative may be organized and registered by at 


least TWENTY (20) [fifteen (15)] persons for any or all of the following 
purposes: 
“(1 1) To undertake any an all other activities for the effective and 
efficient implementation of the provision of this Code. 
“AREAS OF OPERATION FOR A COOPERATIVE SHALL BE 
DETERMINED BY THE COOPERATIVE DEVELOPMENT AUTHORITY 
IN RULES AND REGULATIONS PROMULGATED PURSUANT TO 
ARTICLE 123 OF THIS ACT. 
“ONLY ONE COOPERATIVE OF THE SAME TYPE AND 
CATEGORY IN ACCORDANCE WITH ARTICLE 23 OF THIS ACT AND 
PRIMARY 
PURPOSE 
SET 
FORTH 
IN 
THE 
ARTICLES 
OF 
COOPERATION SHALL BE REGISTERED AND ALLOWED TO BE 
OPERATED IN AN AREA OF OPERATION. 
WHERE THERE IS A 
REGISTERED AND FULLY OPERATIONAL COOPERATIVE IN AN 
AREA OF OPERATION, REGISTRATION OF A NEW COOPERATIVE 
WITH THE SAME OR SIMILAR PRIMARY PURPOSE AND OF THE 
SAME TYPE AND CATEGORY WITHIN THE SAME AREA OF 
OPERATION AS THE EXISTING REGISTERED COOPERATIVE SHALL 
BE DISALLOWED. 
“THE COOPERATIVE DEVELOPMENT AUTHORITY SHALL 
PROMULGATE APPROPRIATE RULES AVD REGULATIONS THE 
CRITERIA FOR A FULLY OPERATIONAL COOPERATIVE EXISTING AT 
THE TIME OF APPLICATION FOR A NEW COOPERATIVE AS TO 
WARRANT DISALLOWANCE OF THE NEW APPLICATION FOR 
REGISTRATION. A NOTICE OF THE APPLICATION SHALL BE SENT 
TO THE EXISTING COOPERATIVE WITH THE SAME TYPE AND 
CATEGORY OPERATING WITHIN THE SAME AREA OF OPERATION 
WITHIN 
THIRTY 
(30) 
DAYS 
OF 
THE 
APPLICATION 
FOR 
REGISTRATION OF THE NEW COOPERATIVE AND PRIOR TO ANY 
ACTION THEREON SO AS TO PROVIDE TIME FOR THE EXISTING 
COOPERATIVE TO RESPOND TO THE AUTHORITY AS TO ITS 
REACTIONS TO THE NEW APPLICATION.” 
3-B Organizing a Primary Cooperative 
‘,ART. IO. Organizing a Primary Cooperative. - TWENTY (20) 
[Fifteen (15)] or more natural persons OF AT LEAST EIGHTEEN (18) 
YEARS OF AGE, who are citizens of the Philippines, having a common 
bond of interest and ALL of WHOM are residing or working in the intended 
area of operation or WHO HAVE A BUSINESS OR OTHER 
PRODUCTIVE ENTERPRISE OR WHO ARE STUDYING WITHIN SAID 
INTENDED AREA OF OPERATION, MAY ORGANIZE A primary 
cooperative under this Code.” 
3-C Members qf Cooperatives 
“ART. 26. Who May Be Members of Cooperatives. -Any natural 
person WHO IS AT LEAST EIGHTEEN (18) YEARS OF AGE, AND who is 
a citizen of the Philippines, ANY DULY-REGISTERED COOPERATIVE, A 
JURIDICAL PERSON REGISTERED UNDER PHILIPPINE LAWS, or ANY 
non-profit organization OR NON-GOVERNMENTAL ORGANIZATION with 
a juridical personality, shall be eligible for membership is a cooperative 
PROVIDED [if] THE APPLICANT FOR MEMBERSHIP IN THE 
COOPERATIVE meets the qualifications AND HAS NONE OF THE 
DISQUALIFICATIONS prescribed in the by-laws of THE COOPERATIVE 
MEMBERSHP IN WHICH IS BEING APPLIED FOR; Provided, That only 
natural persons AT LEAST EIGHTEEN (18) YEARS OF AGE AND WHO 


ARE CITIZENS OF THE PHILIPPINES may be admitted as members of a 
primary cooperative.” 
3-D Members of Federations of Cooperatives 
“ART. 24. Federation of Cooperatives. - 
“(2) 
Registered cooperatives may organize a federation at the 
provincial, SPECIAL METROPOLITAN POLITICAL SUBDIVISION, city, 
MUNICIPAL, regional, and national levels according to the type of 
business carried on BY COOPERATIVES. A FEDERATION MAY ALSO 
BE ORGANIZED BY REGISTERED COOPERATIVES WITHIN AN 
ECONOMIC ZONE CREATED BY AN AUTHORITY ESTABLISHED BY 
LAW OR BY THOSE OPERATING WITHIN AN ISLAND OR GROUP OF 
ISLANDS. FEDERATIONS SHALL BE DULY REGISTERED BY THE 
COOPERATIVE DEVELOPMENT RULES AND REGULATIONS.” 
TITLE II. POWERS, RIGHTS, CAPACITIES, PRIVILEGES 
SEC 4. Powers, Rights, Capacities, and Privileges of Cooperatives. - 
Articles 9, 62, 63, 76, and 87 of R.A. No. 6938 are hereby amended as follows: 
4-A Powers, Rights, and Capacities 
“ART. 9. 
Cooperative Power, Rights, and Capacities. - A 
cooperative registered under this Code shall have the following powers, 
RIGHTS and capacities: 
“(1) 
TO THE EXCLUSIVE USE OF ITS REGISTERED 
COOPERATIVE NAME, to (To) sue and be sued in its cooperative name, 
AND TO PLACE THE SAME WITHIN THE AREA OF THE PRINCIPAL 
OFFICE SO AS TO BE VISIBLE TO THE GENERAL PUBLIC HAVING 
BUSINESS WITH SAID COOPERATIVE; 
“(8) TO MAKE LOANS, BE ENTITLED TO CREDIT AND TO (To) 
accept and receive grants, donations and assistance from foreign and 
domestic sources SUBJECT TO CONDITIONS OF SAID LOANS, 
CREDIT, GRANTS, DONATIONS OR ASSISTANCE AND TO BE 
PROVIDED HELP AND ASSISTANCE UPON WRITTEN REQUEST TO 
THE AUTHORITY IN ORDER TO FULFILL REQUIREMENTS TO AVAIL 
OF SAID LOANS, CREDIT OR BE A RECIPIENT OF GRANTS, 
DONATIONS 
AND 
ASSISTANCE: 
PROVIDED, 
THAT 
ANY 
COOPERATIVE, UPON WRITTEN REQUEST OF THE BOARD OF 
DIRECTORS, OFFICERS OR THE GENERAL ASSEMBLY, MAY BE 
PROVIDED BY THE AUTHORITY THE NECESSARY TECHNICAL, 
MANAGERIAL, ENTREPRENEURIAL ASSISTANCE OR PROVIDED 
STANDBY RESOURCES IN ORDER TO RESTRUCTURE LOANS OR 
CREDIT, COMPLY WITH PAYMENTS THEREFOR, OR TO COMPLY 
WITH CONDITIONS OF THE GRANT, DONATIONS, OR ASSISTANCE 
FROM DOMESTIC OR FOREIGN SOURCES; [and] 
“(9) 
TO AVAIL OF PREFERENTIAL RIGHTS GRANTED TO 
COOPERATIVES UNDER R.A. NO. 7160, THE LOCAL GOVERNMENT 
CODE PARTICULARLY THOSE IN THE GRANT OF FRANCHISE TO 
ESTABLISH, CONSTRUCT, OPERATE AND MAINTAIN FERRIES, 
WHARVES, MARKETS OR SLAUGHTERHOUSES AND TO LEASE 
PUBLIC UTILITIES: 


“(IO) TO AVAIL OF BASIC SERVICES AND FACILITIES UNDER 
R.A. NO. 7160, THE LOCAL GOVERNMENT CODE, PARTICULARLY 
RELATED TO AGRICULTURE AND FISHERY ACTIVITIES BOTH AS TO 
PROVIDING THE PRODUCTS FOR DISPERSAL AS WELL AS TO BE 
RECIPIENT OF DISPERSAL PROGRAMS OF LOCAL GOVERNMENT 
UNITS; 
EXTENSION AND ON-SITE RESEARCH SERVICES AND FACILITIES 
“(11) 
PROVIDE CONTINUITY FOR THE COOPERATIVE AND 
COOPERATIVISM 
THROUGH 
TRAINING, 
PROVIDING 
WORK 
EXPERIENCE AND PARTICIPATORY COOPERATIVE INVOLVEMENT 
OF YOUTH WITHIN THE AREA OF OPERATION; AND 
“(12) [(9)] TO EXERCISE SUCH OTHER POWERS GRANTED BY 
THIS Code or WHICH ARE necessary to carry out its purpose or purposes 
as stated in its articles of cooperation.” 
4-B Privileges and Preferential Treatment 
“ART. 63. 
Privileges AND PREFERENTIAL TREATMENT of 
Cooperative. 
“(7) 
Cooperatives and their federations, such as FARM AND 
FISHERY PRODUCERS AND SUPPLIERS, market vendors and OTHER 
cooperatives WHICH 
HAVE FOR THEIR 
PRIMARY PURPOSE 
PRODUCTION AND/OR 
MARKETING 
OF 
PRODUCTS 
FROM 
AGRICULTURE, FISHERY AND ENTREPRENEURIAL INDUSTRIES 
AND FEDERATIONS THEREOF shall have preferential rights in THE 
management of public markets and/or lease of public market facilities, stall 
or spaces: PROVIDED, THAT THE COOPERATIVE ITSELF UTILIZES 
PERSON NOT CONNECTED WITH NOR A MEMBER OF THE 
COOPERATIVE. 
THESE RIGHTS AND NOT THROUGH A MIDDLE-MAN NOR A 
4-C Services From a Judge or Register of Deeds 
“ART. 62. Tax and Other Exemptions. - 
“(4) Any judge in his capacity as notary public, ex-officio, shall 
render service, free of charge, to any person or group of persons, 
requiring either the administration of oath or the acknowledgment of 
articles of cooperation or a cooperative applicant for registration and 
instruments of loan BY OR from ANY cooperative IN THE AMOUNT not 
exceeding ONE HUNDRED [Fifty] Thousand Pesos (PlO0,OOO.OO) 
“(5) Any register of deed shall accept for registration, free of 
charge, any instrument relative to a loan made under this Code THE 
AMOUNT OF WHICH does not exceed ONE HUNDRED [Fifty] Thousand 
Pesos (PlOO,OOO.OO) [(PSO,OOO.OO)], 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 
duties and obligations.” 
[(P50,000.00)] 
4-D Right to Interest on Share Capital 
“ART. 76. Merest on Share Capital. - Interest on share capital 
shall not exceed the normal rate of return on investments as determined to 
the Cooperative Development Authority PURSUANT TO ITS RULE- 
MAKING POWERS UNDER THIS ACT, BUT IN NO CASE SHALL THE 


SAID RATE TO RETURN EXCEED FIFTEEN PERCENT (15%) PER 
ANNUM.” 
4-E Fund for Education and Training 
“ART. 87. 
Order of Distribution. - The net surplus of every 
cooperative shall be distributed as follows: 
“( 1 ) 
“(2) An amount for the education and training funds, which shall be 
not LESS [more] than ten percentum (10%) of net surplus. The by-laws 
may provide that certain fees or fines or a portion thereof be credited to 
such fund. 
THE FUND SHALL PROVIDE FOR THE TRAINING, 
PROVISION 
OF 
WORK 
EXPERIENCE 
AND 
COOPERATIVE 
INVOLVEMENT OF YOUTH WITHIN PURSUANT TO ARTICLE 9 
PARAGRAPH (11) OF THIS CODE IN ADDITION TO WHATEVER 
RESOURCES A COOPERATIVE MAY DECIDE TO SET ASIDE FOR 
THIS PROGRAM FOR CONTINUITY OF COOPERATIVISM.” 
TITLE 111. REGISTRATION REQUIREMENTS, BY-LAWS, ANNUAL 
REPORTS 
SEC 5. 
Registration Requirements, By-Laws, Annual Reports of 
Cooperatives. - Articles 11, 14, 16, 17, 18 and 54 of R.A. 6938 are hereby 
amended as follows: 
5-A Economic Survey as a Basis of Registration 
“ART. 11. Economic Survey AS A BASIS OF REGISTRATION. - 
Every group of individuals or cooperatives intending to form a cooperative 
under this Code shall submit to the Cooperative Development Authority a 
general statement describing the structure, purposes and economic 
feasibility of the proposed cooperative, indicating therein the area of 
operation, the size of membership and other pertinent data WHICH 
PROVIDE AN ECONOMIC SURVEY AS A BASIS OF REGISTRATION 
AND THE PERCEIVED ROLE OF THE COOPERATIVE IN SUSTAINED 
BALANCED DEVELOPMENT WITHIN THE INTENDED AREAS OF 
OPERATION AND THE NATION AS A WHOLE.” 
5-B Signature on Articles of Cooperation 
“ART. 74. Article of Cooperation. - (1) All cooperatives applying 
for registration shall file with Cooperative Development Authority the 
articles of cooperation which shall be signed by each of the organizers 
AND ALL THE COOPERATORS and acknowiedge by THE ORGANIZER 
AND MAJORITY OF THE COOPERATORS [the] if natural persons, and 
by the President or Secretaries, i f  juridical persons, before a notary public. 
No cooperative shall be registered unless the articles of 
cooperation ARE [is] accompanied with the bonds of the accountable 
officers and a sworn statement of the treasurer elected by the subscribers 
showing that at least twenty-five percentum (25%) of the authorized share 
capital has been subscribed and at least twenty-five percentum (25%) of 
the total subscription has been paid; Pmvidgd, That in no case shall the 
paid-up share capital [shall] be less than TWENTY [two] Thousand Pesos 
“(5) 
(P20,000.00) [(P2,000.00)].” 
5-C Pre-Membership Seminar Requisite for Registration 


”ART. 16. 
Registration. - NO COOPERATIVE SHALL BE 
COMPLETED AND PROOF OF COMPLETION THEREOF WITH A LIST 
OF PARTICIPANTS THERETO INCLUDED IS SUBMITTED TO THE 
AUTHORITY 
REGISTERED UNLESS THE PRE-MEMBERSHIP SEMINAR HAS BEEN 
5-D Registration Documents 
“ART. 17. 
Certificate of Registration AND REGISTRATION 
“THE 
CERTIFICATE 
SHALL 
BE 
ACCOMPANIED 
WITH 
REGISTRATION DOCUMENTS INDICATING THE APPROVED AREA 
OF OPERATION OF THE REGISTERED COOPERATIVE, THE FIELD 
OF MEMBERSHIP AND THE NATURE OF THE BUSINESS OF THE 
COOPERATIVE.” 
DOCUMENTS. - 
5-E Amendment of Articles of Cooperation and By-Laws 
“ART. 18. Amendment to 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-third (2/3) vote of all the members with voting 
rights, without prejudice to the rights of the dissenting members to 
exercise their right to withdraw their membership under Article 31 and 32. 
AFFIRMATIVE VOTE OF ALL THE MEMBERS AND THE LIST OF 
MEMBERS WHO 
DISSENTED 
FROM THE 
VOTE 
ON 
THE 
AMENDMENTS TOGETHER WITH THE NAMES OF THOSE MEMBERS 
WITH VOTING RIGHTS WHO WERE NOT PRESENT AT THE VOTING 
ON SAID AMENDMENTS SHALL BE RECORDED AND SUBMITTED, 
WITH THE PROPOSED AMENDMENTS TO THE ARTICLES OF 
DEVELOPMENT AUTHORITY. 
THE 
LIST OF MEMBERS CONSTITUTII\IG THE TWO-THIRDS 
COOPERATIVE OR TO THE BY-LAWS, TO THE COOPERATIVE 
“The original and amended articles AND BY-LAWS together shall 
contain all provisions required by law to be set out in the articles of 
cooperation AND IN THE BY-LAWS. Amendments shall be indicated by 
underscoring or otherwise appropriately indicating the change or changes 
made and a copy [thereofj OF THE ARTICLES OR BY-LAWS AMENDED 
duly certified under oath by the cooperative secretary and a majority of the 
directors stating the fact that said amendment or amendments have been 
duly approved by the required vote of the members. All amendments to 
the articles of cooperation OR THE BY-LAWS shall be submitted to the 
Cooperative Development Authority. The amendments shall take effect 
upon its approval within thirty (30) days from the date of filing thereof if not 
acted upon by the Authority for a cause attributable to the cooperatives.” 
5-F Annual Reports 
“ART. 54. Annual Reports. - (1) Every cooperative shall draw up 
an annual report of its ACTIVITIES AND PROGRAMS [affairs] as of the 
end of every CALENDAR [fiscal] year, and publish the same furnishing 
copies to all its members of record, a copy thereof shall be filed with the 
Cooperative Development Authority within NINETY (90) [sixty (60)] days 
from the DATE OF THE COOPERATIVE’S REGULAR GENERAL 
ASSEMBLY MEETING AND IN NO CASE LATER THAN NINETY (90) 
DAYS FROM THE END OF CALENDAR YEAR. The form and contents of 
the annual report shall be prescribed by the rules of the Authority. Failure 
to file the required annual report shall be a ground for CANCELLATION 
OF THE CERTIFICATE OF REGISTRATION OF THE COOPERATIVE 


ISSUED BY THE AUTHORITY OR FOR revocation of authority of the 
cooperative to operate as such. The fiscal year of every cooperative shall 
be the calendar year, except as may be otherwise provided in the By- 
Laws.” 
TITLE IV. ADMINISTRATION, VOTING, BOARD OF DIRECTORS, 
OFFICERS 
SEC 6. Administration, Voting, Board of Directors, Officers. - Articles 28, 
35, 36, 37, 38,40, 41,43, 45, and 51 of R.A. No. 6938 are hereby amended as 
follows: 
6-A Meeting, Quorum and Voting 
“ART. 35. Meetings. - A  regular meeting shall be held annually by 
the General Assembly [on a date fixed in the by-law], or [if not so fixed] on 
any date within ninety (90) days after the close of each CALENDAR 
[fiscal] year; Provided, That written notice of regular meetings shall be 
sent to all members of record at their official addresses at least two (2) 
weeks prior to the meeting, unless a different period FOR THE WRITTEN 
NOTICE is required in the by-laws. 
“(4) The Authority may call a special meeting of the cooperative; 
“(a) For the purpose of reporting to the members the result of any 
audit, examination, or other investigation of the cooperative [affairs] 
ACTIVITIES AND PROGRAMS ordered or made by SAID AUTHORITY 
[him]; or” 
“ART. 36. Quorum. - [unless otherwise provided in the by-laws, a] 
A quorum shall consist of AT LEAST twenty-five percentum of all the 
members entitled to vote.” 
“ART. 37. Voting System. - 
“ ( 1 ) x x x x x x  
“(2) x x x x x x 
“(3) No member of a primary cooperative shall be permitted to vote 
by proxy. [,unless provided for specifically in the by-laws of cooperative] 
However, 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 in behalf of 
another delegate of the delegate of the same cooperative.” 
and Removal 
6-B Board of Directors, Officers, Disqualifications and Prohibitions, 
“ART. 28. Government Officers and Employees. - 
“(1) 
Any officer or employee of the Cooperative Development 
Authority shall be disqualified to be elected to any position in a 
cooperative; 
PROVIDED, THAT THE DISQUALIFICATION OF ANY 
OFFICER OR EMPLOYEE OF THE COOPERATIVE DEVELOPMENT 
AUTHORITY 
SHALL 
NOT 
EXTEND TO 
ANY 
COOPERATIVE 
ORGANIZED EXCLUSIVELY BY THE OFFICERS OR EMPLOYEES OF 
THE AUTHORITY WHOSE MEMBERS ARE ALL AUTHORITY 
OFFICIALS OR EMPLOYEES; 


“(2) Elective officials of the Government, except barangay officials, 
AND APPOINTED OFFICIALS OF THE GOVERNMENT shall be ineligible 
to become officers and directors of cooperatives; PROVIDED, THAT THE 
DISQUALIFICATION DOES NOT EXTEND TO A COOPERATIVE 
ORGANIZED EXCLUSIVELY BY THE OFFICERS OR EMPLOYEES OF 
A GOVERNMENT OFFICE OR AGENCY AND WHOSE MEMBERS ARE 
ALL OFFICERS OR EMPLOYEES OF SAID GOVERNMENT OFFICE OR 
AGENCY; 
“(3) 
Any government employee OR OFFICIAL may, in the 
discharge of his duties as member in the cooperative, be allowed by the 
head of the office concerned to use official time for attendance at the 
general assembly, board and committee meetings of cooperatives, as well 
as cooperative seminars, conferences, workshops, technical meetings, 
and training courses locally or abroad; Provided, That the operations of 
the office concerned are not adversely affected.” 
“ART. 38. Composition of the Board of Directors. - 
“(1) x x x  x x 
“A DIRECTOR WHO HAS SERVED THREE (3) CONSECUTIVE 
TERMS, 
IS ELIGIBLE FOR REELECTION AFTER THREE (3) 
CONSECUTIVE YEARS OF NOT SERVING ON THE BOARD OF 
DIRECTORS OF A COOPERATIVE. 
“ART. 40. Directors. - 
”(I) 
x x x x x  
“(2) x x x x x  
“(3) THE MEMBERS OF THE BOARD OF DIRECTORS SHALL 
NOT ONLY ANY OTHER POSITION IN THE COOPERATIVE, OTHER 
THAN AS MEMBERS OF THE BOARD OF DIRECTORS. THEY SHALL 
CHAIRMAN.” 
ELECT FROM AMONG THEMSELVES A CHAIRMAN AND A VICE- 
“ART. 41. Meeting of the Board, Quorum. - 
“ ( 1 )  x x x x x  
“(2) Special meting of the board of directors may be held at any 
time upon the call of the CHAIRMAN [President] or as provided in the by- 
laws. 
‘I x x x x x  
“ART. 43. Officer of the Cooperatives. - The board of directors 
shall elect from among themselves only the Chairman and Vice-chairman, 
and elect or appoint other officers of the cooperative from outside of the 
board in accordance with THE [their] by-laws OF THE COOPERATIVE. 
All officers shall serve during good behavior and shall not be removed 
except for cause after due hearing. Loss of confidence shall not be a valid 
ground for removal unless proven by evidence by acts or omissions 
causing loss of confidence in the honestly and integrity of such officer. No 
two (2) or more persons with relationships up to the third civil degree of 
consanguinity or affinity shall serve as elective or appointive officers in the 
same Board OR COMMITTEES. 


“NO TWO OR MORE PERSONS WITH RELATIONSHIP UP TO 
THE THIRD CIVIL DEGREE OF CONSANGUINITY OR AFFINITY SHALL 
SERVE IN THE SAME MANAGEMENT STAFF OF ANY COOPERATIVE. 
”THE SECRETARY OF THE BOARD NEED NOT BE A PERSON 
OUTSIDE THOSE ELECTED TO THE BOARD OF DIRECTORS. 
“NO TWO OR MORE PERSONS WITH RELATIONSHIPS UP TO 
THE THIRD CIVIL DEGREE OF CONSANGUINITY OR AFFINITY SHALL 
SERVE TOGETHER WHERE ONE IS AN OFFICER OUTSIDE THE 
BOARD AND THE OTHER IS A DIRECTOR OR A STAFF MEMBER.” 
“ART. 45. Functions and Responsibilities of Directors, Officers 
and Committee Members. - The functions and responsibilities of the 
directors, officers and committee members of the directors, officers and 
committee members shall be as prescribed in detail in the by-laws of a 
cooperative. 
“WITHIN SIXTY (60) DAYS FROM REGISTRATION AND IN NO 
CASE LATER THAN SIXTY (60) DAYS FROM HAVING BEEN ELECTED 
OR 
APPOINTED, 
ALL 
DIRECTORS, 
OFFICERS, 
COMMITTEE 
MEMBERS, MANAGEMENT STAFF AND EMPLOYEES ARE REQUIRED 
TO UNDERGO RIGID TRAINING IN THEIR FUNCTIONS AND 
RESPONSIBILITIES TO BE CONDUCTED BY THE AUTHORITY AND 
ORGANIZATION.” 
ANY DULY ACCREDITED GOVERNMENT OR NON-GOVERNMENT 
“ART. 51. Removal. - An elective officer, director or committee 
member may be removed by a vote of two-thirds (2/3) of the voting 
members present and constituting a quorum, in a regular or special 
general assembly meeting called for the purpose. The person involved 
shall be given an opportunity to be heard at said assembly. 
“APPOINTIVE 
OFFICERS 
OR 
COMMITTEE 
MEMBERS 
APPOINTED BY THE BOARD OF DIRECTORS MAY, FOR GOOD 
CAUSE SHOWN, BE REMOVED BY A MAJORITY VOTE OF ALL THE 
MEMBERS OF THE BOARD OF DIRECTORS, IN ALL CASES, THE 
PERSON CONCERNED SHALL BE GIVEN AN OPPORTUNITY TO BE 
HEARD BY THE BOARD OF DIRECTORS OR BY THE GENERAL 
ASSEMBLY. 
“A DIRECTOR WHO HAS SERVED THREE (3) CONSECUTIVE 
TERMS, 
IS ELIGIBLE FOR REELECTION AFTER THREE (3) 
CONSECUTIVE YEARS OF NOT SERVING ON THE BOARD OF 
DIRECTORS OF A COOPERATIVE. 
“A DIRECTOR WHO HAS SERVED THREE (3) CONSECUTIVE 
TERMS, 
IS ELIGIBLE FOR REELECTION AFTER THREE (3) 
CONSECUTIVE YEARS OF NOT SERVING ON THE BOARD OF 
DIRECTORS OF A COOPERATIVE. 
TITLE V. SETTLEMENT OF DISPUTES, CONCILIATION, BONDING OF 
ACCOUNTABLE OFFICERS, PENALTIES 


SEC 7. Bonding of Accountable Officers. - Article 57 of R.A. No. 6938 is 
“ART. 57. 
Bonding Accountable Officers. - Every director, 
officer and employee handling funds, securities or property on behalf of 
any cooperative shall execute and deliver adequate bonds for the faithful 
performance of THEIR RESPECTIVE [his] duties and obligations. The 
board of directors shall determine the adequacy of such bond. 
hereby amended as follows: 
“THE BONDS OF THE ACCOUNTABLE OFFICERS SHALL 
ACCOMPANY 
THE 
ARTICLES 
OF 
COOPERATION 
AS 
A 
REQUIREMENT OF REGISTRATION ON THE COOPERATIVE. THE 
BONDS SHALL BE KEPT UP-TO-DATE EVERY YEAR AND THE 
ADEQUACY AND THE FACT OF BEING UP-TO-DATE SHALL BE 
INCLUDED IN THE ANNUAL REPORT PURSUANT TO ARTICLE 54 OF 
THIS ACT AND WHICH REPORT IS FURNISHED ALL MEMBERS OF 
RECORD 
AND 
IS 
SUBMITTED 
TO 
THE 
COOPERATIVE 
DEVELOPMENT AUTHORITY. THE AUTHORITY MAY, BY RULES AND 
REGULATIONS, SET THE CRITERIA AND GUIDELINES AS TO THE 
ADEQUACY OF THE BONDS OF ACCOUNTABLE OFFICERS OF A 
COOPERATIVE.” 
SEC 8. Settlement of Disputes and Conciliation. -Article 121 of R.A. No. 
“ART. 121. 
Settlement of Disputes, CONCILIATION AND 
MEDIATION PROCEEDINGS. - Disputes among members, officers, 
directors, and committee members and intra-federation or inter-federation 
disputes AS WELL AS INTER-COOPERATIVE, INTRA-FEDERATION OR 
INTER-FEDERATION DISPUTES shall, as far as practicable, be settled 
amicably in accordance with the conciliation or mediation mechanism 
embodied in the by-laws of cooperative FOR INTRA-COOPERATIVE 
6938 is hereby amended as follows: 
DISPUTES, IN THE BY-LAWS OF DISPUTANT COOPERATIVES FOR 
INTER-COOPERATIVE DISPUTES, IN THE BY-LAWS OF THE 
FEDERATION FOR INTRA-FEDERATION DISPUTES AND IN THE BY- 
LAWS OF DISPUTANT FEDERATIONS FOR INTER-FEDERATION 
DISPUTES, and in applicable laws. 
“Should such a conciliation or mediation proceedings fail, the 
matter shall be settled in a court of competent jurisdiction.” 
SEC 9. Penalties. - Article 124 of R.A. No. 6938 is hereby amended as 
follows: 
“ART. 124. Penal Provision. - The following acts or omission 
affecting cooperatives are hereby prohibited: 
”(1) The use of the word “cooperative” by any person or persons or 
organizations, domestic or foreign, unless duly registered as a cooperative 
under this Code. In case of violation hereof, the individual or individuals 
concerned, or in the case of an organization, its officers and directors shall 
upon conviction, suffer the penalty of imprisonment OF NOT LESS THAN 
[for] one (1) year NOR MORE THAN FIVE (5) years and a fine not 
exceeding FIVE [One] Thousand Pesos (P5,QOO.OO) [(PI ,000.OO)l or both 
at the discretion of the court: 


“(2) x x x x x  
“In case of violation of any provision of this subsection, the 
individual or individuals, and in the case of organizations, its officers and 
directors, shall upon conviction by a court, suffer a penalty of not less than 
TWO (2) YEARS [one (1) year] but not more than SIX (6) [five (5)] years 
imprisonment or a fine of an amount not less than Five Thousand Pesos 
(P5,OOO.OO) or both at the discretion of the court. IN THE CASE OF A 
PUBLIC OFFICIAL OR EMPLOYEE, HE SHALL, UPON CONVICTION, 
SUFFER THE NECESSARY PENALTY OF TEMPORARY ABSOLUTE 
DISQUALIFICATION.” 
TITLE VI. FINAL PROVISIONS 
SEC 10. Separability Clause. - Should any part of this Act be declared 
unconstitutional or invalid for any reason, the rest of the provisions shall not be 
affected thereby. 
SEC 11. 
Repealing Clause. - All laws, decrees, executive orders, 
proclamations, rules and regulations, and other issuance and parts thereof which 
are inconsistent with the provisions of this Act, are hereby repealed or modified 
accordingly. 
SEC 12. 
€flectivify Clause. - This Act shall take effect upon its 
publication in at least two (2) national newspapers of general circulation. 
Approved,