THIRTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
:3 a 
S E N A T E  
S. No. 
~ 
Introduced by Senator S. R. OsmeAa 1111 
EXPLANATORY NOTE 
P.D. 717, otherwise known as the Agri-Agra Law requires banks to 
allocate at least 25% of their loanable funds for Agricultural or Agrarian Reform 
credit. This was designed to relieve the perceived scarcity of credit in the 
countryside, especially among poor farmers. 
In a banking system with an 
estimated P250 billion in total loanable funds, at least PI30 billion should have 
been available for countryside credit. Ironically, the records show that more 
than 50% of these funds end up in government securities which can substitute 
for Agri-Agra credit in compliance with the law. 
Of the actual portfolio of 
commercial banks, a significant proportion is channeled to the agri-business 
ventures of large multinational corporations, leaving a small residual for the 
small farmers whom the law intended as beneficiaries. 
The problem with countryside credit is apparently not as much it 
shortage, as the inability of farmers to qualify for and hence access such credit. 
The high default rates associated with countryside credit make it a very 
unattractive proposition for commercial banks and has rendered numerous 
credit programs to increase agricultural productivity unsustainable. 
Clearly, 
countryside credit thus far channeled through traditional financial institutions has 
proven inadequate in transforming farmers to entrepreneurial producers. 
This bill seeks to strengthen the cooperative bank as the institution that 
will help develop skills and values among the farmers, serve as a vehicle for 
savings mobilization, and consolidate the market power of small producers so 
that they can profitably participate in market exchange. In the experience of 
developed countries, cooperatives have been the proven method for broadening 
ownership and control of economic organizations, increasing the number of 
market participants and building bridges between human and non-human 
resources in productive activity. Using the Bangladesh Grameen Bank model of 
peer monitoring and peer group pressure mechanisms, we envision cooperative 
banks to be the effective retailers of credit which can in the future transform 
agricredits to an attractive investments outlet for commercial loans, rendering 
redundant the mandated allocation among commercial banks, 
This bill provides the regulatory mechanisms that will place the 
cooperative banks under the joint and coordinated supervision of the Bangko 


Sentral ng Pilipinas and the Cooperative Develoment Authority, in order to 
safeguard the interests of the public, while allowing leeway for the peculiar 
nature of cooperative banks. It also allows government owned and controlled 
financial institutions and other agencies of the government to contribute credit 
resources to countryside development, but with cooperatives as the lead 
institutions, countryside development is envisioned to be primarily a self-help 
effort. 
In view of the foregoing, early passage of this bill is earnestly requested. 
SERGIO QSMENA 111 
Senator 


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THIRTEENTH CONGRESS OF THE REPUBLI 
OF THE PHILIPPINES 
First Regular Session 
S E N A T E  
S. No. 
)’ . 
Introduced by Senator S. R. OsmeAa 111 
AN ACT 
EXPANDING COUNTRYSIDE CREDIT THROUGH COOPERATIVE BANKS 
AND 
ENCOURAGING 
THE 
GROWTH 
AND 
DEVELOPMENT OF 
COOPERATIVE BANKS BY AMENDING CHAPTER Xlll OF REPUBLIC ACT 
NO, 6938, OTHERWISE KNOWN AS THE COOPERATIVE CODE OF THE 
PHILIPPINES, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Shod Title -- This Act shall be known as the “Cooperative 
Bank Act of 2004.” 
SECTION 2. Chapter Xlll of Republic Act No. 6938, otherwise known 
as the Cooperative Code of the Philippines, is hereby amended to read as 
follows: 
“ARTICLE 
99. 
Governing Law [(I)] 
The provisions of this 
Chapter shall primarily govern cooperative banks registered under this 
Code and the other provisions of this Code shall apply to them only 
insofar as they are not inconsistent with the provisions contained in this 
Chapter. 
“[(2) 
Cooperatives duly established and registered under the 
provisions of this Code may organize among themselves a cooperative 
bank which shall likewise be considered a cooDerative reaisterable under 
13 
“ 


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the provisions of this Code subject to the requirements of and requisite 
authorization from the Central Bank.] 
“ARTICLE 
100. 
[Definition, Classification and Functions. 
A 
cooperative bank is one organized by and the majority shares of which is 
owned and controlled by cooperatives primarily to provide financial and 
credit services to cooperatives. The term “cooperative bank” shall include 
cooperative rural banks. 
“A cooperative bank may perform the following functions: 
(I) To carry on banking and credit services for the cooperative; 
(2) To receive financial aid or loans from the Government and the 
Central Bank of the Philippines for and in behalf 
of the 
cooperative banks and primary cooperatives and their 
federations engaged in business and to supervise the lending 
and collection of loans 
(3) To mobilize the savings of its members for the benefit of the 
cooperative movement; 
(4) To act as the balancing medium for the surplus funds of 
cooperatives and their federations; 
(5) To discount bills and promissory notes issued and drawn by 
cooperatives;. 
(6) To issue negotiable instruments to facilitate the activities of 
cooperative; 
(7) To issue debentures subject to the approval of and under 
conditions 
and 
guarantees 
to 
be 
prescribed 
by the 
Govern men t ; 
(8) To borrow money from banks and other financial institutions 
within the limit to be prescribed by the Central Bank; and 
(9) To carry out all other functions as may be prescribed by the 
Authority: 
Provided, That the performance of any banking 


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function shall be subject to prior approval by the Central Bank 
of the Philippines.] 
DECLARATION OF POLlCY 
- 
IN ADDITION TO THE 
DECLARATION OF POLICIES STATED UNDER ARTICLE 2 OF THIS 
CODE, IT IS HEREBY DECLARED THE POLICY OF THE STATE TO: 
(A) RECOGNIZE 
COOPERATIVE 
BANKS AS 
EFFECTIVE 
VEHICLES FOR BROADENING PARTICIPATION IN ECONOMIC 
DEVELOPMENT, ESPECIALLY AMONG THE POOR, 
THEREBY 
HARNESSING 
THEIR 
POTENTIAL 
FOR 
PRODUCTIVITY 
AND 
EFFICIENCY 
AND 
ACHIEVING ECONOMIC 
GROWTH WITH 
SOCIAL JUSTICE; 
(B)ENCOURAGE 
AND 
ASSIST 
THE 
GROWTH 
AND 
DEVELOPMENT OF COOPERATIVE BANKS IN ORDER TO MEET 
THE REQUIREMENTS OF CAPITAL, 
CREDIT AND 
CREDIT 
FACILITIES PRIMARILY 
FOR THE COOPERATIVES AND THEIR 
MEMBERS; 
(C) ENCOURAGE THRIFT AND SAVINGS MOBILIZATION FOR 
THE ACHIEVEMENT OF SUSTAINABLE ECONOMIC DEVELOPMENT, 
EQUITY 
AND 
SOCIAL 
JUSTICE 
PRIMARILY 
AMONG 
COOPERATIVES AND THEIR MEMBERS; AND 
(D) REGULATE 
AND 
SUPERVISE 
THE 
ACTIVITIES 
OF 
COOPERATIVE BANKS IN ORDER TO ACHIEVE SOUND, STABLE 
AND EFFICIENT OPERATIONS FOR THE PROTECTION OF THE 
PUBLIC INTEREST. 
Article 'l01. 
[Regisfrafion Requiremenfs - No entity 
shall be 
registered by the Cooperative Development Authority as a cooperative 
bank unless the articles of cooperation and by-laws thereof as well as 
its establishment and operation as a cooperative bank have been 
approved by the Central Bank of the Philippines and it satisfies all 


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requirements for registration as a cooperative] DEFINITION OF TERMS 
- 
THE FOLLOWING 
DEFINITIONS SHALL APPLY WITHIN THIS 
CHAPTER: 
(A)“COOPERATIVE BANK” 
SHALL REFER TO A BANK 
ORGANIZED UNDER THIS CODE, 
THE MAJORITY 
SHARES OF 
WHICH ARE OWNED AND CONTROLLED BY COOPERATIVE 
ORGANIZATIONS, THE PURPOSE OF WHICH IS PRIMARILY TO 
PROVIDE FINANCIAL AND CREDIT SERVICES TO COOPERATIVES 
AND THEIR MEMBERS. IT SHALL ALSO INCLUDE COOPERATIVE 
RURAL BANKS; 
(B)”BANGKO SENTRAL” SHALL 
REFER TO THE BANGKO 
CREATED UNDER REPUBLIC ACT 
SENTRAL NG PILIPINAS (BSP) 
NO 7653; 
(C) “MONETARY BOARD” SHALL REFER TO THE MONETARY 
BOARD OF THE BANGKO SENTRAL NG PILIPINAS; 
(D) “COOPERATIVE ORGANIZATION” SHALL REFER TO ANY 
COOPERATIVE, WHETHER PRIMARY, SECONDARY OR TERTIARY, 
REGISTERED UNDER THE PROVISIONS OF THIS CODE AND WITH 
THE COOPERATIVE DEVELOPMENT AUTHORITY; 
(E) “COOPERATIVE DEVELOPMENT AUTHORITY” 
SHALL 
REFER TO 
THE AGENCY OF GOVERNMENT MANDATED TO 
REGULATE AND SUPERVISE COOPERATIVES, CREATED UNDER 
REPUBLIC ACT NO 6939. 
ARTICLE 102. [ Membership - 
Membership in a cooperative 
bank shall include only cooperatives and federation of cooperatives.] 
ORGANIZATION, 
MEMBERSHIP 
AND 
ESTABLISHMENT 
OF 
CO 0 PERA TI VE BANKS 
“SECTION 
1. 
ORGANIZATION. 
- 
COOPERATIVE 
ORGANIZATIONS DULY ESTABLISHED AND REGISTERED UNDER 


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THIS CODE MAY 
ORGANIZE A COOPERATIVE BANK, 
WHICH 
SHALL 
LIKEWISE 
BE 
CONSIDERED 
A 
COOPERATIVE 
REGISTERABLE UNDER THE PROVISIONS OF THIS 
CODE 
SUBJECT 
TO 
THE 
REQUIREMENTS 
AND 
REQUISITE 
AUTHORIZATION FROM THE BANGKO SENTRAL. 
SECTION 2. 
MEMBERSHIP. - 
MEMBERSHIP 
IN A 
COOPERATIVE BANK MAY BE DIVIDED INTO REGULAR AND 
ASSOCIATE MEMBERS. REGULAR MEMBERSHlP SHALL BE OPEN 
ONLY TO COOPERATIVE ORGANIZATIONS WHICH ARE HOLDERS 
OF COMMON SHARES OF THE BANK. 
“ASSOCIATE MEMBERS ARE THOSE SUBSCRIBING AND 
HOLDING PREFERRED SHARES OF THE BANK, 
WHICH MAY 
INCLUDE BUT ARE NOT LIMITED TO THE FOLLOWING: 
(A) NON-COOPERATIVE ORGANIZATIONS OR ASSOCIATIONS 
(B) INDIVIDUAL 
MEMBERS 
OF 
THE 
BANK’S 
MEMBER- 
PRIMARY COOPERATIVES; 
(C) LOCAL GOVERNMENT UNITS; AND 
(D) GOVERNMENT AGENCIES AND GOVERNMENT-OWNED 
OR CONTROLLED FINANCIAL INSTITUTIONS. 
“SAMAHANG 
NAYONS AND MUNICIPAL 
KATIPUNANS NG 
MGA SAMAHANG NAYONS (MKSNs) 
WHICH HELD COMMON 
STOCKS OF COOPERATIVE BANKS PRIOR TO THE EFFECTIVITY 
OF THIS ACT SHALL APPLY FOR CONVERSION TO FULL-FLEDGED 
COOPERATIVES 
IN ORDER TO MAINTAIN THEIR STATUS AS 
REGULAR MEMBERS 
OF COOPERATIVE BANKS; 
PROVIDED, 
THAT THEY SHALL NOTIFY THE COOPERATIVE BANK CONCERNED 
OF THEIR INTENTION TO CONVERT WITHIN A PERIOD OF NINETY 
(90) DAYS FROM TH,E EFFECTIVITY OF THIS ACT. SAMAHANG 
NAYONS AND MKSNs ARE HEREBY GIVEN A PERIOD OF ONE (I) 


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YEAR FROM THE EFFECTIVITY OF THIS ACT TO COMPLETE THEIR 
CONVERSION TO COOPERATIVES. COOPERATIVE BANKS SHALL 
EXERT REASONABLE EFFORTS TO INFORM THEIR MEMBER 
SAMAHANG NAYONS AND MKSNs ABOUT THE REQUIREMENTS 
SET IN THIS PARAGRAPH. UPON THE FAILURE OF SAMAHANG 
NAYONS OR MKSNs 
TO FINALLY CONVERT OR TO GIVE THE 
NOTICE OF CONVERSION WITHIN THE PRESCRIBED PERIODS, 
THE COOPERATIVE BANK CONCERNED 
MAY CONVERT THE 
COMMON 
STOCKS 
HELD 
BY 
SUCH 
ASSOCIATIONS 
TO 
PREFERREDSHARES. 
“SECTION 3 - ESTABLISHMENT OF COOPERATIVE BANKS - 
THE ARTICLES OF COOPERATION AND BY-LAWS OF ANY 
COOPERATIVE BANK, OR ANY AMENDMENT THERETO, SHALL BE 
REGISTERED ONLY WHEN ACCOMPANIED BY A CERTIFICATE OF 
AUTHORITY ISSUED BY THE MONETARY BOARD, 
UNDER ITS 
OFFICIAL SEAL. SUCH CERTIFICATE SHALL BE ISSUED IF THE 
MONETARY BOARD IS SATISFIED 
FROM THE EVIDENCE 
SUBMITTED TO IT THAT: 
(A) 
ALL THE REQUIREMENTS OF 
EXISTING LAWS AND REGULATIONS TO ENGAGE IN BUSINESS 
FOR WHICH THE APPLICANT IS PROPOSED TO BE REGISTERED 
HAVE BEEN COMPLIED WITH; (B) 
PUBLIC INTEREST AND 
ECONOMIC CONDITIONS, BOTH GENERAL AND LOCAL, JUSTIFY 
THE AUTHORIZATION ; AND (C ) THE AMOUNT OF CAPITAL, THE 
FINANCING ORGANIZATION, 
DIRECTION AND ADMINISTRATION, 
AS WELL AS THE INTEGRITY AND RESPONSIBILITY OF THE 
ORGANIZERS AND ADMINISTRATORS REASONABLY ASSURE THE 
SAFETY OF THE INTEREST WHICH THE PUBLIC MAY ENTRUST TO 
THEM. 
I 


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“ARTICLE 103. 
[Board of Directors. 1 ADM/N/STRAT/ON OF 
COOPERA TlVE BANKS. 
“SECTION 1. BANK MANAGEMENT. IN ORDER TO MAINTAIN 
THE QUALITY 
OF BANK MANAGEMENT AND ACCORD BETTER 
PROTECTION TO DEPOSITORS AND THE PUBLIC IN GENERAL, 
THE MONETARY BOARD MAY 
PASS UPON AND REVIEW THE 
QUALIFICATIONS 
OF 
PERSONS 
WHO 
ARE 
ELECTED 
OR 
APPOINTED BANK DIRECTORS AND OFFICERS, AND DISQUALIFY 
THOSE UNFIT. THE MONETARY BOARD SHALL PRESCRIBE THE 
QUALIFICATIONS OF BANK DIRECTORS AND OFFICERS FOR 
PURPOSES OF THIS SECTION, GIVING DUE RECOGNITION TO THE 
UNIQUE 
COOPERATIVE 
NATURE 
AND 
CHARACTER 
OF 
COOPERATIVE BANKS. 
“SECTION 2. Board of Directors - The number, composition, and 
voting rights of the Board of Directors shall be defined in the articles of 
cooperation and by-laws of the cooperative bank, 
notwithstanding 
provisions of this Code to the contrary. 
“EX-OFFICIO MEMBERSHIP IN THE BOARD OF DIRECTORS 
OF A COOPERATIVE BANK SHALL BE SUBJECT TO THE APPROVAL 
OF THE BANK’S BOARD OF DIRECTORS. 
“ARTICLE 104. [Loans - Cooperatives may obtain loans from a 
cooperative bank. 
Loans granted by a cooperative bank shall be 
reported to the Central Bank of the Philippines] POWERS, FUNCT/ONS 
AND ALLIED UNDERTAKINGS OF COOPERATIVE BANKS. 
“SECTION I. 
POWERS AND FUNCTIONS -- 
COOPERATIVE 
BANKS SHALL PRIMARILY PROVIDE FINANCIAL, BANKING AND 
CREDIT SERVICES TO COOPERATIVE ORGANIZATIONS AND THEIR 
MEMBERS. 


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“IN ADDITION TO THE POWERS GRANTED BY THIS CODE 
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AND OTHER EXISTING LAWS, ANY COOPERATIVE BANK MAY: 
(A) ACCEPT SAVINGS AND TIME DEPOSITS; 
(B)MOBlLlZE 
SAVINGS 
FOR 
THE 
BENEFIT 
OF 
THE 
COOPERATIVE MOVEMENT; 
(C)RECElVE 
FINANCIAL AID 
OR 
LOANS 
FROM 
THE 
GOVERNMENT AND THE BANGKO SENTRAL FOR AND IN BEHALF 
PRIMARILY OF THE COOPERATIVE BANKS AND COOPERATIVE 
ORGANIZATIONS ENGAGED IN BUSINESS AND SUPERVISE THE 
LENDING AND COLLECTION OF LOANS; 
(D)ACT AS A BALANCING MEDIUM FOR THE SURPLUS 
FUNDS OF COOPERATIVE ORGANIZATIONS; 
(E) ISSUE NEGOTIABLE INSTRUMENTS TO FACILITATE THE 
ACTIVITIES OF COOPERATIVE ORGANIZATIONS; 
(F)lSSUE DEBENTURES SUBJECT TO THE APPROVAL OF 
AND UNDER CONDITIONS AND GUARANTEES TO BE PRESCRIBED 
BY THE GOVERNMENT; 
(G) BORROW MONEY FROM BANKS AND OTHER FINANCIAL 
INSTITUTIONS WITHIN THE LIMIT TO BE PRESCRIBED BY THE 
BANGKO SENTRAL; 
(H) OPEN 
CURRENT 
AND 
CHECKING 
ACCOUNTS; 
PROVIDED, THAT THE COOPERATIVE BANK HAS NET ASSETS OF 
AT LEAST FIVE MILLION PESOS (P5,QOO,QQO), SUBJECT TO SUCH 
GUIDELINES AS MAY BE ESTABLISHED BY THE MONETARY 
BOARD; 
AND SHALL BE ALLOWED TO DIRECTLY CLEAR ITS 
DEMAND DEPOSIT OPERATIONS WITH THE BANGKO SENTRAL 
AND/OR THE PHILIPPINE CLEARING HOUSE CORPORATION; 
(I) ACT AS CORRESPONDENT 
FOR OTHER FINANCIAL 
INSTITUTIONS; 


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(J) ACT 
AS 
COLLECTION AGENT 
FOR 
GOVERNMENT 
ENTITIES, INCLUDING BUT NOT LIMITED TO THE BUREAU OF 
INTERNAL REVENUE, THE SOCIAL SECURITY SYSTEM AND THE 
BUREAU OF CUSTOMS; 
(K) 
ACT AS OFFICIAL DEPOSITORY OF NATIONAL AGENCIES, 
AND OF MUNICIPAL, CITY OR PROVINCIAL GOVERNMENT UNITS 
IN THE MUNICIPALITY, 
CITY OR PROVINCE WHERE THE 
COOPERATIVE 
BANK 
IS 
LOCATED, 
SUBJECT 
TO 
SUCH 
GUIDELINES AS MAY BE ESTABLISHED 
BY THE MONETARY 
BOARD; 
(L) DISCOUNT AND REDISCOUNT PAPER WITH PRIVATE OR 
GOVERNMENT FINANCIAL INSTITUTIONS; 
(M) ISSUE 
MORTGAGE 
AND 
CHATTEL 
MORTGAGE 
CERTIFICATES, BUY AND SELL THEM FOR ITS OWN ACCOUNT OR 
FOR THE ACCOUNT OF OTHERS, OR ACCEPT OR RECEIVE THEM 
IN PAYMENT FOR OR AMORTIZATION OF ITS LOAN; 
(N) PURCHASE, HOLD AND CONVEY REAL ESTATE UNDER 
THE SAME CONDITIONS AS THOSE GOVERNING COMMERCIAL 
BANKS AS SPECIFIED UNDER SECTION 25 OF REPUBLIC ACT NO 
337, AS AMENDED; 
(0) ENGAGE IN QUASI-BANKING AND MONEY MARKET 
0 P E RAT1 0 NS ; 
(P) OPEN LETTERS OF CREDIT AND BANK DRAFTS; 
(Q) EXTEND 
CREDIT 
FACILITIES 
TO 
PRIVATE 
AND 
GOVERNMENT EMPLOYEES; PROVID€D, THAT IN THE CASE OF 
A BORROWER WHO IS A PERMANENT EMPLOYEE OR WAGE 
EARNER, THE TREASURER, CASHIER OR PAYMASTER OF THE 
OFFICE EMPLOYING HIM IS AUTHORIZED, 
NOTWITHSTANDING 
THE 
PROVISIONS OF ANY 
EXJSTJNG 
LAW, 
RULES 
OR 


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REGULATIONS TO THE CONTRARY, 
TO MAKE DEDUCTIONS 
FROM HIS SALARY, WAGE OR INCOME PURSUANT TO THE TERMS 
OF HIS LOAN, TO REMIT DEDUCTIONS TO THE COOPERATIVE 
BANK CONCERNED, 
AND COLLECT SUCH REASONABLE FEES 
FOR HIS SERVICES; 
(R) EXTEND CREDIT AGAINST THE SECURITY OF JEWELRY, 
PRECIOUS STONES AND ARTICLES 
OF 
SIMILAR 
NATURE, 
SUBJECT 
TO 
SUCH 
RULES AND 
REGULATIONS 
AS 
THE 
MONETARY BOARD MAY PRESCRIBE; 
(S) OFFER OTHER BANKING SERVICES AS 
PROVIDED 
UNDER SUBSECTIONS (H), (J), 
(K), 
(M), 
AND (0) OF THIS 
SECTION ONLY UPON PRIOR APPROVAL OF THE MONETARY 
BOARD. 
“NOTHING IN THIS SECTION §HALL BE CONSTRUED AS 
PRECLUDING A COOPERATIVE BANK FROM PERFORMING WITH 
PRIOR APPROVAL OF THE MONETARY BOARD, 
COMMERCIAL 
BANKING SERVICES OR FROM OPERATING UNDER AN EXPANDED 
BANKING AUTHORITY 
OR FROM EXERCISING, 
WHENEVER 
APPLICABLE AND NOT INCONSISTENT WITH THE PROVISIONS OF 
THIS ACT AND BANGKO SENTRAL REGULATIONS, SUCH OTHER 
POWERS INCIDENT TO A CORPORTAJION. 
“SECTION 2. 
INVESTMENTS IN ALLIED UNDERTAKINGS - 
SUBJECT TO SUCH GUIDELINES AS MAY BE ESTABLISHED BY THE 
MONETARY BOARD, 
COOPERATIVE BANKS MAY INVEST IN 
EQUITIES OF ALLLIED 
UNDERTAKINGS 
AS HEREINAFTER 
ENUMERATED, PROVIDED THAT (A) THE TOTAL INVESTMENT IN 
EQUITIES SHALL NOT EXCEED TWENTY FIVE PER CENTUM (25%) 
OF THE NET WORTH OF THE COOPERATIVE BANK; 
(B) THE 
EQUITY INVESTMENT IN ANY SINGLE ENTERPRISE SHALL BE 


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LIMITED TO FIFTEEN PER CENTUM (15%) OF THE NET WORTH OF 
THE COOPERATIVE BANK; AND (C ) THE EQUITY INVESTMENT IN 
OTHER BANKS SHALL BE SUBJECT TO THE SAME PROVISIONS 
GOVERNING SIMILAR INVESTMENTS OF COMMERCIAL BANKS AND 
SHALL BE DEDUCTED FROM THE INVESTING BANK’S NET WORTH 
FOR THE PURPOSE OF COMPUTING THE PRESCRIBED RATIO AS 
PROVIDED IN SECTION 2 ARTICLE 106 
HEREOF; 
PROVDED 
FURTHER, 
THAT 
EQUITY INVESTMENTS SHALL NOT BE 
PERMITTED IN NON-RELATED ACTIVITIES. 
WHERE THE ALLIED 
ACTIVITY IS A WHOLLY OR MAJORITY-OWNED SUBSIDIARY OF 
THE COOPERATIVE BANK, THE BANGKO SENTRAL MAY SUBJECT 
IT TO EXAMINATION. 
“INVESTMENT IN ALLIED UNDERTAKINGS SHALL INCLUDE 
ENGAGING IN THE FOLLOWING ACTIVITIES: 
(A) BANKING AND FINANCING; 
(B) WAREHOUSING AND OTHER POST-HARVEST ACTIVITIES; 
(C) FERTILIZER 
AND 
AGRICULTURAL 
CHEMICAL 
AND 
PESTICIDE DISTRIBUTION; 
(D) FARM EQUIPMENT DISTRIBUTION; 
(E) TRUCKING AND TRANSPORTATION OF AGRICULTURAL 
PRODUCTS; 
(F) MARKETING OF AGRICULTURAL PRODUCTS; 
(G) LEASING; AND 
(13) OTHER UNDERTAKINGS AS MAY BE DETERMINED BY 
THE MONETARY BOARD. 
“SECTION 3. 
LIM/TAT/ONS ON LENDING AUTHORITY -- 
COOPERATIVE 
ORGANIZATIONS, THEIR MEMBERS, AND THE 
BANK’S DEPOSITORS MAY OBTAIN LOANS FROM A COOPERATIVE 


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BANK, SUBJECT TO SUCH LIMITATIONS AS MAY BE PROVIDED 
FOR BY THE BANGKO SENTRAL. 
“EXCEPT AS THE MONETARY BOARD MAY OTHERWISE 
PRESCRIBE, 
THE DIRECT 
INDEBTEDNESS TO COOPERATIVE 
BANKS 
OF 
ANY 
PERSON 
OR 
ASSOCIATION, 
EXCEPT 
COOPERATIVE ORGANIZATIONS, 
FOR MONEY BORROWED, 
EXCLUDING: 
(A) 
LOANS SECURED BY OBLIGATIONS OF THE 
BANGKO SENTRAL; 
(6) LOANS FULLY GUARANTEED BY THE 
GOVERNMENT AS TO THE PAYMENT OF PRINCIPAL AND 
INTEREST; (C ) LOANS TO THE EXTENT COVERED BY THE HOLD- 
OUT ON, OR ASSIGNMENT OF DEPOSITS MAINTAINED IN THE 
PHILIPPINES; (D) LOANS TO COOPERATIVE ORGANIZATIONS OR 
THEIR 
MEMBERS 
FROM 
FUNDS 
PASSED 
THROUGH 
THE 
COOPERATIVE BANK 
AS A CONDUIT IN ANY PRIVATE OR 
GOVERNMENT LENDING PROGRAM; AND (E) OTHER LOANS OR 
CREDITS AS THE MONETARY BOARD MAY, FROM TIME TO TIME, 
SPECIFY AS NON-RISK ASSETS, SHALL AT NO TIME EXCEED 
FIFTEEN PER CENTUM (15%) OF THE UNIMPAIRED CAPITAL AND 
SURPLUS OF THE COOPERATIVE BANK. 
i
i
~
~
THE PROVISIONS OF THE :PRECEDING 
PARAGRAPH AND SUBJECT TO SUCH REGULATIONS THAT THE 
MONETARY BOARD MAY PRESCRIBE, THE TOTAL INDEBTEDNESS 
OF ANY BORROWER TO THE COOPERATIVE BANK MAY AMOUNT 
TO A FURTHER 
FIFTEEN PER CENTUM (15%) 
OF THE 
UNIMPAIRED CAPITAL AND SURPLUS OF SUCH BANK; PROVlDED 
THAT THE ADDITIONAL INDEBTEDNESS IS FOR THE PURPOSE 
OF FINANCING A SUBDlVlDlON 
OR HOUSING DEVELOPMENT, 
MEDIUM-INCOME 
OR 
LOW-INCOME 
BORROWERS, 
OR 
AGRICULTURE, ON A FULLY SECURED BASIS. 


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“THE MONETARY BOARD MAY REGULATE THE AMOUNT OF 
CREDIT ACCOMMODATIONS THAT MAY BE EXTENDED, DIRECTLY 
OR INDIRECTLY, BY COOPERATIVE BANKS TO THEIR DIRECTORS, 
OFFICERS OR SHAREHOLDERS. HOWEVER, THE OUTSTANDING 
CREDIT ACCOMMODATIONS WHICH A COOPERATIVE BANK MAY 
EXTEND TO EACH OF 
ITS 
DIRECTORS, 
OFFICERS OR 
SHAREHOLDERSl 
EXCEPT 
MEMBER 
COOP E RATIVE- 
SHAREHOLDERS, 
SHALL 
BE 
LIMITED 
TO 
AN 
AMOUNT 
EQUIVALENT TO THE RESPECTIVE 
OUTSTANDING DEPOSITS 
AND BOOK VALUE OF THEIR PAID-IN CAPITAL CONTRIBUTION IN 
THE BANK. 
“THE MONETARY BOARD MAY PRESCRIBE APPROPRIATE 
CEILINGS 
AND 
CONDITIONS 
ON 
BORROWINGS 
OF 
A 
COOPERATIVE ORGANIZATION FROM A COOPERATJVE BANK. 
“ARTICLE 105. SUPERVISION OF COOPERAT/V€ BANKS. 
“SECTION 1. Supervision - The cooperative banks registered 
under this Code shall be under the supervision of the [ Central Bank ] 
BANGKO SENTRAL, THROUGH THE MONETARY BOARD, 
upon 
consultation with the [agency] 
COOPERATIVE DEVELOPMENT 
AUTHORITY 
and the NATIONAL FEDERATIONS AND UNIONS OF 
COOPERATIVES, shall formulate ORDERS, INSTRUCTIONS, RULES 
AND REGULATIONS AND guidelines regarding the operations 
and 
banking transactions of cooperative banks. [These] SUCH ORDERS, 
INSTRUCTIONS RULES AND REGULAJJON AND guidelines shall give 
due recognition to the unique cooperative 
nature and character of 
cooperative banks. To this end, cooperative banks may be exempted 
from [Central Bank] 
BANGKO SENTRAL 
rules and regulations, 
applicable to other types of banks, which would impede the cooperative 


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[rural] bank from performing legitimate financial and banking services to 
its members. 
“SECTION 2. 
POWER O f  THf BANGKO SENTRAL OVER 
COOPERATlVf BANKS -- THE BANGKO SENTRAL SHALL HAVE 
THE POWER TO ENFORCE THE LAWS, ORDERS, INSTRUCTIONS, 
RULES AND REGULATIONS PROMULGATED BY THE MONETARY 
BOARD APPLICABLE TO COOPERATIVE BANKS; 
TO 
REQUIRE 
COOPERATIVE BANKS, 
THEIR DIRECTORS, 
OFFICERS AND 
AGENTS TO CONDUCT AND MANAGE THE AFFAIRS OF THE 
COOPERATIVE BANK IN A LAWFUL AND ORDERLY MANNER; AND, 
UPON PROOF THAT THE COOPERATIVE BANK OR ITS BOARD OF 
DIRECTORS OR OFFICERS ARE CONDUCTING AND MANAGING 
THE AFFAIRS OF THE BANK IN A MANNER CONTRARY TO LAWS, 
ORDERS, 
I NSTR U CTI ONS, 
RULES 
AND 
REGULATIONS 
PROMULGATED BY THE MONETARY BOARD OR IN A MANNER 
SUBSTANTIALLY PREJUDICIAL TO THE INTEREST 
OF THE 
GOVERNMENT, 
DEPOSITORS, 
CREDITORS OR THE GENERAL 
PUBLIC, TO APPOINT A CONSERVATOR PURSUANT TO SECTION 
29 OF REPUBLIC ACT NO. 7653 WITHOUT PREJUDICE TO THE 
PROSECUTION 
OF 
PERSONS 
RESPONSIBLE 
FOR 
SUCH 
VIOLATIONS UNDER THE PROVIDIONS OF SECTIONS 36 AND 37 
OF REPUBLIC ACT NO 7653. 
“THE DIRECTOR AND EXAMINERS OF THE DEPARTMENT OF 
THE BANGKO SENTRAL CHARGED WITH THE SUPERVISION OF 
COOPERATIVE 
BANKS ARE 
HEREBY 
AUTHORIZED 
TO 
ADMINISTER OATHS TO ANY DIRECTOR, OFFICER OR EMPLOYEE 
OF ANY COOPERATIVE BANK OR TO ANY VOLUNTARY WITNESS, 
AND TO COMPEL 
THE PRESENTATION OF ALL BOOKS, 
DOCUMENTS, PAPERS OR RECORDS NECESSARY TO ASCERTAIN 


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THE FACTS RELATIVE TO THE TRUE CONDITION OF ANY 
COOPERATIVE BANK OR TO ANY LOAN EXTENDED. 
“ARTICLE 
106. 
CAPITALIZATION 
AND 
CAPITAL 
REQUIREMENTS OF COOPERATIVE BANKS -- 
“SECTION I .  Capitalization. -- (I) 
A national cooperative bank 
shall have a minimum authorized share capital of two hundred million 
pesos (P200,000,000) in relation to Article 14 (5). 
The authorized 
share capital shall be divided into such number of shares 
with a 
minimum par value of one thousand pesos (P1,OOO) per share. For the 
purpose primarily of determining the permanency of equity, the types of 
shares a cooperative bank may issue, including the terms thereof and 
the rights appurtenant thereto, 
shall be subject to such rules and 
regulations as the [Central Bank] BANGKO SENTRAL may prescribe. 
“(2) A local cooperative bank shall have a minimum authorized 
share capital of twenty million pesos (P20,000,000) divided into such 
number of shares with a minimum par value of one hundred pesos 
(PI 00) per share. 
“(3) 
THE LAND BANK OF THE PHILIPPINES (LBP) 
SHALL 
SUBSCRIBE TO AT LEAST TWENTY PERCENTUM (20%) OF THE 
PREFERRED SHARES OF A COOPERATIVE BANK. 
OTHER 
GOVERNMENT-OWNED 
AND 
CONTROLLED 
FINANCIAL 
INSTITUTIONS AS WELL AS PRIVATE COMMERCIAL BANKS MAY 
ALSO 
SUBSCRIBE 
TO THE PREFERRED SHARES 
OF A 
COOPERATIVE BANK. HOWEVER, SUCH SUBSCRIPTIONS OF THE 
LBP, OTHER GOVERNMENT-OWNED AND CONTROLLED FINANCIAL 
INSTITUTIONS AND PRIVATE COMMERCIAL 
BANKS SHALL BE 
SUBJECT 
TO THE APPROVAL OF THE BANK’S 
BOARD OF 
DIRECTORS. SUCH CAPITAL INFUSION SHALL BE CONSIDERED 
AS PARTIAL COMPLIANCE BY THE GOVERNMENT-OWNED AND 


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CONTROLLED 
FINANCIAL 
INSTITUTIONS AND 
COMMERCIAL 
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BANKS CONCERNED. WITH THE PROVISIONS OF PRESIDENTIAL 
DECREE NO. 717, OTHERWISE KNOWN AS THE AGRI-AGRA LAW. 
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THE SHARES HELD BY GOVERNMENT FINANCIAL INSTITUTIONS 
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AND PRIVATE COMMERCIAL BANKS SHALL BE PAID OFF AT PAR 
AND RETIRED IN WHOLE OR IN PART WHEN THE COOPERATIVE 
BANK HAS ACQUIRED ENOUGH CAPITAL STRENGTH TO PERMIT 
RETIREMENT OF SUCH SHARES. 
“(4) THE AGRICULTURAL CREDIT POLICY COUNCIL (ACPC) 
THROUGH ITS EXECUTIVE DIRECTOR, 
THE COOPERATIVE 
DEVELOPMENT AUTHORITY (CDA), 
THROUGH ITS BOARD OF 
AD MI N ISTRATORS , 
AND OTHER GOVERNMENT-OWNED OR 
CONTROLLED NON-FINANCIAL INSTITUTIONS WITH LOANING AND 
DEVELOPMENT FUNCTIONS AND PROGRAMS, 
THROUGH THEIR 
APPROPRIATE AUTHORITIES, MAY UTILIZE FUNDS SUCH AS THE 
COMPREHENSIVE 
AGRICULTURAL 
LOAN FUND (CALF) THE 
COOPERATIVE 
DEVELOPMENT 
LOAN 
FUND 
(CDLF), 
THE 
COOPERATIVE MARKETING PROJECT FUND (CMPF) AND OTHER 
FUNDS EXISTING OR HEREINAFTER CREATED UNDER THEIR 
RESPECTIVE 
ADMINISTRATIONS TO SUBSCRIBE 
TO THE 
PREFERRED SHARES OF A COOPERATIVE BANK THROUGH THE 
CONVERSION OF THE LfABlLlTlES O f  THE BANK DUE TO THESE 
INSTITUTIONS INTO PREFERRED SHARES 
AND/OR 
FRESH 
CAPITAL INFUSION SUBJECT TO MUTUAL AGREEMENT OF THE 
PARTIES; PROVIDED THAT SUCH PREFERRED SHARES HELD BY 
SUCH NON-FINANCIAL 
INSTITUTIONS SHALL BE RETIRED 
IN 
WHOLE OR IN PART AT BOOK VALUE WHEN THE COOPERATIVE 
BANK HAS ACQUIRED ENOUGH CAPITAL STRENGTH TO PERMIT 
THE RETIREMENT OF SUCH SHARES; PROVIDED, FURTHER, THAT 


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THE ACPC, THE CDA AND THE OTHER GOVERNMENT-OWNED 
AND CONTROLLED NON-FINANCIAL INSTITUTIONS MAY UTILIZE 
EARNINGS DERIVED FROM SUCH BASIC SOURCE FUNDS SUCH 
AS CALF, CDLF, CMPF AND OTHER FUNDS CREATED UNDER 
THEIR ADMINISTRATION 
FOR INSTITUTION-BUILDING, 
CREDIT 
AND CREDIT-RELATED PROGRAMS AND ACTIVITIES. 
“SECTION 2. 
COMBINED CAPITAL ACCOUNTS - THE 
COMBINED CAPITAL ACCOUNTS OF EACH COOPERATIVE BANK 
SHALL NOT BE LESS THAN AN AMOUNT EQUAL TO TEN 
PERCENTUM (10%) OF ITS RISK ASSETS, WHICH IS DEFINED AS 
ITS TOTAL ASSETS MINUS THE FOLLOWING ASSETS: 
(A) CASH ON HAND; 
(B) AMOUNTS FROM THE BANGKO SENTRAL; 
(C)EVlDENCES OF INDEBTEDNESS OF THE REPUBLIC OF 
THE PHILIPPINES, AND OF THE BANGKO SENTRAL, AND ANY 
OTHER EVIDENCES OF INDEBTEDNESS OR OBLIGATIONS THE 
SERVICING 
AND 
REPAYMENT 
OF 
WHICH 
ARE 
FULLY 
GUARANTEED BY THE REPUBLIC OF THE PHILIPPINES; 
(D) LOANS TO THE EXTENT COVERED BY HOLD-OUT ON, OR 
ASSIGNMENT OF DEPOSITS MAINTAINED IN, THE LENDING BANK 
AND HELD IN THE PHILIPPINES; AND 
(E)OTHER NON-RISK ITEMS AS THE MONETARY BOARD 
MAY FROM TIME TO TIME, AUTHORIZE TO BE DEDUCTED FROM 
TOTAL ASSETS. 
“THE MONETARY BOARD SHALL PRESCRIBE THE MANNER 
OF DETERMINING THE TOTAL ASSETS OF COOPERATIVE BANKS 
FOR PURPOSES FO THIS SECTION. 
“WHENEVER THE CAPITAL ACCOUNTS OF A COOPERATIVE 
BANK ARE DEFICIENT WITH RESPECT TO THE REQUIREMENTS OF 


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THE PRECEDING PARAGRAPH, THE MONETARY BOARD, AFTER 
CONSIDERING THE REPORT OF THE APPROPRIATE SUPERVISING 
DEPARTMENT 
ON 
THE 
STATE 
OF 
SOLVENCY 
OF 
THE 
INSTITUTION, SHALL LIMIT OR PROHIBIT THE DISTRIBUTION OF 
NET PROFITS AND SHALL REQUIRE THAT PART OR ALL OF THE 
NET PROFITS BE USED TO INCREASE THE CAPITAL ACCOUNTS 
OF THE INSTITUTION UNTIL THE MINIMUM REQUIREMENT HAS 
BEEN MET. THE MONETARY BOARD MAY, AFTER CONSIDERING 
THE AFORESAID REPORT OF THE APPROPRIATE SUPERVISING 
DEPARTMENT 
AND IF THE AMOUNT OF THE DEFICIENCY 
JUSTIFIES IT, 
RESTRICT OR PROHIBIT THE MAKING OF NEW 
INVESTMENT OF ANY SORT BY THE BANK, WITH THE EXCEPTION 
OF PURCHASES OF EVIDENCES OF INDEBTEDNESS INCLUDED 
UNDER SUBSECTION (C ) OF THIS SECTION UNTIL THE MINIMUM 
REQUIRED CAPITAL RATIO HAS BEEN RESTORED. 
“WHEN IN THE PROCESS OF A BANK MERGER OR 
CONSOLIDATION, THE MERGED OR CONSTITUENT 
BANK MAY 
NOT BE ABLE TO COMPLY FULLY WITH THE NET WORTH TO RISK 
ASSET RATIO HEREIN 
PRESCRIBED, THE MONETARY BOARD 
MAY, AT ITS DISCRETION TEMPORARILY 
RELIEVE THE BANK 
FROM FULL COMPLIANCE WITH THIS REQUIREMENT UNDER SUCH 
CONDITIONS IT MAY PRESCRIBE. 
“ARTICLE 107. [Distribution of net surplus -- The provisions of 
this Code on the allocation of net surplus shall apply.] PROHlBlT€D 
ACTS -- WITHOUT PREJUDICE TO ANY PROSECUTION UNDER ANY 
LAW WHICH MAY HAVE BEEN VIOLATED, A FINE OF NOT MORE 
THAN TEN THOUSAND PESOS (P10,OOO) OF IMPRISONMENT OF 
NOT LESS THAN SIX (6) MONTHS BUT NOT MORE THAN TEN ( I O )  


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THE PURPOSE OF OBTAINING, RENEWING, OR INCREASING A 
LOAN OR EXTENDING THE PERIOD THEREOF; OR 
4) ATTEMPT TO DEFRAUD THE COOPERATIVE BANK IN THE 
EVENT OF COURT ACTION TO RECOVER THE LOAN; OR 
5) OFFER ANY OFFICER, EMPLOYEE OR AGENT OF THE 
COOPERATIVE BANK A 
GIFT, 
FEE, 
COMMISSION OR OTHER 
FORMS OF COMPENSATION IN ORDER TO INFLUENCE 
SUCH 
BANK PERSONNEL INTO APPROVING A LOAN APPLICATION; OR 
6) DISPOSE OR ENCUMBER THE PROPERTY OFFERED AS 
SECURITY FOR A LOAN; AND 
( C) ANY EXAMINER, OR OTHER OFFICER OR EMPLOYEE OF 
THE BANGKO SENTRAL 
OR OF ANY DEPARTMENT, 
BUREAU, 
OFFICE, BRANCH OR AGENCY OF THE GOVERNMENT WHO IS 
ASSIGNED TO EXAMINE, 
SUPERVISE, 
ASSIST OR RENDER 
TECHNICAL SERVICE TO COOPERATIVE BANKS AND WHO SHALL 
CONNIVE OR AID IN THE COMMISSION OF THE ACTS PROHIBITED 
IN THIS ARTICLE. 
“ANY METROPOLITAN , MUNICIPAL OR MUNICIPAL CIRCUIT 
TRIAL COURT JUDGE OR REGISTER OF DEEDS WHO SHALL 
DEMAND OR ACCEPT, 
DIRECTLY OR INDIRECTLY, ANY GIFT, 
FEE, COMMISSION, OR ANY OTHER FORM OF COMPENSATION IN 
CONNECTION WITH THE SERVICE OR SHALL ARBITRARILLY AND 
WITHOUT REASONABLE CASE DELAY THE ACKNOWLEDGMENT 
OR ADMINISTRATION OF AN OATH OR THE REGISTRATION OF 
DOCUMENTS REQUIRED TO BE PERFORMED BY SAID JUDGE OR 
SAID REGISTER OF DEEDS SHALL BE PUNISHED WITH A FINE OF 
NOT MORE THAN ONE THOUSAND PESOS (P1,OOO) 
OR BY 
IMPRISONMENT OF NOT MORE THAN ONE (1) YEAR, OR BOTH, 
AT THE DISCRETION OF THE COURT. 


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“ANY BANK NOT ORGANIZED AND REGISTERED UNDER THIS 
CODE AND ANY PERSON, 
ASSOCIATION OR CORPORATION 
DOING THE BUSINESS OF BANKING, NOT AUTHORIZED UNDER 
THIS CODE OR EXISTING LAWS, WHICH SHALL USE THE WORDS 
“COOPERATIVE BANK” AS PART OF ITS NAME OR TITLE AS SUCH 
BANK OR SUCH PERSON, 
ASSOCIATION OR CORPORATION, 
SHALL BE PUNISHED 
BY A FINE OF NOT LESS THAN ONE 
HUNDRED PESOS (PIOO) BUT IN NO CASE TO EXCEED THIRTY 
THOUSAND PESOS (P30,OOO) FOR EACH DAY DURING WHICH THE 
SAID WORDS ARE SO USED. 
Article 108. 
Privileges 
- ] 
AND INCENTIVES OF 
COOPERATWE BANKS - 
[Cooperative Banks shall have the following 
privileges subject to the approval of the Central Bank and compliance 
with applicable banking laws, rules and regulations. 
(1) The cooperative banks registered under this Code shall be 
given the same privilege granted to rural banks, private development 
banks, commercial banks and all other banks to rediscount notes with 
the Central Bank, 
the Land Bank of the Philippines and other 
government banks without affecting in any way the provisions of this 
Code; and 
(2) To act as depository of government funds. For this purpose, 
all government departments, agencies and units of the national and local 
government, including govern ment-owned and con trolled corporations 
are hereby authorized to deposit their funds in any cooperative bank.] 
“SECTION I. 
RESERVE REQUlREMENT DlFFERENTIAL - THE 
RESERVE REQUIREMENT IMPOSED ON ANY COOPERATIVE BANK 
BY 
THE 
MONETARY 
BOARD 
SHALL 
ENJOY 
EQUITABLE 
PREFERENTIAL TERMS OVER THOSE IMPOSED ON ANY OTHER 
TYPE OR CLASS OF BANK, 
INCLUDING 
RURAL BANKS AND 


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THRIFT BANKS; PROVlDED THAT THE MONETARY BOARD MAY 
CHANGE SUCH RESERVE DIFFERENTIALS FOR THE PURPOSE OF 
STIMULATING 
ECONOMIC GROWTH IN THE COUNTRYSIDE, 
THEREBY PROMOTING NATIONAL ECONOMIC DEVELOPMENT. 
SECTION 
2. 
LIBERALIZED 
BRANCHlNG 
RULES 
-- 
COOPERATIVE BANKS SHALL HAVE UNRESTRICTED BRANCHING 
RIGHTS FREE FROM ANY STIPULATION, 
ASSESSMENT 
OR 
SURCHARGES REQUIRED IN SETTING UP A BRANCH, BUT IN 
COORDINATION WITH THE BANGKO SENTRAL 
WHICH SHALL 
ASSESS THAT THERE ARE QUALIFIED PERSONNEL, CONTROLS 
AND PROCEDURES TO OPERATE SUCH BRANCH OR BRANCHES. 
“SECTION 3. PUBLICA TlON OF STA TEM.ENT OF CONDITION - 
- SUBJECT TO THE APPROVAL OF THE MONETARY BOARD, A 
COOPERATIVE 
BANK MAY PUBLISH 
ITS STATEMENT OF 
CONDITION IN A NEWSPAPER OF GENERAL CIRCULATION, OR A 
LOCAL NEWSPAPER COVERING ITS AREA OF OPERATIONS, OR 
POST IT IN THE MOST CONSPICUOUS AREA OF ITS PREMISES, 
THE MUNICIPAL BUILDING, 
THE MUNICIPAL 
MARKET, 
THE 
BARANGAY HALL, 
OR THE BARANGAY 
PUBLIC MARKET, 
IF 
THERE BE ANY, WHERE THE COOPERATIVE BANK IS LOCATED. 
“SECTION 
4. 
EXEMPTION 
FROM 
PUBLlCA TlON 
REQUIREMENT 
-- 
THE 
FORECLOSURE 
OR 
MORTGAGES 
COVERING LOANS GRANTED BY A COQPERATIVE BANK AND 
EXECUTIONS 
OF 
JUDGMENTS THEREON 
INVOLVING 
REAL 
PROPERTIES AND LEVIED UPON BY A SHERIFF 
SHALL BE 
EXEMPT FROM PUBLICATION REQUIREMENTS WHERE THE TOTAL 
AMOUNT OF THE LOAN, EXCLUDING INTEREST DUE AND UNPAID, 
DOES NOT EXCEED FIVE HUNDRED THOUSAND PESOS (P500,OOO) 
OR SUCH AMOUNT AS THE MONETARY BOARD MAY PRESCRIBE, 


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AS MAY BE WARRANTED BY 
THE PREVAILING 
ECONOMIC 
CONDITIONS 
AND BY THE NATURE AND CHARACTER OF 
COOPERATIVE BANKS. IT SHALL BE SUFFICIENT PUBLICATION IN 
SUCH CASES IF THE NOTICE OF FORECLOSURE AND EXECUTION 
OF JUDGEMENT ARE POSTED IN CONSPICUOUS AREAS OF THE 
COOPERATIVE BANK’S PREMISES, THE MUNICIPAL HALL, THE 
MUNICIPAL PUBLIC MARKET, 
THE BARANGAY HALL OR THE 
BARANGAY PUBLIC MARKET, IF THERE BE ANY, WHERE THE 
LAND MORTGAGED IS SITUATED, WITHIN A PERIOD OF SIXTY 
(60) DAYS IMMEDIATELY PRECEDING THE PUBLIC AUCTION OR 
THE EXECUTION OF JUDGEMENT. PROOF OF PUBLICATION AS 
REQUIRED HEREIN SHALL BE ACCOMPLISHED BY AN AFFIDAVIT 
OF THE SHERIFF OR OFFICER CONDUCTING THE FORECLOSURE 
SALE OR EXECUTION OF JUDGMENT, AND SHALL BE ATTACHED 
TO THE RECORD OF THE CASE. 
“A 
COOPERATIVE 
BANK 
SHALL 
BE 
ALLOWED 
TO 
FORECLOSE LANDS MORTGAGED TO IT; PROVlDED THAT SAID 
LANDS SHALL BE COVERED UNDER REPUBLIC ACT NO. 6657, AS 
AMENDED. 
“SECTION 
5. 
PRlVlLEGES -- 
IN ADDITION TO THE 
PRIVILEGES GENERALLY GRANTED TO COOPERATIVES UNDER 
THIS CODE, A COOPERATIVE BANK SHALL ALSO BE EXEMPTED 
FROM THE PAYMENT OF ALL TAXES, 
LICENSES, 
FEES AND 
CHARGES OF WHATEVER TYPE, NATURE AND DESCRIPTION, 
WHETHER NATIONAL OR LOCAL, FOR A PERIOD OF TEN YEARS 
FROM THE EFFECTIVITY 
OF THESE AMENDMENTS TO THE 
COOPERATIVE CODE OR FROM THE DATE OF REGISTRATION OF 
A COOPERATIVE BANK WITH THE COOPERATIVE DEVELOPMENT 
AUTHORITY, WHICHEVER COMES LATER. 


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“ARTICLE 109. Assistance to Cooperative Banks 
“SECTION 1. .GENEREAL 
- 
IN ACCORDANCE 
WITH 
EXISTING POLICIES, GOVERNMENT AGENCIES, GOVERNMENT- 
OWNED OR CONTROLLED CORPORATIONS AND FINANCIAL 
I NSTlTUTlONS 
SHALL 
PROVIDE 
ASSISTANCE 
WHETHER 
TECHINICAL OR FINANCIAL OR OTHERWISE, TO COOPERATIVE 
BANKS TO PERMIT THEM TO GROW, DEVELOP AND PERFORM 
THEIR ROLE IN COUNTRYSIDE DEVELOPMENT AND TOWARDS A 
SUSTAINABLE NATIONAL ECONOMIC DEVELOPMENT. 
“SECTION 2. 
GOVERNMENT FUNDlNG - WHENEVER 
NECESSARY AND NOTWITHSTANDING PROVISIONS OF THIS CODE 
TO THE CONTRARY, 
THE BANGKO SENTRAL MAY, UPON 
CONSULTATION WITH THE NATIONAL FEDERATIONS AND UNIONS 
OF COOPERATIVES AND THE CDA, AUTHORIZE THE LAND BANK 
OF THE PHILIPPINES, 
THE DEVELOPMENT BANK OF THE 
PHILIPPINES, AND OTHER GOVERNMENT ORGANIZATIONS AND 
INSTRUMENTALITIES 
TO 
INFUSE 
FRESH 
CAPITAL 
INTO 
COOPERATIVE 
BANKS, 
AND 
TO 
PROVIDE 
FUNDS 
FOR 
COOPERATIVE BANKS AT MINIMAL INTEREST RATES, SUBJECT 
TO SUCH RULES AND REGULATIONS 
THAT THE BANGKO 
SENTRAL MAY PROMULGATE FROM TIME TO TIME. 
“Section 3. 
[Assistance to 
cooperative Banks] DISTRESSED 
COOPERAT/V€ BANKS -- 
Whenever a cooperative bank organized 
under this Code 
is distressed or may need assistance in the 
rehabilitation of its financial condition 
or to avoid bankruptcy, 
the 
Monetary Board of the [Central Bank of the Philippines] BANGKO 
SENTRAL shall designate an official of the [Central Bank] BANGKO 
SENTRAL or a person of recognized competence in banking or finance 


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as [receiver or] conservator of the said bank pursuant to the provisions 
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SECTION 2. 
Any provision of law inconsistent with the provisions of 
of Section 29 of Republic Act No. 7553, as amended.” 
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SECTION 3. If any provision of this Act or the application thereof to 
this Act is hereby repealed, amended or modified accordingly. 
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any person or circumstances is held invalid, the other provisions of this Act 
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and the application of such provisions to other persons and circumstances shall 
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not be affected thereby. 
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SECTION 4. This Act shall take effect fifteen (15) days following its 
I O  publication in at least two (2) newspapers of general circulation. 
Approved,