Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
Second Regular Session

HOUSE BILLNO. _ 5989.

Introduced by Hons. Jose R. Ping-ay and Cresente C. Paez

EXPLANATORY NOTE

‘Taking cognizance of the crucial role played by cooperative banks in the upliftment of
the standard of living of our countrymen especially in the rural areas, it is but fitting and timely
to give the necessary impetus on its banking services and harness its potential as catalyst to
countryside development.

RA 9520 otherwise known as the Philippine Cooperative Code of 2008 already provides
a substantial platform for the coop banking sector to establish its unique niche amidst volatile
financial environment. But for these banks to not only survive but flourish in a highly
competitive environment dominated by big banks, tangible and sustained support from all
government agencies should be brought to bear.

Hence, aside from the already established incentives and privileges accorded to
cooperative banks, this Bill intends to introduce and usher in a new era of cooperative banking.

This Bill seeks to expand its horizon through encouraging bigger capital infusion by
opening up its membership to qualified foreign counterpart cooperative banks, subject to
limitations of laws and statutory restrictions such as the 40% voting capital, real estate
acquisition, etc.

The powers, functions and allied undertakings of the cooperative banks are also
incorporated in this Bill. Likewise, aside from the assistance and support from the on-going
program of the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance
Corporation (PDIC) called the Strengthening Program for Cooperative Banks where Land Bank
of the Philippines (LBP) plays a crucial role in the rehabilitation of cooperative banks, capital
infusion, raising supplemental capital and credit facility infusion from government banks are also
addressed in this Bill.

HON. CRESE!



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
Second Regular Session

a eae
HOUSE BILLNo. 9°89

Introduced by Hons. Jose R. Ping-ay and Cresente C. Paez

AN ACT
AMENDING CHAPTER XII, ON COOPERATIVE BANKS, OF REPUBLIC ACT NO.
9520, OTHERWISE KNOWN AS THE PHILIPPINE COOPERATIVE CODE OF 2008
AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Article 97 of Republic Act No. 9520 is hereby amended with the
insertion of a new paragraph 3, which shall read as follows:

“ART. 97. Organization, Membership and Establishment of Cooperative
Bank.— (1) xxx

Q) xxx

(3) FOREIGN COOPERATIVE ORGANIZATIONS OR EQUIVALENT
COUNTERPARTS IN THEIR COUNTRIES OF ORIGIN DULY
ESTABLISHED AND REGISTERED AS SUCH MAY BECOME AN
ASSOCIATE OR REGULAR MEMBER OF COOPERATIVE BANKS;
PROVIDED, THAT IT SATISFIES THE DEFINITION OF A
COOPERATIVE FOUND IN ARTICLE 3 OF THIS CODE AND THAT IT
SHALL SUBMIT PROOF OF ITS ESTABLISHMENT AND
REGISTRATION AS SUCH FROM THEIR COUNTRY OF ORIGIN.

OWNERSHIP OF QUALIFIED FOREIGN COOPERATIVE
ORGANIZATIONS IN A COOPERATIVE BANK SHALL BE LIMITED
TO A MAXIMUM OF FORTY PERCENT (40%) OF THE VOTING
SHARES OF THE COOPERATIVE BANK.

THE BANGKO SENTRAL NG PILIPINAS (BSP), IN
COORDINATION WITH THE AUTHORITY, SHALL ISSUE RULES AND
REGULATIONS NECESSARY TO IMPLEMENT THIS PROVISION.


(BH) xxx
SEC. 2. Article 102 of the same Act is hereby amended to read as follows:
“ART. 102. Privileges and Incentives of Cooperative Banks. —x x x
() xxx

Q) COOPERATIVE BANKS SHALL BE EXEMPT FROM THE
PAYMENT OF ALL COURT’S AND SHERIFF’S FEES PAYABLE TO
THE PHILIPPINE GOVERNMENT FOR AND IN CONNECTION WITH
ANY AND ALL ACTIONS BROUGHT TO ENFORCE THE PAYMENT
OF OBLIGATIONS CONTRACTED IN FAVOR OF THE BANK. However,
in cases of foreclosure of mortgages covering loans granted by a cooperative
bank, and the execution of judgments thereon involving real properties and
levied upon by a sheriff, it shall be exempt from publication requirement
where the total amount of the loan, excluding interest and other charges due
and unpaid, does not exceed Two hundred fifty thousand pesos (P250,000.00)
or such amount as the BSP may prescribe, as may be warranted by the
prevailing economic conditions and by the nature and character of the
cooperative banks. It shall be sufficient publication in such cases if the notice
of foreclosure and execution of judgment 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 property mortgaged is situated, within a period of sixty (60) days
immediately preceding the public auction or the execution of judgment. 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.

(2)3) xxx
SEC. 3. Article 103 of the same Act is hereby amended to read as follows:
“ART. 103. Assistance to Cooperative Banks. =x x x

ALL BANKING INSTITUTIONS, WHETHER GOVERNMENT OR
PRIVATE, MAY BE ALLOWED TO DEPOSIT TO COOPERATIVE
BANKS AT LEAST TWENTY-FIVE PERCENT (25%) OF THEIR TOTAL
LOANABLE FUNDS FOR AGRICULTURE, FISHERIES AND
AGRARIAN REFORM CREDIT MANDATED BY THE AGRI-AGRA
REFORM CREDIT ACT OF 2000 UNDER REPUBLIC ACT 10000.
SUBJECT TO THE APPROVAL OF THE DEPARTMENT OF
AGRICULTURE, DEPARTMENT OF AGRARIAN REFORM AND BSP,
THEIR DEPOSITS SHALL BE TREATED AS ALTERNATIVE
COMPLIANCE TO THE CREDIT QUOTA REQUIREMENT OF SAID


LAW.

Whenever a cooperative bank organized under this Code is in a state of
continuing inability or unwillingness to maintain a period of liquidity, the BSP
may designate one of its officials or a person of recognized competence,
preferably with experience in cooperative banking and finance, as conservator
of said bank pursuant to the appropriate provisions of existing banking laws.

THE BSP, IN COORDINATION WITH THE AUTHORITY,
DEPARTMENT OF AGRICULTURE AND DEPARTMENT OF
AGRARIAN REFORM, SHALL PROMULGATE THE NECESSARY
RULES AND REGULATIONS TO IMPLEMENT THIS ACT.

SEC. 4. If any section or provision of this Act shall be declared unconstitutional or
invalid, such shall not invalidate any other section of this Act.

SEC. 5. All laws, decrees, orders, rules, regulations, ordinances or parts thereof which
are inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 6. This Act shall take effect fifteen (15) days following its publication in the
Official Gazette or in two (2) national newspapers of general circulation,

Approved.