Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH (19th) CONGRESS 
First Regular Session 
HOUSE BILL NO._______ 
_____________________________________________________________________ 
Introduced by REP. JOSEPH STEPHEN S. PADUANO 
_____________________________________________________________________ 
EXPLANATORY NOTE 
The Philippine government through the Cooperative Development Authority 
(CDA) recognizes1 the significant contribution of the cooperatives sector in promoting 
rapid, inclusive and sustained economic growth in our country.   
In 20202, CDA reported that there are around eighteen (18) thousand 
cooperatives all over the Philippines, with more than eleven (11) million members and 
with a rough total of three hundred sixty four (364,000) thousand generated 
employment in the said year. 
From these statistics, we can immediately view the cooperative sector as one 
potent economic force and it is more than worthy of all the support from the 
government in order to further strengthen this sector. 
On the other hand, cooperative banks are one among other instruments of 
cooperatives in providing financial services and promoting growth among their 
members and the public in general, as such, the House of Representatives 
acknowledged this in 2021, with the intention of further improving the conditions of 
cooperative banking in our country by passing on its third and final reading, House 
Bill (HB) No. 9541 in the 18th Congress, entitled “An Act Providing for the 
Registration, Regulation, and Operation of Cooperative Banks”, with this 
Representation as one of the principal authors on its Third Reading copy.  Although it 
was transmitted to the Senate, it was not enacted into law. 
1 “Cooperatives in the Socio-Economic Development of the Philippines”, Castillo and Castillo, 2017, accessed 
through: https://cda.gov.ph/wp-content/uploads/2021/01/2017-07-21-Paper_Adm_Eloy.pdf 
2 “FY 2020 Cooperative Statistics, CDA, 2021, accessed through:  https://cda.gov.ph/updates/fy-2020-
cooperative-statistics/ 
August 25, 2022
12:41 pm
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The measure intends to harmonize regulations on cooperative banks 
implemented by the Bangko Sentral ng Pilipinas (BSP) and CDA.  This measure also 
seeks to institutionalize incentives and privileges of cooperative banks to further 
encourage its propagation, and above all else, it seeks regulation of cooperative 
banking in our country to provide further protection to such financial institutions and 
to all its stakeholders. 
These considerations motivated this Representation in re-filing this measure 
and hence, seek its eventual approval during the 19th Congress. 
 JOSEPH STEPHEN S. PADUANO 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH (19th) CONGRESS 
First Regular Session 
HOUSE BILL NO._______ 
_____________________________________________________________________ 
Introduced by REP. JOSEPH STEPHEN S. PADUANO 
_____________________________________________________________________ 
AN ACT 
PROVIDING FOR THE REGISTRATION, REGULATION, AND OPERATION OF 
COOPERATIVE BANKS 
Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
Philippines  in Congress  assembled:  
CHAPTER I 
1 
DECLARATION OF POLICY AND DEFINITIONS 
2 
3 
SECTION 1. Title. – This Act shall be known as the “Cooperative Banking Act”. 
4 
5 
6 
SEC.  2. Declaration of Policy. – It is the declared policy of the State to foster the 
7 
creation and growth of cooperatives to promote self-reliance, communal unity and the 
8 
attainment of economic development and social justice. The State shall encourage the private 
9 
sector to undertake the actual formation and organization of cooperatives and shall create an 
10 
atmosphere that is conducive to the growth and development of these cooperatives. Further, it 
11 
is hereby declared the policy of the State to: 
12 
13 
14 
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Recognize Cooperative Banks (CBs) as practical vehicles for the promotion of self-
1 
reliance and economic development and the attainment of social justice; 
2 
 
3 
(a) Encourage thrift and savings mobilization for the achievement of sustainable 
4 
economic development primarily among cooperatives and their members; and 
5 
 
6 
(b) Regulate and supervise the activities of CBs in order to achieve sound, stable, 
7 
sustainable, and efficient operations for the protection of the public interest. 
8 
 
9 
Towards these ends, the government shall encourage and assist in the establishment of 
10 
CBs in order to make credit facilities available and readily accessible on reasonable terms. 
11 
 
12 
 
13 
SEC. 3. Definition of Terms. – As used in this Act,  
14 
 
15 
(a) Cooperative Bank – refers to a bank organized under this Act and under the 
16 
provisions of Republic Act No. 9520, otherwise known as the “Philippine 
17 
Cooperative Code of 2008”, and prior laws, for the primary purpose of providing a 
18 
wide range of financial services to cooperatives and their members and the public, 
19 
and which was issued by the Bangko Sentral ng Pilipinas (BSP) a license to as such, 
20 
the majority shares of which are owned and controlled by the cooperative 
21 
organizations; 
22 
 
23 
(b) Cooperative organization – refers to any cooperative whether primary, secondary, 
24 
tertiary, or a special type of cooperative registered under the provisions of Republic 
25 
Act No. 9520 and Republic Act No. 10744, otherwise known as the “Credit Surety 
26 
Fund Cooperative Act of 2015”; and 
27 
 
28 
(c) Samahang Nayon and Municipal Katipunan ng mga Samahang Nayon – refers to 
29 
pre-cooperative organizations established under Presidential Decree No. 175, on 
30 
“Strengthening the Cooperative Movement”. 
31 
 
32 
 
33 


CHAPTER II 
1 
ORGANIZATION 
2 
 
3 
SEC. 4.  Organization and Membership. – The organization and membership of a CB 
4 
shall be governed by the following: 
5 
 
6 
(a) Organization – At least fifteen (15) cooperative organizations duly established 
7 
and registered under the Cooperative Code may register a CB with the 
8 
Cooperative Development Authority (CDA), upon compliance with the 
9 
requirements of and required authorization from the BSP; 
10 
 
11 
(b) Membership – Membership in a CB shall be open to: 
12 
 
13 
(1) Cooperatives of all types and categories; 
14 
 
15 
(2) Individuals who are members of a cooperative; 
16 
 
17 
(3) Foreign cooperatives; 
18 
 
19 
(4) Pre-cooperative organizations established under Presidential Decree No. 
20 
175; and 
21 
 
22 
(5) Individuals. 
23 
 
24 
 Membership in a CB is either regular or associate. Regular membership shall be limited 
25 
to cooperative organizations and individuals who are members of a domestic cooperative or 
26 
foreign cooperative. Associate members shall be pre-cooperative organizations established 
27 
under Presidential Decree No. 175 and individuals who are subscribing and holding preferred 
28 
shares only.  
29 
 
30 
The common and preferred shareholdings of the CB shall at all times be at least sixty 
31 
percent (60%) of the total outstanding shares held by local cooperative organizations, local 
32 
cooperatives of all types and categories, individuals who are members of local cooperatives and 
33 
pre-cooperative organizations established under Presidential Decree No. 175. Common shares 
34 
held by individuals who are members of a local cooperative and foreign cooperatives shall not 
35 
be more than forty percent (40%) of the total outstanding voting shares: Provided, That the 
36 
common shareholdings of each individual who is a member of a cooperative shall not be more 
37 
than five percent (5%) of the total outstanding voting shares. 
38 


 
1 
SEC. 5.  Establishment of Cooperative Banks. – The articles of cooperation and bylaws 
2 
of a CB or any amendment thereto shall be registered with the CDA only when accompanied 
3 
by a certificate of authority issued by the BSP. 
4 
 
5 
SEC. 6. Establishment of Branches and Other Offices. – The establishment of 
6 
branches, branch-lite units, or other banking offices shall be governed by the rules and 
7 
regulations of the BSP. 
8 
 
9 
CHAPTER III 
10 
MANAGEMENT AND GOVERNANCE OF COOPERATIVE BANKS 
11 
 
12 
SEC. 7. Management of Cooperative Banks. – The management of the CBs shall be 
13 
governed by the rules and regulations to be promulgated by the BSP, in consultation with the 
14 
CDA. To maintain the quality of bank management and accord appropriate protection to 
15 
depositors and the public in general, the BSP shall prescribe the fit and proper qualifications of 
16 
bank directors and officers for the purposes of this section, giving due recognition to the unique 
17 
nature and character of CBs. 
18 
 
19 
The number, composition, and term of the board of directors shall be defined in the 
20 
articles of cooperation and bylaws of the CB in accordance with the following guidelines: 
21 
 
22 
(a) Board and Committees. – The CB shall constitute, at a minimum, the Board of 
23 
Directors, Election Committee, and Audit Committee. 
24 
 
25 
The Board of Directors shall be composed of at least five (5) but not more than 
26 
fifteen (15) members, at least one (1) of whom is an independent director. It shall be 
27 
entrusted with the management of the affairs of the CB. It shall be responsible for 
28 
the policy formulation, strategic planning, direction-setting and activities of the CB. 
29 
The members of the Board of Directors shall be elected by the general assembly or 
30 
representative assembly of the cooperative.  
31 
 
32 
 
33 


The Election Committee shall be responsible for the formulation and 
1 
implementation of election rules and guidelines. It shall supervise the conduct of 
2 
election and election-related activities, canvass and certify the results of the election, 
3 
and decide cases relative to such election, except those involving the committee 
4 
itself or its members. The members of the Election Committee shall be elected by 
5 
the general assembly or representative assembly.  
6 
 
7 
The Audit   Committee   is   a   board-level   committee   which   composition,   
8 
functions   and responsibilities shall be in accordance with the existing regulations 
9 
of the BSP. Other board-level committees may be created as may be directed by the 
10 
BSP.  
11 
 
12 
Other committees may be created by the Board of Directors with powers, functions, 
13 
and responsibilities which shall be defined in the bylaws. 
14 
 
15 
(b) Key Management Officers. – The key management officers shall be appointed by 
16 
the Board and shall include the President, Treasurer, Internal Auditor, and 
17 
Compliance Officer, or their equivalent ranks. The BSP shall prescribe the 
18 
qualifications and disqualifications of the key management officers. 
19 
 
20 
 SEC. 8. Vacancy in the Board and Committees. – Any vacancy in the Board of 
21 
Directors, other than by removal or by expiration of term, may be filled by the vote of at least 
22 
a majority of the remaining directors, if still constituting a quorum; otherwise, said vacancy 
23 
must be filled by the general assembly in a regular or special meeting called for that purpose. 
24 
A director so elected to fill a vacancy shall serve only the unexpired term of the predecessor in 
25 
office. 
26 
 
27 
In case of vacancy in the committees, the Board, unless otherwise provided in the 
28 
bylaws, will appoint a person to fill the same, subject to the provision that the person appointed 
29 
shall serve only for the unexpired portion of the term. 
30 
 
31 
SEC. 9. Compensation. – In the absence of any provision in the bylaws fixing their 
32 
compensation, the directors shall not receive any compensation except for reasonable per diems: 
33 


Provided, however, That the directors and officers shall not be entitled to any per diem when, 
1 
in the preceding calendar year, the CB reported a net loss or had a dividend rate less than the 
2 
official inflation rate for the same year. Any compensation other than per diems may be granted 
3 
to directors by a majority vote of the members with voting rights at a regular or special general 
4 
assembly meeting specifically called for the purpose: Provided, That no additional 
5 
compensation other than per diems shall be paid during the first year of existence of the CB.  
6 
 
7 
In no case shall the total yearly compensation of directors exceed ten percent (10%) of 
8 
the net of the CB during the preceding year. 
9 
 
10 
 
11 
SEC. 10. Liability of Directors, Officers and Committee Members. – Directors, 
12 
officers, and committee members, who willfully and knowingly vote for or assent to patently 
13 
unlawful acts or who are guilty of gross negligence or bad faith in directing the affairs of the 
14 
CB or acquire any personal or pecuniary interest in conflict with their duties as such directors, 
15 
officers or committee members, shall be liable jointly and severally to the CB for the full 
16 
amount of damages or personal gain resulting therefrom. 
17 
 
18 
SEC. 11.  Disloyalty of Directors and Officers. – A director or officer who, by virtue 
19 
of the office, acquires a financial opportunity which should belong to the CB shall be liable for 
20 
damages and must account for double the profits that otherwise would have accrued to the CB 
21 
by refunding the same, unless the act was ratified by a two-thirds (2/3) vote of all the members 
22 
with voting rights. 
23 
 
24 
This provision shall be applicable notwithstanding the fact that the director or officer 
25 
used personal funds for the venture. 
26 
 
27 
SEC. 12.  Dealings of Directors, Officers, Stockholders and Related Interests 
28 
(DOSRI). – Dealings with directors, officers, stockholders and related interests of the CB shall 
29 
comply with Section 36 of Republic Act No. 8791, otherwise known as “The General Banking 
30 
Law of 2000”. 
31 
 
32 
 
33 


SEC. 13.  Illegal Use of Confidential Information. – A director or officer, or an 
1 
associate of a director or officer, who, for the benefit or advantage or that of an associate, makes 
2 
use of confidential information that, if generally known, might reasonably be expected to 
3 
adversely affect the operations and viability of the CB, shall be held: 
4 
 
5 
(a) Liable to compensate the CB for the direct losses suffered by the CB as a result of 
6 
the illegal use of information; and  
7 
 
8 
(b) Accountable to the CB for any direct benefit or advantage received or yet to be 
9 
received by the associate, as a result of the transaction.  
10 
 
11 
The CB shall take the necessary steps to enforce the liabilities and accountabilities 
12 
described herein. 
13 
 
14 
SEC. 14.  Bond for Faithful Performance of Duties and Obligations. – Every officer 
15 
or employee handling funds, securities, or property on behalf of a CB shall, before performing 
16 
such duties, execute and deliver adequate and appropriate bond for the faithful performance of 
17 
one’s duties and obligations. 
18 
 
19 
SEC. 15.  Quorum and Voting Rights. – In the meetings of the Board of Directors, 
20 
whether special or regular, the quorum requirements shall be one-half plus one of all the 
21 
members. Each director shall only have one (1) vote. 
22 
 
23 
CHAPTER IV 
24 
GENERAL ASSEMBLY 
25 
 
26 
SEC. 16.  Composition of the General Assembly. – The general assembly shall be 
27 
composed of regular members who are entitled to vote under the articles of cooperation and 
28 
bylaws of the CB. 
29 
 
30 
SEC. 17.  Powers of the General Assembly. – The general assembly shall be the highest 
31 
policy-making body of the CB and shall exercise such powers as are stated in the Cooperative 
32 
Code, in the articles of cooperation, and in the bylaws of the CB. The general assembly shall 
33 
have the following powers which cannot be delegated: 
34 


 
1 
(a) To determine and approve amendments to the articles of cooperation and bylaws; 
2 
 
3 
(b) To elect or appoint the members of the Board of Directors, and to remove them for 
4 
cause; and 
5 
 
6 
(c) To approve developmental plans of the CB. 
7 
 
8 
Subject to such other provisions of the Cooperative Code and only for purposes of 
9 
prompt and intelligent decision-making, the general assembly may, by a three-fourths (3/4) vote 
10 
of all its members with voting rights present and constituting a quorum, delegate some of its 
11 
powers to a smaller body of the CB. These powers shall be enumerated under the bylaws of the 
12 
CB. 
13 
  
14 
SEC. 18.  Meetings. – A regular meeting shall be held annually by the general assembly 
15 
on a date fixed in the bylaws, or if not so fixed, on any date within one hundred eighty (180) 
16 
days after the close of each fiscal year: Provided, That notice of regular meetings may be sent 
17 
through personal delivery, registered mail or other electronic means, or such other manner as 
18 
the BSP may allow under its existing regulations, to all members of record, and posted in 
19 
conspicuous places within the CB premises. 
20 
 
21 
Whenever necessary, a special meeting of the general assembly may be called at any 
22 
time by a majority vote of the Board of Directors or as provided for in the bylaws: Provided, 
23 
That a notice shall be sent one (1) week prior to the meeting to all members who are entitled to 
24 
vote: Provided, however, That a special meeting shall be called by the Board of Directors after 
25 
compliance with the required notice or by at least ten percent (10%) of the total members who 
26 
are entitled to vote to transact specific business covered by the call. 
27 
 
28 
If the Board fails to call a regular or a special meeting within the given period, the CDA 
29 
shall, upon petition of ten percent (10%) of all the members of the CB who are entitled to vote, 
30 
and for good cause shown, shall issue an order to the petitioners directing them to call a meeting 
31 
of the general assembly by giving proper notice as required in the Cooperative Code or in the 
32 
bylaws. 
33 


In the case of a newly approved CB, a special general assembly shall be called, as far as 
1 
practicable, within ninety (90) days from such approval.  
2 
 
3 
The CDA may call a special meeting of the CB for the purpose of reporting to the 
4 
members the result of any examination or other investigation of the CB affairs.  
5 
 
6 
Notice of any meeting may be waived, expressly or impliedly, by any member. 
7 
 
8 
SEC. 19.  Quorum and Voting System. – The quorum requirement for general assembly 
9 
meetings, whether special or regular, shall be one-half plus one of the number of voting shares 
10 
of all the members in good standing. 
11 
 
12 
To amend its articles of cooperation and bylaws, at least three-fourths (3/4) vote of all 
13 
the members with voting rights, present and constituting a quorum, shall be required. All other 
14 
voting requirements shall be prescribed by the BSP.  
15 
 
16 
The voting rights of the members shall be proportionate to the number of their paid-up 
17 
shares. 
18 
 
19 
CHAPTER V 
20 
POWERS, FUNCTIONS, AND ALLIED UNDERTAKINGS 
21 
 
22 
SEC. 20. Powers and Functions of Cooperative Banks. – CBs shall primarily provide 
23 
a wide range of financial services to cooperative organizations, their members, and the public. 
24 
A CB may perform any or all of the following banking services: 
25 
 
26 
(a) Extend loans and advances primarily for the purpose of meeting the normal credit 
27 
needs of farmers, fishermen, or farm families as well as cooperatives, merchants, 
28 
and private and public employees: Provided, That loans and advances granted to 
29 
cooperative organizations shall not be subject to individual ceilings on loans to 
30 
DOSRI; 
31 
(b) Accept savings and time deposits; 
32 
(c) Act as correspondent of other financial institutions; 
33 


(d) Discount and rediscount paper with the Land Bank of the Philippines, Development 
1 
Bank of the Philippines or any other bank, including its branches and agencies. Said 
2 
banks shall specify the nature of paper deemed acceptable for rediscounting, as well 
3 
as the rediscount rate to be charged by any of these banks; 
4 
(e) Act as collection agent; 
5 
(f) Act as official depository of local government units and other government agencies 
6 
or instrumentalities; 
7 
(g) Acquire readily marketable bonds and other debt securities; 
8 
(h) Buy and sell foreign exchange; 
9 
(i) To act as conduit bank for the disbursement of government funds intended for 
10 
lending to agriculture, micro, small and medium enterprises (MSMEs) and projects 
11 
for local economic development; 
12 
(j) To be eligible to participate in government program allocations for agricultural 
13 
lending, social housing, loans to rural microenterprises and other initiatives towards 
14 
inclusive growth; and 
15 
(k) Offer other banking services as provided for in Section 53 of Republic Act No. 8791. 
16 
 
17 
In addition to the powers granted to CBs by this Act and other existing laws, any CB 
18 
may perform any or all of the banking services offered by other types of banks subject to the 
19 
prior approval of the BSP. 
20 
 
21 
SEC. 21.  Investment in Allied Undertakings. – Subject to the requirements and 
22 
restrictions as may be imposed by the Monetary Board under its existing rules and regulations, 
23 
CBs may invest in equities of allied undertakings which may include the following: 
24 
 
25 
(a) Banks, financial institutions and nonbank financial intermediaries; 
26 
 
27 
(b) Warehousing and other post-harvest facilities; 
28 
 
29 
(c) Fertilizer and agricultural chemical and pesticides distribution; 
30 
 
31 
(d) Farm equipment distribution; 
32 
 
33 


(e) Trucking and transportation of agricultural products; 
1 
 
2 
(f) Marketing of agricultural products; 
3 
 
4 
(g) Leasing; 
5 
 
6 
(h) Automated teller machine (ATM) networks; 
7 
 
8 
(i) Public transportation; 
9 
 
10 
(j) Financial technology; and  
11 
 
12 
(k) Other undertakings as may be determined by the Monetary Board. 
13 
 
14 
SEC. 22.  Limitations on Lending Authority. – Except as the Monetary Board may 
15 
otherwise prescribe, the direct indebtedness to CBs of any person, company, corporation, or 
16 
firm, including the indebtedness of members of a partnership and association, for money 
17 
borrowed, shall in no time exceed twenty-five percent (25%) of unimpaired capital and surplus 
18 
of the CB. However, the direct indebtedness mentioned shall exclude loans secured by 
19 
obligations of the BSP; loans fully guaranteed by the government as to the payment of principal 
20 
and interest; loans to the extent covered by the holdout on, or assignment of, deposits 
21 
maintained in the lending CB and held in the Philippines; and other loans or credits as the 
22 
Monetary Board may, from time to time, specify non-risk assets. 
23 
 
24 
CHAPTER VI 
25 
CAPITALIZATION AND CAPITAL STRUCTURE 
26 
 
27 
SEC. 23.  Capital Requirement for Cooperative Banks. – A CB shall have a minimum 
28 
paid-up capital in such amount as may be required by the BSP. The BSP may prescribe rules 
29 
and regulations on the types of shares a CB may issue, including the terms thereof and rights 
30 
appurtenant thereto to determine compliance with laws and regulations governing capital and 
31 
equity structure of banks: Provided, That CBs shall issue par value shares only. 
32 
 
33 
 
34 


SEC. 24.  Barrio Savings Fund (BSF), Barrio Guarantee Fund (BGF), Cooperative 
1 
Development Loan Fund (CDLF), Cooperative Marketing Program (CMP), and Other 
2 
Funds Administered by the CDA. – In order to augment the capitalization of CBs, the 
3 
aforementioned funds collected or deducted by various CBs throughout the country from the 
4 
loan proceeds of farmer borrowers in compliance with Presidential Decree No. 175, which are 
5 
still floating and outstanding either as active or dormant accounts in the books of those banks, 
6 
shall be converted as capital of the CB located in the province where the depository banks of 
7 
the BSF and BGF are located. 
8 
 
9 
SEC. 25.  Samahang Nayon and Municipal Katipunan ng mga Samahang Nayon. – 
10 
The Samahang Nayon (SN) and Municipal Katipunan ng mga Samahang Nayon (MKSN) 
11 
which held common shares of CBs prior to the effectivity of Republic Act No. 9520 shall apply 
12 
for conversion to cooperatives in order to maintain their status as regular members of CBs: 
13 
Provided, That the CBs shall exert efforts to inform and assist the SN and MKSN to convert 
14 
within a period of three (3) years from the effectivity of this Act. Upon failure of the SN and 
15 
MKSN to finally convert to a cooperative within said period, the funds held in the name of such 
16 
SN and MKSN shall be considered as preferred shares and shall remain as capital of the CB. 
17 
 
18 
SEC. 26.  Additional Source of Capital of the CBs. – The funds or common shares in 
19 
CBs held in the name of cooperatives whose certificates of registration have already been 
20 
cancelled by the CDA and which failed to liquidate such funds or shares during its liquidation 
21 
shall remain as capital in said CBs and shall be treated as preferred shares. 
22 
 
23 
CHAPTER VII 
24 
SUPERVISION 
25 
 
26 
SEC. 27.  Supervision of Cooperative Banks. – All CBs shall be under the supervision 
27 
of the BSP: Provided, however, That the CDA shall monitor the CBs’ compliance with 
28 
cooperative laws, rules, and regulations. With respect to the governance of the CBs, the 
29 
provisions of the banking laws, rules, and regulations shall prevail, notwithstanding Section 71 
30 
of Republic Act No. 8791. 
31 
 
32 
 
33 


SEC. 28.  Promulgation of Guidelines. – The BSP and CDA may formulate guidelines 
1 
to implement or clarify the provisions of this Act: Provided, That the BSP, as the regulator of 
2 
banks, shall be the primary regulator of cooperative banks consistent with the provisions of 
3 
Republic Act No. 8791: Provided, further, That in order to minimize the burden of dually-
4 
regulated entities, the BSP shall, in consultation with the CDA, shall in its promulgation of rules 
5 
and regulations, to the extent allowed in banking and other relevant laws, and insofar as 
6 
consistent with the BSP’s exercise of supervisory and regulatory powers over banks, consider 
7 
the requirements of this Act and the CDA for cooperatives in general. 
8 
 
9 
 
10 
CHAPTER VIII 
11 
PRIVILEGES AND INCENTIVES 
12 
 
13 
SEC. 29.  Privileges of Cooperative Banks. – CBs registered under this Act and the 
14 
Cooperative Code shall have the following privileges and incentives: 
15 
 
16 
(a) Those privileges and incentives accorded to cooperatives under the Cooperative 
17 
Code and other prior laws including exemption from all national, city, provincial, 
18 
municipal or barangay taxes, fees and charges of whatever nature and description: 
19 
Provided, however, That when a CB has reached an undivided net savings of more 
20 
than One hundred million pesos (P100,000,000.00), transactions to nonmember will 
21 
become taxable; 
22 
 
23 
(b) The foreclosure of mortgages covering loans granted by CBs and executions of 
24 
judgment thereon involving real properties levied upon by sheriff shall be exempt 
25 
from the publications in newspapers where the total amount of loan, excluding 
26 
interests due and unpaid, does not exceed One million pesos (P1,000,000.00) or 
27 
such amount as the Monetary Board may prescribe as may be warranted by 
28 
prevailing economic conditions. It shall be deemed sufficient publication in such 
29 
cases where the notices of foreclosure and execution of judgment are posted in the 
30 
most conspicuous areas such as the municipal building, the municipal public 
31 
market, the CB, and the barangay hall where the land mortgaged is situated during 
32 
the period of sixty (60) days immediately preceding the public auction or execution 
33 
of judgment. Proof of publication as required herein shall be accomplished via an 
34 


affidavit of the sheriff or officer conducting the foreclosure sale or execution of 
1 
judgment and shall be attached to the records of the case; 
2 
 
3 
(c) A CB shall be allowed to foreclose lands mortgaged to it subject to the provisions 
4 
of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian 
5 
Reform Law of 1988. For agrarian lands foreclosed by a CB, the disposal of the 
6 
same to another qualified beneficiary under Republic Act No. 6557 shall be made 
7 
through the same CB. Further, the amortization of the beneficiary in favor of the 
8 
Department of Agrarian Reform (DAR) shall be coursed through the servicing CB: 
9 
Provided, however, That CBs shall be exempt from the landholding limits as 
10 
prescribed by the DAR or any other law requiring the same; 
11 
 
12 
(d) For CBs granted by the BSP with accreditation as Rural Financial Institution (RFI) 
13 
under Republic Act No. 10000, the following privileges shall be awarded: 
14 
 
15 
(1) Unrestricted branching rights to set up agriculture-oriented branches in 
16 
unbanked municipalities and predominantly agricultural communities, subject 
17 
to existing regulations on minimum capitalization for banks and the size of 
18 
branch network;  
19 
 
20 
(2) Automatic eligibility with Philippine Guarantee Corporation (with respect to 
21 
agricultural credit guarantee), Philippine Crop Insurance Corporation, and 
22 
governmental agencies providing services towards risk mitigation in the 
23 
agriculture sector;  
24 
 
25 
(3) Priority status as credit delivery partner or conduit of government-directed 
26 
programs for agricultural projects through the Department of Agriculture and 
27 
other government agencies; and 
28 
 
29 
(4) Entitlement to participate free of charge in capability-building activities in 
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agriculture lending such as the exchange of best-practice experiences, study 
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tour, technology transfer among ASEAN member states and other fora of 
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international cooperation. 
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SEC. 30.  Separability Clause. – If any provision or section of this Act or the application 
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thereof to any person or circumstance is held invalid, the other provisions or sections of this 
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Act shall remain valid, and the application of such remaining provisions or sections to other 
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persons or circumstances shall not be affected thereby. 
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SEC. 31.  Repealing Clause. – All laws, issuances, rules, and regulations inconsistent 
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with this Act are hereby modified or amended accordingly. 
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SEC. 32.  Effectivity. – This Act shall take effect fifteen (15) days after its publication 
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in the Official Gazette or in a newspaper of general circulation. 
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Approved,  
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