Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Philippines
NINETEENTH CONGRESS
Second Regular Session
HouseBi||No.9450      .
Introduced by HON. NICANOR M. BRIONES
Represeritczt{.ue, AGAP Party List
EXPLANATORY NOTE
Since its enactment, the Cooperative Code of 2008 has helped thousands
of  cooperatives  organize  and  flourish  in  their  respective  undertakings  and
enterprises.  Fifteen years later,  however,  many  social  and  economic  changes
have occurred which now call for concomitant amendments to the existing Code.
President Ferdinand Marcos Jr.  himself,  during his second  State of the
Nation  Address,  called  for  the  timely  and  much-needed  amendment  of  the
Cooperative Code. At present, the impact of the pandemic, geopolitical conflicts,
and global economic slowdown led to rising costs of goods and services.  Such
economic barriers thus hinder the different sectors, especially the agricultural
sector, from maximizing production.
The  framework  of cooperatives  makes  it  a  perfect  vehicle  to  empower
people   to   start   and   continue   their   enterprises   amidst   economic   crisis.
Cooperatives  are  more  resilient.  The  self-help  principle  in  cooperatives  allows
them to sustain their business with members patronizing their own products
and services. Moreover, cooperatives as an entity can easily facilitate availment
of grants  and  other  assistance  offered  by  the  government  to  support  their
economic activities.
The  1987  Constitution recognizes cooperatives as instruments of social
justice and economic development. As such, it is only proper to ensure that the
laws governing the organization and regulation of cooperatives are streamlined
and responsive to the sector's present needs.


Hence,  with  the  foregoing  premises  considered,  this  representation
fervently seeks support in the approval of this bill.
.`   .,..   `..`-:      ` ,... :
2


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Philippines
NINETEENTH CONGRESS
Second Regular Session
House Bill No.  9450
Introduced by HON. NICANOR M. BRIONES
Represeutatiue, AIQAP Party List
AN ACT
PROVIDING FOR THE REVISED COOPERATIVE CODE
OF THE PHILIPPINES
Be it erracted, bg the Senate and House Of Representofives of the Ph,thppines in
congress assembled:
CHAPTER I. GENERAL PROVISIONS
5                 ARTICLE   1.   Itt!e.   -   This   Code   shall   be   known   as   the   "Revised
6      Cooperative code of the philippines".
7                 ART. 2.  Deczaratfon o/Pozicgr. -It is hereby declared the policy of the
8      State to foster the creation and growth of cooperatives as a practical vehicle for
9     promoting self-reliance and harnessing people power towards the attainment
10      of economic  development  and  social justice.  The  State  shall  encourage  the
11      private   sector   to   undertake   the   actual   formation   and   organization   of
12      cooperatives and shall create an atmosphere that is conducive to the growth
13      and development of these cooperatives.
14                 Towards  this  end,  the   Cooperative  Development  Authority  shall  be
15     primarily  responsible  for  the  institutional  development  and  regulation  of
16      cooperatives.     The     government     and     all    its     branches,     subdivisions,
17      instrumentalities,   and   agencies   shall   ensure   the   provision   of   technical
18      guidance, financial assistance, and other services to enable the cooperatives to
19      develop  into  viable  and  responsive  economic  enterprises  towards  a  strong
20     cooperative movement, free from conditions that infringe upon the objectives
21      and character of cooperatives.
3


1                 Accordingly, the state recognizes the right of the cooperatives to initiate
2     and   foster  within   their   own   ranks   cooperative   promotion,   organization,
3     training, information gathering, audit, and support services, with government
4      assistance where necessary.
5                AR:T. 8. General concepts. -
6         a.  A cooperotl.LJe is an autonomous and duly registered association of persons
7              with a common bond of interest who have voluntarily joined together to
8              achieve  their  social,  economic,  and  cultural  needs  and  aspirations  by
9              making equitable contributions to the capital required, patronizing their
10              products and services, and accepting a fair share of the risks and benefits
11               of the undertaking in  accordance with universally accepted  cooperative
12                principles ;
13         b.   Coaperatr.I;e p7i.not.pies  -  Every  cooperative  shall  conduct  its  affairs  in
14               accordance with Filipino culture, practices, good values, and experiences,
15               and the universally accepted principles of cooperation, which include, but
16               are not limited to, the following:
17               (1)  VozttntcLrgr    a7tcz    Open    Membership    -Cooperatives    are    voluntary
18                   organizations, open to all persons able to use their services and willing
19                   to  accept  the  responsibilities  of membership,  without  gender,  social,
20                   racial, cultural, political, or religious discrimination.
21               (2) Democrotr.c Member co71troz -Cooperatives are democratic organizations
22                   that are controlled by their members who actively participate in setting
23                   their  policies   and  making  decisions.   Men  and  women   serving  as
24                   elected/appointed representatives, directors or officers are accountable
25                   to the membership.
26               (3) Members' Economi.c pcirfu.Ch.pcifi.on -Members contribute equitably to, and
27                   democratically control, the capital of their cooperative. At least part of
28                   that   capital   is   usually   the   common   property   of  the   cooperative.
29                   Members  usually  receive  limited   compensation,   if  any,   on  capital
30                   subscribed as a condition of membership. Members allocate surpluses
31                    for  any or all  of the  following purposes:  developing their  cooperative,
32                   possibly  by  setting  up  reserves,  which  at  least would  be  indivisible;
33                   benefiting   members   in   proportion   to   their   transactions   with   the
34                   cooperative;    and    supporting    other    activities    approved    by    the
35                    membership.
36               (4) ALtto7tomg ancz froczepenczence -Cooperatives are autonomous,  self-help
37                   organizations controlled by their members. If they enter into agreements
38                  with other organizations, including governments, or raise capital from
39                   external sources, they do so on terms that ensure democratic control
40                   by their members and maintain their cooperative autonomy.
4


1                (5) Ec{ucatr.ori,    Trot.".ng,   czricz   J7t/o7mczft.on   -Cooperatives   shall   provide
2                   education  and  training  for  their  members,   elected  and  appointed
3                  representatives, managers, and employees so that they can contribute
4                   effectively and efficiently to the development of their cooperatives. They
5                   shall  also  inform  the  general  public  -  particularly young  people  and
6                   leaders -about the nature and benefits of cooperation.
7              (6)  Coaperotr.ort Amo7tg  Cooperatr.LJes  -Cooperatives  serve  their  members
8                   most effectively and strengthen the cooperative movement by working
9                  together through local, national, regional, and intemational structures.
10               (7)  Co7icer7`i  /or   CommLtrtj€g   -Cooperatives   work   for   the   sustainable
11                    development of their communities through  policies  approved by their
12                     members.
c.   Coaperatr.L;e  Vazues -  Cooperatives  are  based  on  the values  of self-help,
self-responsibility,     democracy,     equality,     equity,     and     solidarity.
Cooperative members believe in the ethical values of honesty, openness,
social responsibility and caring for others.
ART. 4.   Dertriition oJ. Terms. - The following terms shall mean:
a.  Awtho7itg  refers     to  the  Cooperative  Development  Authority  (CDA),   a
government  agency  created  by  virtue  of  Republic  Act  No.   6939,   as
reorganized and strengthened by Republic Act No.  11364,  in compliance
with  the  provisions  of  Section   15,  Article  XII  of  the   1987  Philippine
Constitution which mandates Congress to create an agency to promote the
viability and growth of cooperatives as instruments of equity, social justice
and economic development;
25         b.  Area o/Operofl.on refers to the place where the cooperative operates and
26              conducts its business,  as provided for in its Articles of Cooperation and
27                By-laws;
28         c.   A7tzczes   o/  Coaperotr.o7i   refers   to   the   document   registered   with   the
29              Authority,  including  its  amendments,  that  defines  and  regulates  the
30              relations between the cooperative and the state;
31          d.  Bocird o/Di`rectors refers to the collegial body responsible for the strategic
32              planning,   direction-setting,   and   policy-formulation   activities   of   the
33                cooperative ;
34         e.   Branch-Zi.te u7ijt refers to a cooperative bank that performs limited banking
35              activities and records its transactions in the books of the head office or
36              the branch to wbich it is annexed;
5


I1         f.   B#-Zcitus refers to the document registered with the Authority,  including
2              its   amendments,   that   defines   and   regulates   the   operations   of  the
3              cooperative  and  governs  the  relations  between  the  cooperative  and  its
4              members and among themselves;
5         g.   Commt.ttee refers the  mandatory committees under this  Code  entrusted
6              with  specific  functions  and  responsibilities  and  such  other  committees
7              that  the  Board  of Directors  deem  necessary  for  the  governance  of the
8               business affairs of the cooperative;
9         h.  Coaperotr.zJe Urn.o7t refers  to  a cooperative whose members  are  registered
10               cooperatives  and/or  federations,  organized  purposely  to  represent  the
11               interest  and  welfare  of all  types  of cooperatives  at  the  city,  provincial,
12               regional, and national levels;
13          i.    Feczercit{.ort   o/  Coaperoti.I;es   refers   to   an   aggrupation   of  cooperatives
14              registered with the Authority to undertake business activities in support
15              of its primary and secondary member cooperatives engaged in the same
16               line  of business,  organized  at  the  municipal,  city,  provincial,  regional,
17               national,  special  metropolitan  political  subdivision,  or  economic  zones
18                created by law;
19         j.    FI.scciz   yecir  refers   to  the   operating  cycle   of  business   operation  and
20               activities of a cooperative, covering a twelve (12) month period. As used in
21               this code, calendar year shall be adopted as the fiscal period;
22         k.   Generczz Assembzg refers  to  the  full membership  of the  cooperative  duly
23               assembled for the purpose of exercising all the rights and performing all
24               the obligations pertaining to  cooperatives,  as provided by this  Code,  its
25               Articles of cooperation, and By-laws;
26         I.   Honorcin.ttm refers to token of appreciation granted for the expert service
27               rendered in a specific field which admits of no compensation;
28         in. J7tz/estme7tf  refers   to   equity   participation   in   any   enterprise   formed,
29               organized or existing under the laws of the philippines;
30         n.  Jnteresf on Shczre Cczpz.£czZ refers to the amount earned by the members on
31               their investment in the cooperative. The interest on share capital and the
32              patronage refund shall be determined at the end of the fiscal year after the
33              net surplus shall have been computed in accordance with the Articles of
34               Cooperation and By-laws or by the Board of Directors;
35         o.  Member  includes  a  person  either  natural  or juridical,  who  has  been
36               approved  and  admitted  by  the  Board  of  Directors  of  the  cooperative,
37              federation,  or  union,  after  undergoing  the  Pre-Membership  Education
38               Seminar and has vowed to adhere to the Articles of Cooperation and its
6


ByHlaws. Members shall be classified as regular or associate, as qualified
by the cooperative;
p.  Mone{cz7t/  Board    refers  to  the  entity  which  exercises  the  powers  and
functions  of  the  Bangko  Sentral  ng  Pilipinas  on  the  formulation  of
monetary policies and the supervision of the financial system;
q.  Pcitroriczge I?ertynd refers to the payment to the members of a percentage
or portion of the amount availed of,  the interest on loans paid,  or other
services availed from the cooperative. The amount will be determined at
the end of the fiscal period after the computation of the net surplus. The
percentage of the allocation will be in accordance with the provisions in
its Articles of Cooperation, the By-laws, or by the Board of Directors. The
formula and basis for the computation of the rate of patronage refund will
be determined by the Authority.
1 €        r.  :=;e£:ee¥£:::e:Sedt%yt::e :;]°t¥::Ceerfo¥:eannc:Sofr£££:a::£SeesTent  for  extra
16
17
18
19
2:             ::orfp°e=ta±::e;na::cffrp::i::£Vae£%ei;nforining tfie general riembership of the
s.   Per/ormc{7ice Audi.t refers to an audit conducted by the Authority on the
efficiency,    efficacy,    and    effectiveness    of   the    cooperative's    overall
performance  as  a  whole,  its  management  and  officers,  and  its  various
responsibility centers as basis for improving individual,  team,  or overall
t.   Prfmciny Coaperati.ue refers to a cooperative, registered with the Authority,
the members of which are natural persons;
u.  Regist7icitl.ori means  the  operative  act  granting juridical  personality  to  a
proposed cooperative and is evidenced by a Certificate of Registration;
v.   j3eprese7ifcztl.Lje  Assembzg   means   the   full   membership   of  a   body   of
representatives elected by each of the sectors, chapters, or districts of the
cooperative duly assembled for the purpose of exercising such powers in
29               accordance with its By-laws;
3:       W. rse¥emr:frtaongpr¥:c9o°onpe¥a€iv¥"onr!::Pn:£a¥i:#€tt:gtnab|9sh:8au:a:rafrpar:8id¥:¥£°ai
32                 Decree No.175;
33         x.   Secoriczcirg Coaperatr.I/e refers to a cooperative, the members of which are
34               primary cooperatives;
::       y.  :i%:::far£:S:nec°e°c::roa#;ce a::::]rtsy,  te°xcetgt°Stehostgp:Sho °irec°a°]Poe;:tdiv::
37               undertake allied economic activity/ies;
7


11
12
13
14
15
16
17
18
z.   Share  Capi.tat refers  to  the  equitable  contribution  of a  member  to  the
cooperative fund, the working capital fund of the cooperative, which shall
have a par value of at least One Hundred Pesos (PIOO.00) and issued as
common or preferred shares depending on the type of membership with
the cooperative;
aa.Soa.ciz ALtczi.t refers  to  an  audit  to  assess  the  cooperative's  social impact
and  ethical  performance  vis-a-vis  its  stated  mission,  vision,  goals,  and
code of social responsibility. It is a mechanism whereby it can account for
its social performance and evaluate its impact on the community and be
accountable for its decisions and actions to its members;
bb.   Sttbscn¢fl.on Agreemerl{ refers to the document executed by a member to
signify   the   amount  that   the   member   intends   to   contribute   to   the
cooperative fund;
cc. SLtbsi.CZI.ci7t/  Coaperatr.pe refers  to  a  cooperative,  all  or  majority  of whose
members or shareholders come from a parent cooperative,  organized for
any   other   purpose   different   from   that   of,   and   receives   technical,
managerial, and financial assistance from the latter, in accordance with
the rules and regulations of the Authority;
dd.   Terfi.a7{/   Coaperati.LJe   refers   to   a   cooperative   whose   members   are
federations;
ee. Worfeer Beriejiciclrg refers to a natural person who renders service for value
as an employee or laborer in an agricultural enterprise or farm within an
agrarian reform cooperative;
24                                  CIIAPTER II. PURPOSES AND ORGANIZATION
25                ART. 5. Gocizs and onjectities a/a coaperatfae. -The primary objective
26      of  every  cooperative  is  to  help  improve  the  quality  of  life  of its  members.
27      Towards this end, the cooperative shall aim to:
::        a.  ;noc;::,Sea£:C°pToeinost:V£:£So'n;n¥::t:seeit:: Perq°ud£¥ac:i:t¥'±stanpbdutT::C::Sine:
::             ::::PLTssk::::¥#g;maximum utilization of economies of scale, cost sharing
32         b.  Provide optimum social and economic benefits to its members;
33         c.  Teach them efficient ways of processing tasks in a cooperative manner;
8


i        d.  =r:::8:lee::Stth::::t£Ctehs; int:]%Vaat:1;V: :genaesw£:e:gal;E:Sises:ndelfakings and
:        e.  =imdp:k¥]e]:tt==:i:g¥nal£Zed sector to gain opportunities through education
:       f.   ::te£:::yd c:i[gaabn°£:tt:o¥L:t,h ttohep:o°:eortnemceonot;e°rtaht:;e:°°a€eraat;Vreasct::£ P£::]ne:
7               towards sustainable socio-economic development;
8         g.  Adopt  membership  expansion  mechanism  to  ensure,  the  growth  of the
9               cooperative movement;
1 :        h.  =3]ee=:Fttaf|Oe]£caycc¥jge:±onei:sthr:tsowji]c::s::edtrs1:Pc=s:n:¥'dacpcrooumnottaeb£:[±¥
12               interests of the members;
13         i.   Advance  the  competitiveness  and  innovativeness  of cooperatives  in  the
14               various industries;
15        j.   Coordinate   with    other   cooperatives    through   leaming,    information
16               exchange, teaching foster sustainable development;
17         k.  Advocate   legal   framework  and   enabling  policies   appropriate   for  the
18               development of cooperatives;
19         I.    Be  the  voice  and  the  institution  of  the  marginalized  for  purposes  of
20               promoting people-centered development;
21         in. Encourage thrift and savings mobilization among the members;
22         n.  Generate  funds  and  extend  credit  to  the  members  for  productive  and
23               provident purposes;
24         o.  Encourage among members systematic production and marketing;
25         p.  Provide goods and services and other requirements to the members;
26         q.  Develop expertise and skills among its members;
27         r.   Acquire lands and provide housing benefits for the members;
28         s.   Insure against losses of the members;
29         t.   Promote and advance the economic, social and educational status of the
30               members;
q


u.  Establish, own, lease or operate cooperative banks, cooperative wholesale
and  retail  complexes,  insurance  and  agricultural/industrial  processing
enterprises, and public markets;
v.   Coordinate and facilitate the activities of cooperatives;
5         w. Advocate for the cause of the cooperative movements;
;         X.  tEe:a:roe]o:Fees;viability  Of  CO0Peratives   through   the   utilization   of  new
:       y.  :cnocn°ou::fegr:#hp=¥:toeves=]yf-i::£±:tr±osne;I::¥PIoyment as  an  enedne for
::       Z.  ade::tf::]¥e:t:::Pt]haen:owmhic:nTt;y help foster the welfare of the members,
12                 ART.  6.  P{txpose oJ a coaperat{tie. -A duly organized and registered
13      cooperative  under  this   Code   shall  engage  only  in  economic  or  business
14      activities as stated in its Articles of cooperation and By-laws. The cooperative
15      can only engage in other activities provided its Articles of cooperation and By-
16      laws are amended accordingly.
17                ART. 7.   CoaperatitJes Not in Restraint o/ ]tode. -No cooperative or
18      method  or  act  thereof  which  complies  with  this  Code  shall  be  deemed  a
19      conspiracy or combination in restraint of trade or an illegal monopoly, or an
20      attempt to lessen competition or fix prices arbitrarily in violation of any laws of
21       the philippines.
22                ART. 8. Cooperacttle potuers and cclpac€t€es. -A cooperative registered
23     under this code shall have the following powers, rights and capacities:
24         a.  To the exclusive use of its registered name,
25         b.  To sue and be sued;
26          c.   Of succession;
::         d.  :h°±s¥:fed; its Articles of cooperation in accordance with the provisions of
::       e.  Ti:eandd°Patn:¥;]£ewf tE°ets:°mn:rfanryactc°o::¥;c:°#hs t::sPcuobd[i: P°]±Cy'  and t°
i:      f   :°£:¥s¥a::t:;an=oLf :eiieeeL##:e#:?rist8h::sn¥t£:h:°%L:I::::d:]¥¥;£S:e#::eosa:Se:±¥:;:dfhej
10


1
2
3
4
5
6
7
18
necessarily require,  subject to the limitations prescribed by law and the
Constitution;
9.  To  enter  into  joint  venture  agreement  and  partnership,  or  any  other
commercial activity with other cooperatives;
h.  To enter into division, merger or consolidation, as provided in this Code;
i.   To  form  subsidiary  cooperatives  and  join  federations,  unions,  and/or
Credit Surety F`und Cooperatives, as provided in this Code;
j.   To avail of loans,  be entitled to credit,  and to accept and receive grants,
donations, and assistance from foreign and domestic sources,  subject to
the conditions of said loans, credits, grants, donations or assistance that
will not undermine the autonomy of the cooperative;
k.  To avail of preferential rights granted to cooperatives under Republic Act
No.  7160,  otherwise  known  as  the  Local  Government  Code,  and  other
laws, particularly those in the grant of franchises to establish, construct,
operate and maintain ferries, wharves, markets or slaughterhouses and
to lease public utilities, including access to extension and on-site research
services and facilities related to agriculture and fishery activities;
1.   To establish and operate schools in all levels of the education system;
;3        in. Too ceaxre;c[;suetsfTsc:uortfoe:e€os¥:::d¥::::dA::±ct]:±sS o:ocdoeo::rsa:]fo]Lpe necessary
21                  ART.  9.  Organfzfng  a Primargr Coopcrat€ue.  -Five  (5)  to  fifteen  (15)
22      natural persons who are Filipino citizens, oflegal age, having a common bond
23      of interest, and are residing or working in the intended area of operation, may
24      organize a primary cooperative under this  Code.  The cooperators must have
25      attended and completed a pre-Registration seminar (PRS) as a prerequisite for
26      registration.
27                 No primary cooperative shall be organized as a multi-purpose cooperative
28     unless it has been in operation for at least two (2) years and shall have complied
29     with the minimum requirements for multi-purpose cooperatives as prescribed
3o      bythe Authority.
3^1^       `   „ :ART.1~O. MaTq?tory perser.net of the cooperative. -A;Il cooperatives
32      shall have a General Manager and a Bookkeeper to be authorized to operate.
3.3A      _ rr _   ART.` 11. Itqbitity of.the Boprd ef _P±_rectors and ouftcers. -Directors,
34      officers and committee members, who willfully and knowingly vote for or assent
35     to patently unlawful acts, or who are guilty of gross negligence or bad faith in
36      directing the affairs of the cooperative,  or acquire any personal or pecuniary
11


interest  in  conflict with  their  duty as  such  directors,  officers  or  committee
membersshallbeliablejointlyandseverallyforalldamagesorprofitsresulting
there from to the cooperative, members, and other persons.
When  a  director,  officer,  or  committee  member  attempts  to  acquire  or
Fcquires,inviolationofhisduty,anyinterestorequityadversetothecooperative
in respect to any matter which has been reposed in him in confidence, he shall,
as a trustee for the cooperative, be liable for damages and shall be accountable
for double the profits which otherwise would have accrued to the cooperative.
ART.12. ram a/edstence a/cooperatftJe. -A cooperative shall have
perpetual existence from the date of registration unless voluntarily dissolved or
the Certificate of Registration is cancelled for reasons provided under this Code
and its Implementing Rules and Regulations.
ART.  13. Art€czes o/ Cooperation. -All primary cooperatives applying
for registration shall present to the Authority the Certificate of Pre-Registration
Seminar  and  the  Articles  of  Cooperation,   signed  by  all  cooperators  and
16      acknowledged by them before a notary public.
17                 In   case   of  cooperative   banks,   insurance   cooperatives,   federations,
18      unions,  tertiary cooperatives,  or special  types  of cooperatives,  the Articles  of
19      Cooperation   shall  be   acknowledged  by  its   Chairpersons   and  Cooperative
20      Secretaries before a notary public. The Articles of cooperation shall contain the
21       following provisions:
::       a  ::h:e:§r¥:##,e ocr°?#:roapt:¥:t¥bhaL,fha::a:LhL£LCLLifeewtL:: ¥::€±#::e:#]eve:'i
25         b.  The  purpose  or  purposes  and  the  economic  activities  for  which  the
26               cooperative is to be registered;
27         c.   Powers and capacities;
23        d.  :fhf]eci::ee:e::r::::a£:#'atdhdereps°sS:¥t£:€roeospse::ti;Se;Principal office, and the
30         e.  The names, nationality, and the postal addresses of the cooperators;
31          f.   The common bond of membership;
32         g.  The list of names of the directors;
h.  The  amount  of authorized,  subscribed,  and  paid-up  share  capital,  the
number of shares, and the par-value of each share, and the names of the
cooperators, except for cooperative unions;
12


i        i.   fer:itaa;e,mo:nstpeacsfalt°ty;eh:ihc:ropt:reat:v°e:Perat±Ve  is  a  Primary,  secondary,
:       j.   :i:s±£tretict]ewsftffth:s°°cpoedr:t::nan;:¥[aga°]a::ntain  any  other  provisions
k.  The Certificate of Authority from the appropriate government agency shall
be included as part of the Articles of Cooperation.
7                 ART.14. Bg-Zaovs. -Every cooperative to be registered under this Code
8      shall adopt By-laws consistent with the provisions of this code which shall be
9      filed together with the Articles of cooperation. The By-laws of each cooperative
10      shallprovide:
11          a.  The qualifications for admission to membership;
: :        b.  :Feeceedqeun£:aft::ethce°:i:£rbcTst:°:f t°hre ±r::irte:i ::mbbeeraschq±;;red  as  a  condition
::         C.   :heemb:£r8shht£Sj;   Prfvi]eges9    dutiest    responsibilities,    and    liabilities    of
: ;        d.  :ehrem:ir:re¥,S:anndc:£eugrdoecre¥:i:htom:emfi::[ros£:a;is acquired, maintained, and
18         e.  The  conditions  under  which  the  transfer  of a  share  or  interest  of the
19               members shall be permitted;
i;     f  ;1:iei¥:¥t:::::::in:§L:£n;e:vr:;:ie:u::s:;ii¥::::o:¥ii:i§j::i:]i:d:::::tieii£!e:yi::¥;jji¥r:i
::       8.  :#ftncnaenrj:uwt#ic:d;the capftalj may be raised and the purposes for
27         h.  The accounting and auditing systems;
:3         i.   fhheeremo:;nner °fc°ntracting loans and boITowings including the limitations
30        j.   The allocation and distribution of net surplus;
31         k.  The manner of adopting and amending By-laws;
13


I.   The institution of a conciliation or mediation mechanism for the amicable
settlement of disputes among members, directors, officers and committee
members of the cooperative; and
in. Other matters incident to the purposes and activities of the cooperative.
CIIAPTER Ill. REGISTRATION
ART.  15.  Reqt{€rements /or Registra€€on.  - The proposed Articles  of
Cooperation, ByLlaws, and such other required documents shall be submitted
in accordance with the rules and regulations to be prescribed by the Authority.
Except for cooperative unions as  described under Article  31  hereof,  no
cooperative   shall   be   registered   unless   the   Articles   of   Cooperation   is
accompanied with the bonds of the accountable officers and a sworn statement
of the  Treasurer  showing  that  at  least  twenty-five  per  centum  (250/o)  of the
authorized  share  capital  has  been  subscribed  and  at  least  twentylfive  per
centum (25%) of the total subscription has been paid.
15                The Authority shall initially fix the minimum paid-up share capital in the
16      Implementing Rules and Regulations of this Code and periodically assess the
17     required  paid-up  share  capital  and  may  increase  or  decrease  it  through
18     subsequent   regulation   whenever   necessary   upon   consultation   with   the
19      cooperative sector.
2o                The Authority may prescribe such other registration requirements as it
21      maydeem necessary.
22                ART.16. Registration. -A cooperative formed and organized under this
23     Code  acquires  juridical  personality  from  the  date  the  Authority  issues  a
24     Certificate of Registration under its official seal. All applications for registration
25     shall be finally disposed of by the Authority within a period offifteen (15) days
26     from the filing of the complete documentary requirements, both in form and in
27     substance, otherwise the application is deemed approved, unless the cause of
28     the delay is justified as the case may be:  ProzJt.c{ec!, That in case of a denial of
29     the   application   for   registration,   the   applicant   may   file   a   Motion   for
30     Reconsideration  to the  CDA Office  denying the application.  An  appeal  to  the
31      CDA Board of Directors at the CDA Head office may be filed within fifteen (15)
32     days  from  receipt  of notice  of denial  of the  Motion  for  Reconsideration.  The
33     decision of the CDA Board of Directors shall be final and executory. Any appeal
34     on the CDA Board's decision may be submitted before the court ofAppeals.
35                 The  grounds  for  denial  of the  registration  shall  be  prescribed  in  the
36      Implementing Rules and Regulations of this code.
14


1                 ART.17.  Cerfi/!cate  a/ Regfs€ra££on.  -A  Certificate  of Registration
2      issued by the Authority under its official seal shall be conclusive evidence that
3     the cooperative therein mentioned is duly registered unless it is proved that the
4     registration thereof has been cancelled or revoked.
5_      ..  .    AR:I.  18..  Arnendr!teryS_ Of Articles  Of Cooperation  and  Bg-Laws.  -
6      Unless  otherwise  prescribed  by  this  Code  and  for  legitimate  purposes,  any
7     provision or matter stated in the Articles of Cooperation and By-laws may be
8      amended by two-thirds (2/3) vote of all the members entitled to vote, present and
9     constituting  a  quorum,  without  prejudice  to  the  right  of  the   dissenting
10     members to exercise their right to withdraw their membership under Article
11         39.
12                 Subject to the guidelines to be issued by the Authority, a cooperative may
13      opt to amend its Articles of cooperation and By-laws through a referendum by
14      a vote of two-thirds (2/3) of all the members entitled to vote.
15                 Both the original and amended Articles of cooperation and/or By-laws
16      shall contain all provisions required by law. Amendments shall be indicated by
17     underscoring  or  othervise  appropriately  indicating  the  change  or  changes
18      made and a copy of the amended Articles of cooperation or amended By-laws
19      duly certified under oath by the  Cooperative Secretary and  a majority of the
20     directors stating the fact that said amendment or amendments to the Articles
21      of cooperation and/or By-laws have been duly approved by the required vote
22     of the members. All anendments to the Articles of cooperation and/or By-laws
23      shall be submitted to the Authority.
24                 An  application  for  amendments   shall  be   deemed   approved  by  the
25      Authority within a period of thirty (30)  days from the filing thereof:  Proui.czecz,
26     That  the  documentary  requirements  are  complete  in  form  and  substance,
27      unless the cause of the delay isjustified.
?e      _.      AP:T. _1?._  Cotttracts  Executed  Prior  to  Registration  and  Expects
29      Thereof:  - Subject to the execution of a formal written contract made in the
30      cooperative's  name  or  on  its  behalf  prior  to  its  registration,  all  contracts
31      executed prior to its registration between private persons and the cooperative
32     shall remain valid and binding between the parties in so far as it redounds to
33      the benefit of the cooperative.
34               ART. 20. Ettifects of Falture to operate or cornpky with condittone
35      on  Registration.  -  Failure  of the  cooperative  to  commence  its  authorized
36     business  activity  after  two  (2)  years  from  the  issuance  of its  Certificate  of
37      Registration,  its  Certificate  of Registration  shall  be  deemed  cancelled  and it
38      shall be delisted from the registry of cooperatives.
39                 ART. 21. Diuls€on o/ CoaperatitJes. -A registered cooperative, through
40      a resolution approved by a vote of two-thirds (2/3) of all the members entitled to
15


vote, present and constituting a quorum, may divide itself into two (2) or more
cooperatives. Such division of the cooperative shall be valid.. Prout.c€ecz, That the
purpose of the division is not to defraud the creditors.
The dissenting members  shall have the  right to  exercise their right to
withdraw their membership pursuant to Article 39.
The Authority shall prescribe the rules and regulations for the division
of the cooperative:  Proz/I.dec{,  That all the requirements  set forth  in this  Code
have been complied with by the new cooperatives.
10             CHAPTER IV. MERGER AND CONSOLIDATION OF COOPERATIVES
11               ART. 22. Merger or consoudation of cooperatives. -
: :       a.  ¥:°:I::eitti;eer¥eocn°e°%:rai±evecso:s:ytu=::g:oL:i:r:tis;:sgL:rc:£:e:::1::liz::::
b.  No merger or consolidation shall be valid unless approved by a two-thirds
(2/3)  vote  of all  the  members  entitled  to vote,  present  and  constituting a
quorum  of  each  of  the  constituent  cooperatives  at  separate  General
Assembly  meetings.  The  dissenting  members  shall  have  the  right  to
exercise their right to withdraw their membership pursuant to Article 39.
c.  The Authority shall issue the guidelines governing the procedure of merger
or  consolidation  of cooperatives.  The  merger  or  consolidation  shall  be
effective upon the issuance by the Authority of the Certificate of Merger,
or  in  the  case  of  a  consolidation  of cooperatives,  a  new  Certificate  of
Registration.
ART.  23.  EJTects  a/ JITerger  and!  Conso!€dation.  -  The  merger  and
20
21
22
23
24
25
26      consolidation of cooperatives shall have the following effects:
27
28
29
30
31
32
33
a.  In  case  of  merger  of  cooperatives,  the  constituent  cooperatives  shall
become   a   single   cooperative   or,   in   the   case   of   consolidation   of
cooperatives, the consolidated cooperative shall be the new cooperative.
b.  The single cooperative and the consolidated cooperative, as the case may
be:
c.   Shall   possess   all   the   assets,   rights,   privileges,   immunities,   and
franchises of each of the constituent cooperatives; and
16


d.  shall be responsible for all the liabilities and obligations of each of the
constituent cooperatives.
e.  Any claim, action, or proceeding instituted by or against the constituent
cooperative(s)    may   be    continued    by   the    single    or   consolidated
cooperative, as the case may be.
f.   The merger or consolidation shall not impair the rights of creditors nor
any lien upon the property of the constituent cooperatives.
CIIAFTER V. TYPES AND CATEGORIES OF COOPERATIVES
AR:T. 24. Ct:ushers cmd Categories Of Cooperatives. -
a.  Clusters of Cooperatives - Cooperatives may fall under any of the following
clusters based on their business activity:
(1) Credit: Fi.n?nc?, Barthing,  and Insurance Cluster refers to cooperatives
organized for the promotion of financial freedom and literacy among its
members, and undertakes savings, lending, and other financial services
to  its  members.  This  includes  insurance  cooperatives,  credit  surety
fund cooperatives, and cooperative banks;
(21 Consumers,   Mcirketing,   Producers,   and   Logistics   Cluster   refers   to
cooperatives organized for the supply, procurement,  and marketing of
products  of its members,  industrial production,  and non-agricultural
business activity for the production and processing of raw materials or
goods or its derivative;
(3) Human Services,  Health, Housing, Workers,  and Labor Service Cluster
refers to cooperatives organized for providing employment and business
opportunities to its members, housing and services related to medical,
dental,  health  and  wellness  and  death  care,  technology,  including
digital payment services;
(4) Eczztcatl.on cmcz AcZz/ocacg Czt/star refers to cooperatives organized for the
promotion and advocacy of cooperativism among its members and the
public   through   socially-oriented   projects,   education   and   training,
research and communication;
(5) 4griculfure_,   Agrcwian,   Aquaculfure,   Fcrmers,   Dalny,   and   Fisherfozh
CZuster refers to cooperatives whose members are involved or engaged
in the raising or culture of plants and animals, including the production
and processing of agricultural produce and its derivatives. This includes
cooperatives organized by agrarian refomi beneficiaries, which includes
17


4
5
6
7
8
9
10
iE
12                    government agency;
13         b.  Categories of cooperative.  Cooperatives shall be categorized as follows:
14              (1) In terms of membership, cooperative may be categorized into:
15                  i.   Primary -The members of which are natural persons;
16                 ii.   Secondary -The members of which are primary cooperatives;
17                iii.   Tertiary -The members of which are secondary cooperatives;
23
marginal farmers, for the purpose of developing a sustainable system of
land    tenure,    land    development,    land    consolidation,     or    land
management.
(6) jJLtbzt.c Uft.ZI.tr.es  CZL{ster refers  to  cooperatives  organized for the  purpose
of undertaking electricity generation, utilizing renewable energy sources
including    hybrid    systems,    acquisition    and    operation    of   sub-
transmission  or  distribution;   operation  and  management  of  water
systems;     land,     air,     and     sea     transportation     services;     and
communications      services      including      telephone      and      digital
communications,   for   which   a   franchise   or   certificate   of   public
convenience  and  necessity  has  been  duly  issued  by  the  appropriate
iv.   Special -The membership of which does not fall under the preceding
categories, as determined and approved by the Authority under this
Code and its lmplementing Rules and Regulations
(2)  In  terms  of  territory,  cooperatives  shall  be  categorized  according  to
areas of operations.
CHAPTER VI. FEDERATION OF COOPERATIVES
24                ART.  25.  Area  a/ CotJerage.  -A  federation  of cooperatives  may  be
25      organized  at  the  municipal/city,  district  or  provincial  level,  regional,  inter-
26      regional or national levels while a tertiary federation may be organized in the
27      regional, inter-regional or national levels only.
28               AR:T. 26. Members of a Federation of cooperatives. -Members of a
29      federation of cooperatives shall consist of cooperatives engaged in the same line
30      or type of business as specified in its Articles of cooperation and By-laws.
31                 The  minimum  number  of members  shall  be  at  least ten  (10)  primary
32      cooperatives  for a federation  of cooperatives  and  at  least ten  (10)  secondary
33      cooperatives for a tertiary federation of cooperatives.
18


T5.I_._ 27:._ _Alr:I?_ri.zee, .Subscrtpe4, . cnd.  Paid-up   capitat  of  a
Fec{eratfon. - The authorized share capital of a cooperative shall be provided
for  in  its  Articles  of  Cooperation  where  at  least  twenty-rive   (25%)  of  the
authorized share capital shall be subscribed to by the members and at least
twenty-five per centum (250/o) of the subscribed share capital shall be paid up
prior to its registration.
7                 The minimum paid-up share capital for a federation of cooperatives shall
8      be one Million pesos  (P1,000,000.00).  For tertiary federation of cooperatives,
9      the minimum paidlup share capital is F`ive Million pesos (P5,000,000.00).
1.9           .   AR:I. 28: Fegis±ratton of Federation of cooperatbes. -AL federation
11      and a tertiary federation of cooperatives shall be registered with the Authority.
12                ART. 29. mnc€£ons a/ a Fec!eratfon a/ Cooperat€ues. -A federation of
13      cooperatives shall undertake the following functions:
: i      a  ;;t¥C:aLn¥mre:n:ts::a:ung:i:P:et:s:ts:£e:;¥t:e:ge:n:S::samEt:ht:c¥£:1::ontodfceLo::fi±::tc::oe5=s;:::
::        b.  :o°tchaergu°sfieesnsc::tr±avl§t:;sa:f£:sssiset=g:rcs:t£°nal and advisory work relating
i!      C  ;;°:Lt=:i:s:y::r:::ig;:::n;du:::e:s;:t::::optf#::r:i::°rfie:e=::¥,£::::o%jo:::f:La:t:1eva:n::;:t:hn::
2:       d.  fnotepr::tt'o?Tt:llf:Labnedr-cci:::::taeti::? :::seT::=rn,:eos:her publication in the
25         e.  To coordinate and facilitate the activities of its member-cooperatives;
:;       f.   :°a::tfearc:::: J£:tsvae[:toufr::o¥it:t:°±Cna]t£: 1;nht:]g:±ti°e:alanc:°apberroaat;res ±n the
:i       8.  i;sopp¥i::t:vafroLLyg aacidasbe::ne:±iLa:i:-mmeg:a£::s±nanL:teorf-£L::::  ::Og:r=t:Vj
:;       h. ::rna;]S±]£c:se:obtehres #hhoeri:yu:=isos:a:r°gfo::=r£::ir:: rreei°[rattso;ngo:::se;r
§2        i.   :ipssaocitv::/I:i:£cde:i:: ::±=S:Stcfonotphe::iEvue±dma:]££e°rfs:he remaining assets of
10


j.   To   develop   programs   on   education,   training,   monitoring,   coaching,
research, and advocacy which complements, augments, and supplements
the businesses of their members; and
i       k  ;n:sopP:escr::Lt=;t:hxeanA#ntta::onntyfL::LnegnsLsa:¥r:n::e::r;jn:;TrL:fi%:a::ry::I:I::ne:=:in::rd
7                ART.  30.  Spec±az Tt/pes a/ Feczeratfons.  -Primary cooperatives that
8      are not in the same line of business may organize a special type of federation
9      for the purpose of delivering the following exclusive services:
10         a.  Water supply system services;
11          b.   Healthcare services;
12          c.   Deathcare services;
13          d.  Technology services;
14         e.   Digital payment services; and
15         f.    Deposit insurance services
16                 Primary cooperatives who federate under this Article are prohibited from
17      engaging in any other business activity not related to the preceding services.
18                                           CHAPTER VII. COOPERATIVE UNIONS
1_9           .    AR:I. 81. Organization ar\d puxposes of a cooperaflue union. -AIL
20      registered cooperatives and federations at the appropriate levels shall organize
21      orjoin cooperative unions to represent the interest and welfare of all types of
22      cooperatives. Cooperative unions may have the following purposes:
23         a.  To represent its member organizations;
24         b.  To  acquire,  analyze,  and  disseminate,  economic,  statistical,  and  other
25              information relating to its members and to all types of cooperatives within
26               its area of operation;
27         c.  To  sponsor  studies  in  the  economic,  legal,  financial,  social  and  other
28               phases of cooperation, and publish the results thereof;
::         d.  ::o:[Pdne:Tot tralnfngs  to  member-Cooperatives  as  an  accredited  training
20


1         e.  To promote the knowledge of cooperative principles and practices;
2         f.   To develop the cooperative movement;
2        8.  ::ve::;]itentthaect]%:ttifeosn#thai:dthi:::less:::±rvneTue::d]Tc:£±:i; £n   cooperative
:        h.  E:opaesrs::£tve£#e:fuemdj:::in;faant;on   and   mon±torfng   of  the   philippine
3       i.  ::maps]:is=c:se:obtehres A:tthhoeri:;banm;Sosj£:r°gfo:::r£::ir:: rreei°]rattso;ngo:::se;r
: i     J  |e::ira:i::f;:::r;:qiie:c:t¥jij?:;ft:;jt:hiis:::tey:ijo:L=ii;::t;1:r:t;b;:rig:r:::;:y:::?di::
:£        k.  ::opae:¥t::est;he   appropriate   authorities   on   all   questions   relating   to
i :       I.   fe°maar?ii=: ifsqsueftdsa::rdsis::1:::;:inc8eifesds£S::::ery£:o:::r=:i::d:t:°mnbe°rfs :he
: :        in. fo°adt:aa£:dt£:¥o°rre=o:=:ho:ut:cet:vne:T-business activities as may be necessary
19               AR:I. 82. Sources of Funds f ior cooperative unions. -The funds of a
20      cooperative  union  shall  be  sourced  from  the  membership  fees,   dues  and
21      contributions,  remitted cooperative education and training fund (CETF)  from
22     member-cooperatives, donations/grants, and subsidies from local and foreign
23      sources, whether private or public.
24        _     AR:I. ee. Prohibited practices and Activides of cooperative unions.
25      -Cooperative unions shall be prohibited from:
26         a.  Engaging in any business activity;
27         b.  Treating the remitted CETF as income;
28         c.   Distributing its fund balance to its members;
29         d.  Accepting training fees during the conduct of trainings;
30         e.   Competing with, or superseding the training activities of its members;
31          f.   Engaging in any fundraising activities;
21


1
2
3
4
9.  Using any part of its fund for any purpose other than the purposes stated
in the Articles of Cooperation; and
h.  Engaging in any activity which is contrary to law, morals, public order, or
public policy.
5                                                  CHAPTER VIII. MEMBERSHIP
6                ART.  34.  JIfembership. -All members of cooperatives  shall be regular
7     members, except as provided in Article 123, ChapterxxII of this code.
8                A   regular   member   is   a   person   who   has   complied   with   all   the
9     qualifications   of   membership   including   the   Pre-Membership   Education
10      Seminar and shall be entitled to all the rights and privileges of membership.
11                AR:I. 85. Quauf icattons of Membership. -
i i      a  ;n:e::¥ocr::lot;a:n:i,::±VLih:ifi:P::gi°:;jtsizi££:;8°::oi§:g::::cf::ieo=nm¥e::=:::i%ir::iiv:§orfe=::h§j
16               disqualifications  provided  for  in  the  By-laws.  A  member  must  have
17               completed the pre-Membership Education seminar (PMES).
18         b.  Secondary  Cooperative  -only  registered  primary  cooperatives  shall  be
19               members of a secondary cooperative.
20         c.  Tertiary  Cooperative  -only  registered  secondary  cooperatives  shall  be
21               members of a tertiary cooperative.
22         d.  Special  Types  of  Cooperatives  -members  are  either  natural  persons,
23              juridical persons, and/or registered primary and secondary cooperatives.
24                AR:T. 86. Gouemrneut oof fitcers and Emptogees. -
25         a.  All elective officials of the Government shall be ineligible to become officers
26               of cooperatives: Proz#.czecz, That the disqualification does not extend to a
27              party list representative being an officer of the cooperative he or she
28               represents;
29         b.  Employees  of  the  Authority  are  allowed  to  become  a  member  of  any
30               cooperative. However, they shall be disqualified to be elected or appointed
31               as an officer, except for cooperatives organized among themselves;
32         c.  Any  government  employee  or  official  may,  in  the  discharge  of his/her
33               duties as a member in the cooperative,  be allowed by the head of office
22


19      cooperative.
2o                ART. e9. Term;inattor. Of Membership. -
::      a  ;:°aFce:re¥dt:i:obff#:ii:°:hp:::;:1;i;td:a;:t°fr::±h:e:c:e¥:tot:D::be:Crt:O::LPc¥f::F sht£:
24
25
26
27
concerned  to  use  official  time  for attendance  at  the  General Assembly,
Board,    and    committee    meetings    including    cooperative    seminars,
conferences, workshops, technical meetings, and training courses locally
or abroad.
ART.  37. App{icat{on. - An application for membership shall be acted
upon by the Board of Directors within the period fixed in the By-laws but not
later than thirty (30) days. Otherwise, the application for membership shall be
deemed approved,  subject to the condition that the applicant has  submitted
his/her duly accomplished application and has paid the membership fees to
the cooperative.
In case membership is denied by the Board of Directors, an appeal may
be made to the General Assembly through the Election Committee,  sitting as
the appeals  and  grievance  body,  within fifteen  (15)  days  after  receipt  of the
notice of denial and the latter's decision shall be final.
If the committee fails to decide within the prescribed period, the appeal
is deemed approved in favor of the applicant.
ART. 38. L€clb€Zitg a/jlfembers. - A member shall be liable for the debts
of the cooperative to the extent of his subscription to the share capital of the
b.  The  death  or  insanity  of a  member  in  a  primary  cooperative,  and  the
insolvency  or  dissolution/cancellation  of a  member  in  a  secondary  or
tertiary cooperative shall be considered valid grounds for termination of
membership: Prozn.c{ecz, That in the case of death or insanity of an agrarian
2:            :esfs°u=ebtehnee£Cuft¥s-:nedmrbeesrp:fn:i::I:t:::aotivteiet::£g::[]£fiie:in;f=:;-°f-ran may
30
31
32
33
34
35
36
37
c.  Termination of membership in the cooperative shall be initiated through
the filing of a complaint before the ethics committee of the cooperative.
The committee shall recommend to the Board of Directors the termination
of membership for any of the following causes:
(1) When a member has not patronized any services of the cooperative for
an unreasonable period of time as provided in the By-laws;
(2) When  a  member  has  continuously  failed  to  comply  with  the  other
obligations as provided for in the Bylaws;
23


i             (3) yf¥£: cao:peeTabt:;e?as acted jn violation of the By-laws and the policies
:            (4) :::I:neyo::ie°rco°o:I:Srsa±t°£:e}n:::°uS °r prejudicial to the interest or the
(5) When a member has been declared as a member not in good standing
for a period of two (2) consecutive years.
7                 Membership  in  the  cooperative  may  be  terminated  by  a  vote  of  the
8      majority  of  all  the  members  of  the  Board  of  Directors.  A  member  whose
9     membership the Board of Directors may wish to terminate shall be informed of
10      such intended action in writing and shall be given an opportunity to be heard.
11      The decision of the  Board  shall be  in writing and  shall be  communicated in
12      person, by registered mail, or by electronic mail to said member and shall be
13      appealable within thirty (30) days from receipt thereof to the General Assembly.
14                 An appeal may be made to the General Assembly through the Election
15      Committee,  sitting as the appeals and grievance body, within thirty (30)  days
16      after receipt of the  appeal,  and the latter's decision shall be final.  When the
17      committee  fails  to decide within the prescribed period,  the appeal is  deemed
18      approved in favor of the  member.  Pending a final decision,  the membership
19      shall remain in force.
20                ART. 40. Regivnd! a/Juterests. -AIl sums computed in accordance with
21      the By-laws due from a cooperative to a former member shall be paid to the
22     member by the cooperative, in accordance with this code and as prescribed in
23      the Implementing Rules and Regulations: Proui.czec{, That such refund shall not
24     be made if upon such payment, the value of the assets of the cooperative would
25     be less than the aggregate amount of its debts and liabilities exclusive of the
26      members' share capital contribution.
27                                                CHAPTER IX. ADMINISTRATION
2^8^      .        PP:T.  4_+.   _Corxpo_sitlort  _Of  the  General  Assernbkyf tepresentatlve
29     Assembly. - The General Assembly shall be composed of the full membership
30     of the cooperative duly assembled, exercising all the rights and performing all
31      the obligations pertaining to cooperatives, as provided in this Code,  and in its
32     Articles of cooperation and By-laws.
33                 For   coopera.tives   with   numerous   and   dispersed   membership,   the
34      Representative   Assembly   shall   be   the   full   membership   of  the   body   of
35     representatives  elected  by  each  of  the  sector,   chapter,   or  district  of  the
36      cooperative duly assembled for the purpose of exercising such powers lawfully
24


9
10
Ej    ffl
12
13
14
15
16
17
18
19
20
21
delegateduntothembytheGeneralAssemblyinaccordancewiththerulesand
regulations of the Authority.
A=:p4T3;PLO.=.e=+3`{t.hLe^\#eLn_er=_1_AS_Se`whfgflRepreseTtquveAssembly.
-  The  General  Assembly  shall  be  the  highest  policy-making  body  of  the
cooperative and shall exercise such powers as are stated in this Code, and in
the  Articles  of  Cooperation  and  By-laws  of  the  cooperative.   The  General
Assembly,  through  its  members  entitled  to  vote,  shall  have  the  following
exclusive powers which cannot be delegated:
a.  To determine and approve amendments to the Articles of Cooperation and
By-laws;
b.  To elect or appoint the members of the Board of Directors, and to remove
them for cause. However, in the case of the electric cooperatives registered
under this Code,  election of the members  of the Board shall be held in
accordance  with   the   By-laws   or   election  guidelines   of  such   electric
cooperative; and
c.  To  approve  developmental  plans,  annual  plans,   and  budgets  of  the
cooperative.
d.  To approve or disapprove proposals from the Board of Directors pertaining
to  all  external  borrowings,  investments,  grants,  donations  and  other
financial assistance; and
e.  To decide membership issues within the cooperative.
Subject to such other provisions of this Code and only for purposes of
prompt and intelligent decision-making, the General Assembly may by a three-
fourths (3/4) vote of all its members entitled to vote, present and constituting
a quorum,  delegate  some of its powers to  a smaller body of the cooperative.
These powers shall be enumerated under the By-laws of the cooperative.
27                 AR:T. 48.  Mectings. -
28
29
30
31
32
i:              g:::I:noEd°.r publicationj or through other electronic means to all in;-i°b'ei€
;i     b  ¥i;::i:e:i;:i:y;:::::ai?t-y;ae:iic¥in:g?d:;tiiima:::;ti;:rt;Bc;n:e:rdai:it:eEn::¥::ts;e:::::
a.  The General Assembly shall conduct a regular annual meeting on a date
fixed in the By-laws,   which shall be within ninety (90) days for primary
cooperatives  and  within  one  hundred  eighty  (180)  days  for  secondary,
tertiary, and special types of cooperatives after the close of each calendar
year: Proz/1.c{ecz, That notice of regular meetings shall be sent in writing, by
__  _L±__   _-_   __                  11.             ,   .
25


However,   a  special  meeting  shall  be  called   by  the   Board  of
Directors  upon  petition  of at  least  ten  per  centum  (loo/o)  of the  total
members  who  are  entitled  to  vote,  to  transact  specific  business  after
compliance with the required notice.
If the Board fails to call a regular or a special meeting within the
given  period,  the Authority,  upon  petition  of ten  per centum  (loo/o)  of
members entitled to vote constituting a quorum or the quorum as stated
in their By-laws and for good cause shown,  shall issue an order to the
petitioners directing them to call a meeting of the General Assembly by
giving proper notice as required in this Code or in the By-laws;
c.   In the case of a newly registered cooperative, a special General Assembly
meeting shall be called within sixty (60)  days from such approval of its
registration, for the following purposes:
14              ( 1)  Presentation of approved Articles of cooperation and By-laws;
15              (2) Approval of business plans and annual budget; and
16              (3) Other matters, as may be determined by the cooperative.
i!      d  ::s:ur|:!o:f:::t;1lv:?xAi:|iEt:jy::::o::te:::€::o::::::t:i:orif:t:hge:;::ohpe:r=:1::be:rr:a:rfs:
e.   Notice  of any  meeting  may  be  waived,  expressly  or  impliedly,  by  any
member.
£P:I.  n4±_.__`¥Ode` Of  ?enducti:lg   Reg¥tar   or   Special   Assembly
ureetings. - Regular and special assembly meetings may be conducted in any
of the following manner:
:;         a.  gauylr assembled in one venue, wherein the meetings are held on the same
28         b.  Simultaneously, wherein the meetings are held on the same day; or
::       C.  =3uaed::£#r]¥in¥::r;i# £ted:ne:t::gtsh=]eashteida;:r a certain number of days
31                 The conduct of sequential General Assembly meetings shall not exceed
32      sixty (60) days from the opening of the meeting up to its adjournment.
33                 As  a general rule,  assembly meetings  shall be conducted in a manner
34      provided   in   the    cooperative's    By-laws.    However,    due   to   technological
26


1,     advancement,   public   health   and   safety   measures,   increased   level   of
2      participation of members and other equally important considerations in favor
3      of the viability and growth of cooperatives, cooperatives are allowed to conduct
4      their  assembly  meetings  through  videoconferencing  or  a  combination  of
5      physical  attendance  and  videoconferencing,  except for electric  cooperatives:
6      Prozji.czec!,  That  cooperatives  who  opt  to  conduct  General Assembly meetings
7      through  videoconferencing  or  a  combination  of  physical  attendance  and
8      videoconferencing as an alternative mode shall amend their By-laws adopting
9      the   same:   Proul.czed,  rtyrther,   That   cooperatives   shall   adopt   policies   and
10      procedures  sufflciently  addressing  administrative,  technical,  and  logistical
11       concerns for an effective and efficient video conference meeting.
12                 ART.  45.    Otto"m.  -Unless  a higher requirement is  provided  in  the
13      cooperative By-laws, a quorum shall consist of at least twenty-five per centum
14      (25%)  of  all  the  members  entitled  to  vote:   Proujcz€cZ,  That  special  types  of
15      cooperatives  regulated  by  other  agencies  shall  follow the  minimum  quorum
16      requirement as may be prescribed by pertinent laws: Prond€cZ,rtyrther, That the
17      quorum for Representative Assembly shall be in no case lower than twenty-five
18      per centum (25%) as provided for in the By-laws of the cooperative approved as
19      theAuthority.
20                 In  the  case  of federations  of cooperatives  and  cooperative  unions,  the
21      quorum requirement  shall  be  fifty per  centum  (50%)  of the total  number of
22      members entitled to vote.
23           In the conduct of sequential General Assembly meetings, cooperatives shall
24      be required to muster the quorum in any of the following manner:
:;       a  ;:uh:eh¥uT:§thf:i]£}: €:iedr:c±tn:fdGaennderdaeLCA:rseedmf:Lrye£::t:i::enF)Tamd?::r°nf£:#:
::        b.  %::i:]eE i:ha:L±::eg;etoerrmfned  and  declared  on  the  day  the  percentage
30         c.   Quorum  shall  be  determined  and  declared  on  the  day  prior  to  the
31               adjournment.
32                ART. 46.  Voting sgrstem, -Each member of a primary cooperative shall
33      have only one (1) vote regardless of the amount of member's share capital.  In
34     the case of members of secondary, tertiary or special types of cooperatives, they
35      shall have one (1) basic vote and as many incentive votes as provided for in the
36      By-laws but not to exceed five (5) votes. The votes cast by the delegates shall
37      be deemed as votes cast by the members thereof.
38                 However, the By-laws of a cooperative, other than a primary cooperative,
39      may provide for voting by proxy. Voting by proxy means allowing a delegate of
27


a cooperative to  represent or vote  on behalf of another delegate  of the same
cooperative.
A=:T=.47:   CoTP.Psition and Term Of the Board Of Directors. -rThe
Board of Directors shall be composed of not less than five (5)  nor more than
fifteen(15)memberselectedbytheGeneralAssemblyforatermoftwo(2)years
and shall hold office until their successors are duly elected and qualified, or
until duly removed for cause.  However, no director shall serve for more than
three (3) consecutive terms.
9               ART. 48. Potoers a/ the Board a/ Directors. -The Board of Directors
10      shall be  responsible  for  the  strategic  planning,  direction-setting  and  policy-
ll      formulation activities of the cooperatives.
12                 ART. 49.   D!rec€ors. -
i i      a  ;::o:vcL§o:d:S:n::te:S:saa§::h:ee:;:L¥el:¥s:::;:s:;a:ne:r:¥Li::oV:::t::TeddL£:q:u¥°:tt::%¥::
b.  The  cooperative  may,  by  resolution  of its  Board  of Directors,  admit  as
directors,   or   committee   member   one   appointed   by   any   financing
institution from which the cooperative received financial assistance solely
to provide technical knowledge not available within its membership. Such
director or committee member need not be a member of the cooperative
17
18
19
20
21
::            t=clnsitgi]a€:rset£°cep:¥:::'u:i:£t£;:£: ::::::asti±bvi::ties except to provide
:i       C.  i:hro:pc¥r;a¥::::v:i t?ne Fh°eardda;ft:Lrde:;°:Sp:faatLL]o:°Lhd°Ldm::¥g°et::rntp°osfLt:::
2:        d.  fnn¥npye;S:ynhe:s8:gceodn±#£cat bo¥:;:::ess:i:£i[£r±tt,°±:hd::::ih±i]::°fpoe:ate±]Veec:i:¥::
29               a director of said cooperative.
;i      e ' ;uFnTcot:etn:::;::f::fiif::,o:irndt::e::e;c:o::c:ot:il:r:f|:E:,ola!:::eo:h:a:ii:ievscetr::1:gE:
33               promulgated by the Authority.
34               AR:I. 50. Meeting of the Board and Quoram Requfremeut. -
a.  In  the  case  of primary  cooperatives,  regular  meetings  of the  Board  of
Directors shall be held at least once a month.
28


1         b.  Special meetings of the Board of Directors may be held at any time upon
2              the call of the chairperson or a majority of the members of the Board. In
3               case a special meeting is called by the Chairperson, written notice shall
4               be given three (3) days prior the date of said meeting. On the other hand,
5              if the special meeting is called by a majority of the Board, a prior written
6               notice  to  other  members  of the  Board  at  least  one  (1)  day  before  the
7               intended  date  of the  special  meeting will  suffice.  Notices  may  be  sent
8              through  electronic  means  or  to  the  official  contact  number  or  email
9               account of the officers.
10         c.  A majority of the members of the Board shall constitute a quorum or the
11               conduct of business, unless the By-laws provides otherwise.
12         d.  Directors cannot attend or vote by proxy at Board meetings.
13         e.   Cooperatives  may  opt  to  allow  meetings  of the  Board  of Directors  and
14               members  of the  different committees  of cooperatives  may  be  conducted
15              either through physical attendance  or videoconferencing,  subject to  the
16              rules on sending of notices, quorum, and voting requirements as provided
17               for in the By-laws. In the conduct of meetings through videoconferencing,
18               cooperatives shall adopt their own policies and procedures which shall be
19               included in their By-laws.
20                ART.  51.  Vacaney in the Board a/ Directors.  -Any vacancy in the
21      Board  of Directors,  other  than  by  expiration  of temi  or  an  increase  in  the
22      number of Board of Directors, may be filled by the vote of at least a majority of
23      the remaining directors, if still constituting a quorum; otherwise, the vacancy
24      must  be  filled  by the  General  Assembly  in  a  special  meeting  called  for  the
25     purpose which must be held not later than thirty (30) days from the time the
26     vacancy  occurs  or  during  the  regular  meeting,  whichever  comes  earlier.  A
27      director  so  elected  to  fill  a vacancy  shall  serve  only  the  unexpired  term  of
28      his/her predecessor in office.
29                 In  case  of vacancy  of the  entire  Board  of Directors  or  failure  of the
30      General Assembly to call a meeting, the Authority shall compel the cooperative
31      through the Election committee to call for a special General Assembly meeting
32      for purposes of electing a new set of Board of Directors. In the absence thereof,
33      the  General  Assembly  may  appoint  an  Ad  Hoc  Committee  who  shall  be
34      responsible in conducting a special General Assembly meeting.
35                ART. 52.  O/ficers oJ. the cooperatitAe. -The officers of the cooperative
36      shall include the members of the Board of Directors, members of the different
37      committees  created  by  the  General  Assembly,   General  Manager  or  Chief
38      Executive Officer, Secretary, Treasurer, and other officers as may be provided
39      for in their By-laws. As such they are entrusted with the power of exercising
29


1,     authority within the scope of their defined functions which shall include the
2      exercise of control and discretion in the performance of their duties.
3                 The   Board   of   Directors   shall   elect   from   among   themselves   the
4      Chairperson and Vice-Chairperson,  and elect or appoint other officers of the
5      cooperative from outside of the Board in accordance with their By-laws.
6                 The Board of Directors is prohibited  to  appoint as  officers  any person
7     related to them up to the fourth civil degree of consanguinity or affinity. Neither
8      shall the appointive officers be related to each otherup to the fourth civil degree
9     of consanguinity  or  affinity.  Further,  no  officer  shall  engage  in  a  business
10     similar  to  that  of the  cooperative  nor in  any other manner has  interests  in
11       conflict with the cooperative.
12               AR:I. 58. Corrmit±ees of cooperatives. -
13         a.  The By-laws may create an executive committee to be appointed by the
: €             [Pn°:i: °Bfyp]£ar:Cst°orrs bwyft£ =ua::rpt;Wveortse=fdaf]utti:S£:mmbaeyrsbeofd:|ee8%t:£r:°:i
16                 Directors.
17         b.  The   By-laws   shall   provide   for   the   creation   of   an   audit,   election,
18               conciliation-mediation,  ethics,  gender and  development,  education,  and
19              such other committees as may be necessary for the conduct of the affairs
20               of  the  cooperative.  The  members  of  the  audit,   election,   conciliation-
21               mediation, and ethics committee shall be elected by the General Assembly
22               and the rest shall be appointed by the Board.
23                 Unless otherwise provided in the By-laws, the Board, in case ofa vacancy
24     in the committees, may call an election to fill the vacancy or appoint a person
25      to fill the same subject to the provision that the person elected or appointed
26      shall serve only for the unexpired portion of the term.
2]               AR:T. 54._ Functions, Responsthittties and Training Requiremertts of
28      Directors,   OJT)tcers   and   Ctommittee   Jkrembers.   -   The   functions   and
29      responsibilities of directors, offlcers and committee members, as well as their
30      training  requirements,  shall  be  prescribed  in  the  cooperative's  By-laws  in
31      accordance with the rules and regulations issued by the Authority.
32               AR:I. 55. Itabtlltg of Directors, Offltcers and corrrmittee Members. -
33      Directors,  officers and committee members, who willfully and knowingly vote
34      for or assent to patently unlawful acts or who are guilty of gross negligence or
35     bad faith in directing the affairs of the cooperative or acquire any personal or
36     pecuniary  interest  in  conflict  with  their  duty  as  such  directors,  officers  or
37      committee  members  shall  be  liable jointly  and  severally  for  all  damages  or
38      profits resulting there from to the cooperative, members, and other persons.
30


18               to this code or its By-laws may be fixed in the By-laws .--------- r~+~--+"
i;       C  ?#tiei:i:ealfrees=h:a:ialfiigpe:Lf=:Inn;e::#R:¥;')B:o:aiddco°fmDPL:::taot::nLn°:ccalo]rd°at£::
When  a  director,  offlcer or committee  member attempts  to  acquire  or
acquires,  in violation  of his/her duty,  any interest or equity adverse  to  the
cooperative in  respect to any matter which  has  been reposed  in  him/her in
confidence, he shall, as a trustee for the cooperative, be liable for damages and
shallbeaccountablefordoubletheprofltswhichotherwisewouldhaveaccrued
to the cooperative.
AR:I. 56. Compel.sat±on and Other Emo.uments. -
a.  In the absence of any provisions in the By-laws fexing their compensation,
thedirectorsshallnotreceiveanycompensationexceptforreasonableper
dl.ems:  ProLJi.c!ecz,  That  no  additional  compensation  other than per czt.ems
shallbepaidduringthefirstyearofexistenceofanycooperative:I+ozn.czecz,
rtyrfber, That.entitlement to per CZI.em shall be limited to attendance to two
(2) meetings in a month, regardless of the number of meetings conducted:
Proz;t.decz,/incizzg,Thatnoincreaseincompensationshalltakeeffectduring
the term of the incumbent Board of Directors approving such increase.
b.  The compensation of officers of the cooperative as well as the members of
the committee as well as the members of the committees created pursuant
1_   ill_I_    ^  _   _11                  .I        -        ,
AR:I. 57.   Pe.alin_gs Of Directors, Outfitcers, or Corrrmittee Members. -
A contract entered into by the cooperative with one (1) or more of its directors,
or their spouses and relatives within the third civil degree of consanguinity or
affinity, is voidable, at the option of the cooperative, unless the first three (3)
conditions are present:
2:       a.  :::tatphperg:::e::: :fo::::e:I:r:%°tro ±cno:hs:±tBu°t:r: qmueoe£=8fi¥rh::ec±# i°e:::::;
:8         b.  :ohnattr::te; Vote of such director was not necessary for the approval of the
c.  That  the  contract  is  fair,  reasonable,  and  beneficial  to  the  cooperative
under the circumstances; and
§§      d  E:::leo:::o:::h:Cob:yj\:t::e::a:::::;:;:i;:r±tL:i:¥t::;y:t¥:;n:t:y;:,::t:h:ee:C§:::e¥:jrL¥::;u:s:;
31


1.                The  Board  of Directors  shall  report  any such  contract  to  the  General
2     Assembly during its regular meeting for ratification.
3                 Where any of the first two conditions set forth in the preceding paragraph
4     is absent, in the case ofa contract with a director, such contract may be ratified
5     by a three-fourths (3/4) vote of all the members entitled to vote, present and
6      constituting a quorum in a meeting called for the purpose: Proz#.decz, That full
7      disclosure  of the  adverse  interest  of the  directors  involved  is  made  at  such
8     meeting, and that the contract is fair and reasonable under the circumstances.
9                 For contracts entered into with officers and/or committee members, only
10      the conditions set forth in paragraphs (c) and (d) of this Article shall apply.
11                AR:T.  58.   Distogattg  Of  a  Director  and  Other  OJ:fitcers  Of  the
12      CooperatitJe. -A director or other officers of the cooperative who, by virtue of
13      such office, directly or indirectly acquires for themselves an opportunity which
14      should belong to the cooperative shall be liable for damages and must account
15      for double the profits that otherwise would have accrued to the cooperative by
16      refunding the  same.  This  provision  shall be  applicable,  notwithstanding the
17     fact that the director or other officers of the cooperative used their own funds
18      to acquire such opportunity.
19              AR:I. 59. megal use of conf ideutidl lnf iorrrution. -
20         a.  A  director  or  officer,  or  any  person  conspiring  or  conniving  with  that
21               director  or  officer,  who,  for  his/her  benefit  or advantage  or  that  of an
22              associate, makes use of confidential information that, if generally known,
23              might  reasonably  be  expected  to  adversely  affect  the  operation  and
24               viability of the cooperative, shall be held:
25               (1) Liable to compensate the cooperative for the direct losses  suffered by
26                    the cooperative as a result of the illegal use of information; and
27               (2) Accountable  to  the  cooperative  for  any  direct  benefit  or  advantage
28                    received  or yet to be received  by him/her or his/her associate,  as  a
29                    result of the transaction.
30         b.  The  cooperative  shall  take  the  necessary steps  to  enforce  the  liabilities
31                described in paragraph (a).
32                 ART.  60.   RemotJaz.  -All officers shall serve during good behavior and
33      shall not be removed, except for cause after due notice and hearing as provided
34      in their internal policies.  Loss of trust and confidence in the performance of
35      their duties shall be a valid ground for removal: Proz/I.czecz, That due process is
36      observed.
32


1                 All complaints for the removal of any elected officer shall be filed with the
2     Board of Directors.  Such officers  shall be given the opportunity to be heard.
3     Majority  of the  Board  of  Directors  may  place  the  ofricer  concerned  under
4     preventive suspension as may be provided in their internal policies, subject to
5      the length of the investigation. Upon finding pn.mcz/act.e evidence of guilt, the
6      Board shall present its recommendation for removal to the General Assembly.
7                 Such elected officers  may be  removed by three-fourths  (3/4)  votes  of the
8     members entitled to vote present and constituting a quorum, in a regular or
9      special General Assembly meeting called for the purpose. The officer concerned
10     shall be given an opportunity to be heard at said assembly.
11                  In cases involving the removal of a member of the Board of Directors, a
12      complaint may be filed with the Authority in accordance with the Implementing
13      Rules and Regulations to be promulgated by the Authority.
14                 In cases involving the removal of any appointive officer, a complaint shall
15      be filed with  the ethics  committee  of the  cooperative,  which  shall  submit its
16      recommendation  to  the  Board  of Directors  for  proper  action.  In  the  case  of
17      removal   of  the   General   Manager   or   the   Chief   Executive   Officer   or   its
18     counterpart positions, a complaint may be filed before the Authority in cases
19     provided under the rules and regulations issued by the Authority.
20                CIIAPTER X. RESPONSIBILITIES, RIGHTS AND PRIVILEGES OF
21                                                                  COOPERATIVES
22                ART.  61.  Address.  -  Every  cooperative  shall  have  an  official  postal
23      address where the principal office is located and an electronic mail address to
24     which all communications, reports, notices, and summons may be served, and
25     where all other documents required by the Authority shall be submitted. The
26     Articles of Cooperation and the By-laws shall be amended accordingly should
27      there be  a change in the official postal and  electronic mail addresses  of the
28      cooperative.
29                 For   this   purpose,   an   electronic   mail   registry   shall   be   created   in
30      accordance with the guidelines to be promulgated by the Authority.
31                 ART. 62. Books to be Kept operL. -
32         a.  Every cooperative shall have the following documents ready and accessible
33              to  its  members   and  representatives  of  the  Authority  for  inspection,
34              examination,   and  investigation  during  reasonable  office  hours  at  its
35               registered principal office:
36              (1) A copy of this code and all other laws pertaining to cooperatives;
.33


1,             (2) A copy of the Implementing Rules and Regulations of the Authority;
2              (3) A copy of the Articles of cooperation and By-laws of the cooperative;
3               (4) A registry of members;
4             (5) The  books  of the  minutes  of the  meetings  of the  General  Assembly,
5                   Board of Directors and committees;
6             (6) Except for cooperative union, a share and transfer book;
7             (7) Financial statements and other financial records; and
8             (8) Such other documents as may be prescribed by the Authority,laws, and
9                    the By-laws.
10         b.  The accountant or the bookkeeper of the cooperative shall be responsible
11               for the maintenance and safekeeping of the books and records of accounts
: :             3:atc¥[:ce::°Hpee/r:i±:esh±£i ::sCo°rbdearnecsepo¥£st±hb]e8::re:£]e[ypr%Cdcuecptt£:i oafctch°eu:in:
14               at the time of audit, inspection, examination or investigation.
15                          The  audit committee  shall be  responsible for the  continuous  and
16              periodic review of the books and records of accounts to ensure that these
17              are in accordance with generally accepted accounting practices.  He/she
18               shall also be responsible for the production of the same at the time of audit
19                or inspection.
20         c.  Each cooperative shall maintain records of accounts such that the true
21               and correct condition and the results of the operation of the cooperative
22              may  be  ascertained  there from  at  any  time.  The  financial  statements,
23              audited  according  to  generally  accepted  auditing  standards,  principles
24              and  practices,  may be  published  annually and  shall  be  kept  posted  in
25              conspicuous places in the principal office of the cooperative, its branches,
26               and satellite offices.
d.  Subject to the pertinent provisions of the National Internal Revenue Code
and other laws, a cooperative may dispose by  burning or any method of
complete  destruction  any  document,  record  or  book  pertaining  to  its
financial and nonfinancial operations which are already more than five (5)
years  old except those relating to  transactions which are the  subject of
civil, criminal, and administrative proceedings. An inventory of the audited
documents, records and books to be disposed of shall be drawn up and
certified to by the Cooperative Secretary and the Chairman of the audit
committee and presented to the Board of Directors which may thereupon
approve the disposition of said records.
34


1                 ART. 63. Reports. -Every cooperative shall prepare an annual progress
2     report with the necessary attachments as may be prescribed by the Authority
3     at the end of every calendar year. The reports shall be made accessible to its
4     members, and copies thereof shall be available upon request   of members on
5      record  during  reasonable  office  hours.  These  reports  shall be  filed  with  the
6     Authority within one hundred twenty (120) days from the end of the calendar
7     year. The form and contents of the reports shall be as prescribed by the rules
8      of the Authority.  Failure to file the required reports on time shall subject the
9     accountable  officer/s  to  fines  and  penalties  as  may  be  prescribed  by  the
10      Authority. Failure to file the required reports despite notice shall be a ground
11      for  the   suspension/cancellation   of  the   Certificate   of  Registration   of  the
12      cooperative, subject to the guidelines to be issued by the Authority.
13                 If a cooperative falls to make and file the reports required herein, or fails
14     to include therein any matter required by the code, the Authority shall, within
15      thirty  (30)  days  from  the  expiration  of  the  prescribed  period,   send  such
16      cooperative a notice  stating its non-compliance and the commensurate fines
17      and penalties  that will be imposed until such time  that  the  cooperative has
18      complied with the requirements.
19         _      AR:I. 64. Registrg of Members as prinra Facie Evidence. -A. registry
20      of members kept by any registered cooperative shall be pn.rna/czcz.e evidence of
21      the following particulars entered therein:
22         a.  The date on which the name of any person was entered in such registry or
23               list of members; and
24         b.  The date on which any such person ceased to be a member.
25                However,  other  information  may  be  required  in  accordance  with  the
26     guidelines that shall be prescribed by the Authority.
2]               AR:I. 65. Probative value of certif ited copies of Eritries. -A capy of
28      any entry in any book, registry or list regularly kept in the course of business
29      in the possession ofa cooperative shall, if duly certified in accordance with the
30      rules of evidence, be admissible as evidence of the existence of entry andp7i.77ici
31      /cier.e evidence of the matters and transactions therein recorded.
32                 No cooperative or person in possession of the books of such cooperative
33      shall,  in  any  legal  proceedings  to  which  the  cooperative  is  not  a  party,  be
34      compelled to produce any of the books of the cooperative, the contents of which
35     can be proved and the matters,  transactions and accounts therein recorded,
36      unless by order of the Authority in the exercise of its adjudicatory powers or a
37      competent court.
38                ART.  66.  Bond! a/Accottnfabze oulTicers.  -Every director,  officer,  and
39      employee handling funds, securities or property on behalf of any cooperative
35


1      shall be covered by a surety bond to be issued by a duly registered insurance
2     or bonding company for the faithful performance of their respective duties and
3      obligations.  The  Board  of  Directors  shall  determine  the  adequacy  of  such
4     bonds.   However,   the   cooperative   is   not   precluded   from   securing   other
5     insurance  policies  to  protect  from  losses  of  monies,  securities,  and  other
6     property from employees who have a manifest intent to cause the cooperative
7      loss.
8                 Within thirty (30) days upon approval of the registration of a cooperative,
9      the bonds of the accountable officers shall be required by the Authority. The
10      bond for the cooperative's Treasurer shall be ten per centum (loo/o) of the sum
11      of  the   initial   paid-up   capital   and   membership   fees.   The   bonds   for   all
12      accountable officers shall be renewed annually and adjusted accordingly.
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14
15
16
17
18
19
20
ABk. 67 .  Preference Of Clalrns. -
a.  Notwithstanding the provisions of existing laws, rules and regulations to
the contrary, but subject to the prior claim of the Authority, any debt due
to the cooperative from the member shall constitute a first lien upon any
raw materials,  production, inputs, and products produced;  or any land,
building,  facilities,  equipment,  goods  or services  acquired  and  held,  by
such member through the proceeds of the loan or credit granted by the
cooperative to him/her for as long as the same is not fully paid.
21         b.  No  property  or  interest  on  property  which  is  subject  to  a  lien  under
22               paragraph (a) shall be sold nor conveyed to third parties without the prior
23               permission of the cooperative. The lien upon the property or interest shall
24              continue to exit even after the sale or conveyance thereof until such lien
25              has been duly extinguished.
26         c.   Notwithstanding the  provisions  of any law  to  the  contrary,  any sale  or
27               conveyance made in contravention of paragraph (b) hereof shall be void.
28               A;RT. 68. Instrumerit f or said:ry or wage Deduction. -
29         a.  A  member  of  a  cooperative  shall,  notwithstanding  the  provisions  of
30
31
32
33
34
35
existing  laws  to  the  contrary,  execute  an  instrument  in  favor  of the
cooperative authorizing his/her employer to deduct from his/her salary or
wages,  commutation  of leave  credits  and  any  other  monetary  benefits
payable to him/her by the employer and remit such amount as maybe
specified  in  satisfaction  of a  debt,  share  capital  contribution,  or  other
demand due from the member to the cooperative.
b.  Upon the  execution of such instrument and as may be  required by the
cooperative contained in a written request,  the employer shall make the
deduction in accordance with the agreement and deduction in accordance
with the agreement and remit forthwith the amount so deducted within
36


1,
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8
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10
iE
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13
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ten  (10)  days after the end of the payroll month to the cooperative.  The
employer  shall  make  the  deduction  for  as  long  as  such  debt  or  other
demand remains unpaid by the employee.
c.  The term "employer" as used in this Article shall include all private firms
and   the   national   and   local   governments,   government-owned   and
controlled   corporations,   government  instrumentalities   with   corporate
powers,    government    corporate    entities,    or    government    financial
institutions  that employ a member of a cooperative  and have  agreed  to
carry out the terms of the instrument mentioned in paragraphs (a) and (b)
of this Article.
d.  The provisions of this Article shall apply to all similar agreements referred
to in paragraph (a) and were enforced prior to the approval of this Code.
e.   Notwithstanding  the  provisions  of  existing  laws  to  the  contrary,  the
responsibilities of the employer as stated in paragraphs (a) and (b) of this
Article shall be mandatory and without the need for any prior conditions,
accreditation  or  other  similar  processes  to  facilitate  or  implement  the
deductions.  Proz/I.decz, That in the  case of a private employer,  the actual
and reasonable cost for deducting and remitting may be collected.
19                 ART.  69.  Primar=/ Lion. -Notwithstanding the provision of any law to
20      the contrary, a cooperative shall have primary lien upon the capital, deposits,
21      or  interests  of a  member  for  any  debt  due  to  the  cooperative  from  such  a
22      member.
23                ART. 70.  rtlx Ttea€ment a/ Coopera€€ties. -F`or purposes of taxation,
24      cooperatives  duly registered under this  Code  shall  be  classified  according to
25     the extent of tax exemptions granted:
26         a.  Duly registered cooperatives under this code which transact business
27              with members only; and
28         b.  Duly registered cooperatives under this code which transacts business
29              with both  members and non-members are further sub-classified in
30               accordance with the following:
31              (1)  Cooperatives whose Reserve Funds have an existing balance of not more
32                    than one Hundred Million pesos (P100,000,000.00); and
33              (2) Cooperatives whose  Reserve  Funds  have  an  existing balance  of more
34                     than one Hundred Million pesos (P100,000,OOO.00).
35                ART.  71.  Tax and! OtJier Exemptions.  -Duly registered cooperatives
36      falling under paragraph (a)  of the preceding Article, regardless of the amount
37


of Reserve Fund, shall not be subject to any taxes, fees, and charges imposed
under the internal revenue laws and other tax laws.
3                 Duly registered  cooperatives  transacting business with  both  members
4     and  non-members  shall  not  be  subjected  to  tax  on  their  transactions  with
5     members. In relation to this, the transactions of members with the cooperative
6     shall not be subject to any taxes, fees, and charges, including but not limited
7     to  final  taxes  on  members'  share  capital  and  deposits  and  corresponding
8     documentary stamp tax.
9                 Notwithstanding the provisions of any law or regulation to the contrary,
10      such  cooperatives  dealing  with  non-members  shall  enjoy  the  following  tax
11       exemptions:
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26
27
28
29
30
31
32
33
34
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39
a.  Duly  registered  cooperatives  whose  Reserve  Funds  have   an   existing
balance  of not more than One Hundred  Million pesos  (P100,OOO,000.00)
shall be exempt from all national internal revenue taxes, fees, and charges
of whatever name and nature.
Such cooperatives shall be exempt from customs duties, advance sales or
compensating  taxes  on  their  importation  of  machineries,   equipment,
batteries, accessories, and spare parts used by them and which are not
available locally certified by the DTI. All tax free imports shall not be sold
nor the  beneficial ownership  thereof be  transferred  to  any person  until
after  five  (5)  years,  otherwise,  the  cooperative  and  the  transferee  or
assignee shall be solidarily liable to pay twice the amount of the imposed
tar and / or duties.
b.  Duly  registered  cooperatives  whose  Reserve  Funds  have   an  existing
balance of more than One Hundred Million pesos (PIOO,OOO,000.00) shall
pay the following taxes at the full rate:
(1) Income Tax -On income derived from transactions with non-members:
Pro".czecz, That the  same  tax is  not consequently imposed  on interest
individually received by members. The tax base for all cooperatives liable
to pay income tax shall be the income directly related from the business
transactions with  non-members  after deducting the  amounts  for  the
statutory funds.
(2) Value-Added Tax (VAT) - On transactions with non-members: Proz/I.czecz,
hoLueLJer,  That  duly registered  cooperatives  shall  be  exempt  from  the
imposition of VAT, namely the following:
(i)  Sales by Agriculture Cooperatives duly registered with the Authority
to  their  members  as  well  as  sale  of their  produce,  whether  in  its
original state or processed form, to non-members; their importation
of direct farm inputs,  machineries  and equipment,  including spare
38


parts thereof,  to be used directly and exclusively in the production
and/or  processing  of  their  produce,   and   their  resale   to   other
Agriculture Cooperatives;
(ii) Gross  receipts  from  lending  activities  by  credit  or  multi-purpose
cooperatives duly registered with the Authority;
(iii)Sales by non-agricultural,  non-electric  and non-credit cooperatives
duly registered with the Authority:  ProL;I.czecz, That the share capital
contribution of all members does not exceed Fifteen thousand pesos
(P15,OOO)  each  and  regardless   of  the   aggregate  capital  and  net
surplus ratably distributed among the members; and
(iv)Electric  cooperatives  duly  registered  with  the  Authority  shall  be
exempt from VAT on revenues on systems loss and VAT on revenues
on distribution, supply, metering, and lifeline subsidy of electricity to
their members;
P7-oz;jczecz, That the exempt transactions in the foregoing shall include
sales   made  by  cooperatives   duly  registered  with   the   Authority
organized   and   operated   by   their   members   to   undertake   the
production and processing of raw materials or of goods produced by
their  members  into  finished  or  process  products  for  sale  by  the
cooperatives to their members and non-members: Proz".czed, hoLuet;er,
That  any processed  product  or  its  derivative  arising  from  the  raw
materials produced by their members, sold in the name and for the
account of the cooperative: Proz/I.czecz, rtyrther, That at least twenty-five
per centum (250/o) of the net income of the cooperatives is returned to
the  members  in  the  form  of  interest  and/or  patronage  refunds:
ProL/I.czecz, fi7iczzzg,  That VAT and  e-VAT shall  not be  imposed for the
purchase of modernized vehicles, machineries, equipment, batteries,
accessories, spare parts, petroleum products, and/or motor fuels by
transport cooperatives whether imported,  locally manufactured,  or
produced; and
(3) All sales of goods and/or services rendered for non-members  shall be
subject  to  the   applicable  percentage  taxes   except  sales  made   by
commodities or service cooperatives; and
(4) All other taxes unless otherwise provided herein.
Donations to duly accredited charitable, research and educational
institutions and reinvestment to socioeconomic projects within the area
of operation of the cooperative may be tax deductible.
c.  All  duly  registered  cooperatives  shall  be  exempt  from  payment  of local
tares, fees and charges whether barangay, municipal, city, or provincial
3Q


'
1              taxes  and taxes  on transactions  with  banks and insurance  companies.
2              The Authority shall furnish the Municipal,  City,  or Provincial Assessor's
3               Office  a  certified  list  of  duly  registered  cooperatives  as  basis  of  their
4               removal from the Assessment Rolls;
5         d.  In areas where there are no available notaries public, the judge, exercising
6              his/her ex-officio capacity as notary public,  shall render service,  free of
7              charge, to any person or group of persons requiring the administration of
8              oath or the acknowledgment of Articles of cooperation and instruments of
9              loan  from  cooperatives  not  exceeding  Five  Hundred  Thousand  Pesos
10                   (P500,OOO.00).
11          e.  Any  register  of  deeds  shall  accept  for  registration,  free  of  charge,  any
12              instrument relative to a loan made under this code which does not exceed
13               Two Hundred Fifty Thousand pesos  (P250,OOO.00)  or the deeds of title of
14              any property acquired by the cooperative or any paper or document drawn
15              in connection with any action brought by the cooperative or with any court
16              judgment rendered in its favor or any instrument relative to a bond of any
17               accountable officer of a cooperative for the faithful performance of his/her
18               duties and obligations.
19         f.   Cooperatives shall be exempt from the payment of all court and sheriff's
20              fees payable to the Philippine Government for and in connection with all
21              actions brought under this code, or where such action is brought by the
22              Authority   before   the   court,   to   enforce   the   payment   of   obligations
23               contracted in favor of the cooperative.
24         g.  All cooperatives shall be exempt from putting up a bond for bringing an
25              appeal against the decision of an inferior court or for seeking to set aside
26               any  third  party  claim:  Proz/I.czecz,  That  a  certification  of  the  Authority
27              showing that the net assets of the cooperative are in excess of the amount
28              of the bond required by the court in similar cases shall be accepted by the
29              court as a sufficient bond.
30         h.    Any security issued by cooperatives shall be exempt from the provisions
31               of the securities Act provided such security shall not be speculative.
32                 Any   public   official   or   employee   who   violates   or   in   any   manner
33     circumvents  this  provision  shall be  dealt with  in  accordance  with the  penal
34      provisions of this code.
35               AR:I. 72. Iss:ucmce of certif icate of Tcoc Exerr.ptton f tor cooperatives.
36      -The Authority shall furnish the Bureau of Intemal Revenue (BIR) a certified
37      endorsement of a list of cooperatives in good standing and compliant with the
38      reportorial  requirements  of the Authority  that  serves  as  basis  for  the  mofu
39     praprio issuance of a certificate of Tax Exemption.
40


1                 ART.  73. Pritrf[eges o/ Cooperatities. -Cooperatives registered under
2      this Code, notwithstanding the provisions of any law to the contrary, be also
3      accorded the following privileges:
4         a.  Cooperatives shall enjoy the privilege of depositing their sealed cash boxes
5              or  containers,  documents  or  any  valuable  papers  in  the  safes  of the
6              municipal or city treasurers and other government offices free of charge,
7              and the custodian of such articles shall issue a receipt acknowledging the
8               articles received duly witnessed by another person;
9         b.  Cooperatives  organized  among  government  employees,  notwithstanding
10              any  law  or  regulation  to  the  contrary,  shall  enjoy  the  free  use  of any
11               available   space   in   their   agency,   whether   owned   or   rented   by   the
12                Government;
13         c.   Cooperatives rendering special types of services and facilities such as cold
14              storage, ice plant, electricity, transportation, water, communications, and
15               similar services and facilities shall be given preference in the grant of a
16               franchise  or  certificate  therefor:  ProLng.c!ecz,  That  such  cooperatives  shall
17               open their membership to all persons qualified in their areas of operation.
18               In case there  are  two  (2)  or more  applicants for the  same  public service
19               franchise  or  certificate  of public  convenience  and  necessity,  all  things
20               being equal, preference shall be given to a cooperative engaged in public
21                  services;
22         d.  In areas where there are Agriculture cooperatives, at least fifty per centum
23               (50%)  of the  supply,  of the  government  institutions,  Local  Government
24              Units and agencies, which includes but is not limited to rice, com, grains,
25              fish and other marine products,  meat,  eggs,  milk, vegetables,  and other
26              agricultural commodities such as fertilizers, seeds and other agricultural
27              inputs and implements, shall be sourced from such cooperatives;
28         e.   Preferential  and   equitable   treatment  in   the   allocation   or   control   of
29               bottomries   of  commercial   shipping   vessels   in   connection   with   the
30               shipment of goods and products of cooperatives;
31         f.   Cooperatives and their federations engaged in the production and/or the
32              marketing     of    products     from     agriculture,     fisheries     and     small
33              entrepreneurial    industries,    shall    have    preferential    rights    in    the
34              management of public markets  and/or lease of public market facilities,
35               stalls or spaces, slaughterhouses, and/or cold storage facilities: ProLit.czed,
36              That  these  rights   shall  only  be  utilized  exclusively  by  cooperatives:
37               Proz#.c!ecz, jfurther, That no cooperative forming a joint venture, partnership
38              or any other similar arrangement with a non-cooperative entity can utilize
39               these rights;
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9.  Cooperatives engaged in credit services shall be entitled to loans,  credit
lines, rediscounting of their loan notes, and other eligible papers with the
Development  Bank  of  the   Philippines   (DBP),  the   Land   Bank  of  the
Philippines  (LBP),  and  other  financial  institutions  except  the  Bangko
Sentral ng Pilipinas (Bangko Sentral ng Pilipinas);
The    Philippine    Deposit    Insurance    Corporation    (PDIC)    and    other
government  agencies,  government-owned  and  controlled  corporations,
and government financial institutions  shall provide technical assistance
to  registered national federations of cooperatives which have  significant
engagement in savings and credit operations in order for these federations
to establish  and/or strengthen their own cooperative deposit insurance
systems;
h.  A public transport service cooperative may be entitled to financing support
for the  acquisition  and/or maintenance  of land,  sea,  and air transport
equipment,  facilities and parts through the program of the Government
Financial   Institutions.   It   shall   have   the   preferential   right   to   the
management and operation of public terminals and ports whether land,
sea, or air transport, wharves, including arrastre and stevedoring services,
where the cooperative operates and on securing a franchise for active or
potential routes for the public transport;
i.   Cooperatives transacting business with the Government of the Philippines
or   any   of   its    political    subdivisions    or   any   of   its    agencies    or
instrumentalities,      including      government-owned      and      controlled
corporations   shall   be   allowed   to   participate   in   bidding  government
procurement.  Notwithstanding the  provisions  of Republic Act No.  9184,
otherwise   known   as   the   Government   Procurement   Act,   government
entities  are  authorized  for the  direct procurement of essential  goods  or
basic necessities with producers and agriculture cooperatives.
29         j.    Cooperative shall enjoy the privilege of being represented by the provincial
30               or city fiscal or the Office of the Solicitor General,  free of charge,  except
31               when the adverse party is the Republic of the philippines;
32         k.  Cooperatives organized by faculty members and employees of educational
33              institutions shall have the preferential right to manage the school canteen
34              and other services related to the operation of the educational institution
35               where they are employed: ProzJt.czecz, That such services are operated within
36              the premises of the said educational institution; and
37         I.   The appropriate housing agencies and government financial institutions
shall create a special window for financing housing projects undertaken
by cooperatives,  with interest rates  and terms  equal to,  or better than
those given for socialized housing projects. This financing shall be in the
42


fomi   of   blanket   loans   or   long-teml   wholesale   loans   to   qualified
cooperatives, without need for individual processing.
3                The  Authority,  in  consultation  with  appropriate  government  agencies
4      and  the  cooperative  sector,  shall issue rules  and  regulations  on  all  matters
5      concerning housing cooperatives and socialized housing projects.
6                                CHAPTER XI. INSOLVENCY OF COOPERATIVES
7                ART. 74. Proceeding Hporl Jrlsozliencg. -In case a cooperative is unable
8      to  fulfill its  obligations  to  creditors  due  to  insolvency,  such  cooperative  may
9      apply for such remedies as it may deem fit under the provisions of Republic Act
10      10142,  otherwise  known  as  the  Financial  Rehabilitation  and  Insolvency Act
11         (FRIA).
12                 Nothing   in   this   Article,   however,   precludes   creditors   from   seeking
13      protection from said insolvency law.
14               AR:I.15. Efflect of Dectarafion of lnsotwencg bg a com;pcterit court.
15     -   Declaration of insolvency of a cooperative by a competent court  shall be a
16     ground for cancellation of its Certificate of Registration by the Authority and
17     the delisting of such cooperative in the Authority's registry.
18                               CHAPTER XII. SUSPENSION OF COOPERATIVES
19                AR:I. 76.  Susperiston Of Certif icate Of Regtstra±ton.  -A penalty Of
20     suspension shall be imposed on a cooperative, after due process, on any of the
21      following grounds:
22         a.  Willful  failure  to  submit  annual  progress  reports  with  the  necessary
23               attachments  within  the  period  mandated  by  this  Code:  Prozjt.c!ecz,  That
24               newly-registered  cooperatives  are  given  two  (2)  years  to  organize  and
25               operate; in which case, this provision shall only apply to them after two
26                 (2) years;
27         b.  Willful failure or refusal to comply with an interlocutory order or a final
28
29
30
31
and executory decision or award of the CDA Board of Directors, any of its
Regional Offices, adjudication officer, or voluntary arbitrator/ s by reason
of  or  as  a  consequence  of  an  investigation,  voluntary  arbitration,  or
adjudication.
43


I
1                 The  Authority shall  commence  suspension  proceedings  in  accordance
2     with the procedure provided in the Implementing Rules and Regulations of this
3       Code.
4                CHAPTER XIII. VOLUNTARY DISSOLUTION OF COOPERATIVES
5               AR:T.11. Voluntary Dissotwtion where no creditors are Af f lected. -
6      If the dissolution of a cooperative does not prejudice the rights of any creditor
7     having a claim against it, the dissolution may be effected by a majority vote of
8     the Board of Directors, and by a resolution duly adopted by the affirmative vote
9      of at least three-fourths (3/4) of all the members entitled to vote, present and
10      constituting  a  quorum  at  a  meeting  to  be  held  upon  call  of the  directors:
11       Proz;Zczec{,  That  the  notice  of time,  place  and  object  of the  meeting  shall  be
12      posted for three (3) consecutive weeks in the principal office of said cooperative,
13      and a copy shall likewise be posted for three (3) consecutive weeks in three (3)
14      public places in the municipality or city where the cooperative's office is located
15      and through its official website and social media accounts.
16                 For  micro  cooperatives,  in  lieu  of publication,  posting  in  conspicuous
17      places within their area of operations shall suffice.  ProL#.czecz, rtyrther, That the
18      notice of such meeting is sent to each member of record either by registered
19      mail, by personal delivery or through other electronic means at least thirty (30)
20      days prior to said meeting. A copy of the resolution authorizing the dissolution
21      shall be certified to by a majority of the Board of Directors and countersigned
22      by the cooperative secretary.
23                 Upon compliance with  all the requisites for voluntary dissolution,  The
24     Authority shall thereupon issue the certificate of Dissolution.
25                AR:T.  78.  Vol;un±ars]  Dissol:utlon  Where  Creditors  Are  Affiected.  -
26      Whenever there are creditors affected, the petition for dissolution shall be filed
27     with the Authority. The petition shall be signed by a majority of its Board or
28      directors  or other officers  managing its  affairs,  verified by its  chairperson or
29      Cooperative Secretary or one of its directors and shall set forth all claims and
30      demands   against  it  and   that  its  dissolution  was  resolved  upon  by  the
31      affirmative vote  of at least three-fourths  (3/4)  of all the members  entitled to
32     vote, present and constituting a quorum at a meeting called for that purpose.
33                 If the  petition is  sufficient in fomi and  substance,  the  Authority shall
34      issue an order reciting the purpose of the petition and shall fix a date which
35      shall not be less than thirty (30) nor more than sixty (60) days after the entry
36      of the order. Before such date, a copy of the order shall be published at least
37      once in a newspaper of general circulation published in the municipality or city
38      where the principal office  of the cooperative  is situated or in the  absence of
39      such local newspaper, in a newspaper ofgeneral circulation in the philippines
44


1
1      at the expense of the cooperative, and a copy shall likewise be posted for three
2      (3) consecutive weeks in three (3) public places in the municipality or city where
3      the cooperative's offlce is located.
4                 Upon expiry of the five (5) day notice to file objections, the Authority shall
5      proceed to hear the petition and try any issue raised in the objection filed.  If
6     there is no objection or the objection is insufficient and the material allegations
7     are proven, it shall issue a certification ofDissolution and direct the disposition
8     of its assets in accordance with existing rules and regulations. The certificate
9      ofDissolution shall set forth therein:
10         a.  The assets and liabilities of the cooperative;
11          b.  The claim of any creditor;
12         c.   The number of members; and
13         d.  The nature and extent of the interests of the members of the cooperative.
14              The Authority shall issue a certificate of cancellation of Registration upon
15      approval of the final report of the liquidators.
16              CHAPTER XIV. INVOLUNTARY DISSOLUTION OF COOPERATIVES
17               ART.19. Canceuation bg order of the Authoritg. -The A:uthorky may
18      cancel,   after   due   notice   and   hearing,   the   cooperative's   Certificate   of
19      Registration on any of the following grounds:
20         a.  Having obtained its registration by fraud;
21         b.  Engaging in an illegal and/or unauthorized purpose;
22         c.  Willful violation, despite written notice by the Authority, of the provisions
23               of this  Code  or  its  Implementing  Rules  and  Regulations  and  all  other
24               issuances of the Authority or By-laws of the cooperative;
25         d.  Willful refusal to comply with an order or written instructions or directives
26               issued or given by the Authority;
27         e.  Willful failure to operate on a cooperative basis; and
28         f.   F`ailure to meet the required minimum capital and minimum number of
29               members in the cooperative; and
30         g.   If a  cooperative  has  not  commenced business  operations within two  (2)
31               years after the issuance of its certificate of Registration.
45


1                 The  decision  of the Authority on  the  cancellation  of the  Certificate  of
2      Registration  of a  cooperative  may  be  appealed  to  the  Authority's  Board  of
3      Directors within thirty (30) days from the receipt of the order of the Authority.
4     The decision of the Authority's Board of Directors shall be final and executory.
5                ART.  80.  Cancezzation bg Faizttre to Operate.  -If a cooperative has
6      not  commenced  business  and  its  operations  within  two  (2)  years  after  the
7     issuance of its certificate of Registration or has not carried on its business for
8      two (2) consecutive years, the Authority shall send a formal notice to the said
9      cooperative  to  explain  its  failure  to  operate.  Failure  of  the  cooperative  to
10      promptly provide justifiable cause for its fallure to operate shall warrant the
11      Authority the power to delete its name from the roster of registered cooperatives
12      and its certificate of Registration is be deemed cancelled.
13                 ART.  81.  Rttzes  and! Regttzations  on  Cancezzat{on.  -The Authority
14      shall  issue  the  appropriate  implementing  guidelines  for  the  cancellation  of
15      cooperatives.
16                               CHAPTER XV. LIQUIDATION OF COOPERATIVES
17                ART. 82. L€qtt€dat€on a/a cooperatitJe. -Every cooperative whose term
18      of existence expires by its own limitation or whose existence is terminated by
19      voluntary  dissolution  or  cancellation  of its  Certificate  of Registration  by  the
20     Authority shall cease to operate, but can continue to exist for three (3) years
21      after the time it is dissolved or cancelled; not to continue the business forwhich
22     it was established but for the purpose of prosecuting and defending suits by or
23      against it;  settlement and  closure  of its  affairs;  disposition,  conveyance  and
24      distribution of its properties and assets.
25                 At any time during the said three (3) years, the cooperative is authorized
26      and empowered to convey all of its interests in the properties to trustees for the
27     benefit of its members, creditors and other persons in interest. From and after
28     any such conveyance, all interests which the cooperative had in the properties
29      are terminated.
30                 Upon the winding up of the cooperative affairs, any asset distributable
31      to any creditor,  shareholder or member who is unknown or cannot be found
32      shall be given to the federation or union to which the cooperative is affiliated
33      with.
34                 A cooperative shall only distribute its assets or properties upon lawful
35      dissolution and after payment of all its debts and liabilities, except in the case
36      of decrease of share capital of the cooperative and as otherwise allowed by this
37       Code.
46


t                In case of voluntary dissolution, the Authority shall issue a certificate of
2     Cancellation upon the approval of the final report of the liquidators.
3                ART. 88. Rtt[es and Regttzations on L€qtt€czation. -The Authority shall
4     issue    the   appropriate    implementing   guidelines    for   the    liquidation    of
5      cooperatives.
CHAPTER XVI. DELISTING OF COOPERATIVES
7                ART.  84.  Dezfst€ng  a/ Cooperat€tJes.  -  Cooperatives  may  be  delisted
8      from the Registry of cooperatives due to the following causes:
9         a.  Voluntary Dissolution;
10         b.  Involuntary Dissolution;
11          c.   Cancellation by order of the Authority;
12         d.  Cancellation by F`ailure to operate; and
13         e.   Merger and consolidation
14               ART`.  85.  Rules and Regulations on Detlsting  Cooperatives. -rThe
15     Authority shall issue the appropriate implementing guidelines for the delisting
16      of cooperatives.
17
CHAPTER XVII. CAPITAL, PROPERTY, AND FUNDS
18                ART.  86.  Capital and Fttnds. -The  capitalization of cooperatives  or
19     funds in the case of unions and the accounting procedures shall be governed
20     by the provisions of this code and the regulations which shall be issued.
21                 ART.  87.  Capital Sources.  -Cooperatives registered under this  Code
22      may derive their capital from any or all of the following sources:
23         a.  Member's share capital;
24         b.  Loans and borrowings;
25         c.  Deposits from members only, except for cooperative banks which accepts
26              deposits from both members and non-members or the general public;
27         d.  Revolving  capital  which  consists  of the  deferred  payment  of patronage
28              refunds, or interest on share capital; and
47


'
1         e.   Subsidies,  donations,  legacies,  grants,  aids  and  such  other  assistance
2               from any local or foreign institution whether public or private:  ProL;t.c!ecz,
3              That capital coming from such subsides, donations, legacies, grants, aids
4              and  other  assistance  shall  not  be  divided  into  individual  share  capital
5              holdings at any time but shall instead form part of the donated capital or
6               fund   of   the   cooperative.    Upon   dissolution   or   cancellation   of   the
7               cooperative, such donated capital shall be subject to escheat.
8         f.   Reserve funds utilized for investment and as capital for the operations of
9               the cooperative as approved by the General Assembly.
10                ART. 88. Lzm€tat€on ori Share Capitaz S«bscript€o» -No member of
11      primary cooperative  other than  the  cooperative itself shall own or hold more
12      than   twenty   per   centum   (20%)   of  the   subscribed   share   capital   of  the
13      cooperative.
14              AR:T. 89. Asstgruneut of share capital coutributton or IrtteresL -
15      Subject to the provisions of this Code and the approval of the majority of the
16      Board of Directors, no member shall transfer his/her shares or interest in the
17      cooperative or any part thereof unless:
18         a.  He/She has held such share capital contribution or interest for more than
19                  one  (1) year.
20         b.  The  assignment  is  made  to  the   cooperative  or  to  a  member  of  the
21               cooperative or to a person who falls within the field of the membership of
22               the cooperative; and
23         c.  The Board of Directors has approved such an assignment.
24                 ART.  90.  Capfta! Bt4}Zd!-Up.  -The By-laws of every cooperative,  except
25     for cooperative  unions,  shall  provide  for a reasonable  and  realistic  member
26      capital  build-up  program  to  allow  the  continuing  growth  of  the  members'
27      contribution  to  their  cooperative  as  their  economic  conditions  continue  to
28      improve.   The   cooperative   shall   execute   a   subscription   agreement   upon
29      admission  and  approval  of  their  membership  and  in  cases  of  additional
30     subscription by the member upon full payment of his/her initial subscription.
31                 ART.  91.  Shares.  -  The  term  ``share"  refers  to  a  unit  of capital  in  a
32      cooperative, except for cooperative unions,  the par value of which may be fixed
33      at any figure not less than One hundred pesos  (PIOO.00)  but  not more than
34      One thousand  pesos  (P1,OOO.00).  The  share  capital of the  cooperative is  the
35     money paid or required to be paid by the members for the operations of the
36      cooperative.
48


1                   Unless otherwise provided for in its policies, the cooperative shall issue
2     Share  Certificates  at the  end  of the  calendar year based  on  the  number  of
3      shares fully paid for the said period.
4                 Cooperatives are  prohibited  from issuing multiple types  of shares with
5     different par values  and  from increasing or decreasing the  par value  of the
6     share capital without amending their Articles of cooperation and By-laws.
7                A share can either be a common share issued to a regular member, or a
8      preferred share issued to associate members.
9                ART. 92.  Fines. -The policies of a cooperative may prescribe a fine on
10      unpaid   subscribed   share   capital.   ProLng.czec{,   That   such   fine   is   fair   and
11      reasonable under the circumstances.
12                ART. 93..JntJestment a/ Capitaz. -A cooperative upon approval of at
13      least three-fourths (3/4) of all members entitled to vote, present and constituting
14      a quorum, may invest its capital in any of the following:
15         a.  In any reputable bank;
16         b.  In securities issued or guaranteed by the Government;
17         c.   In real estate primarily for the use of the cooperative or its members; or
18         d.  In any other manner authorized in the By-laws.
19                 ART. 94. RetJozutrlg capi€az. -The General Assembly of any cooperative
20     may  authorize  the  Board  of Directors  to  raise  a  revolving  capital  from  the
21      proceeds  of  products  sold  or  services  rendered,  or  per  unit  of  product  or
22      services handled, to strengthen its capital structure.
23                        CHAPTER XVIII. AUDIT, INQUIRY, AND MEMBERS' RIGHT TO
2 4                                                                         EXAMIN E
25                ART.  95. Attdit a/ Cooperatilles.  -Cooperatives registered under this
26      Code shall be subject to an annual audit of its financial, governance, and social
27      performance in accordance with the Implementing Rules and Regulations to be
28     promulgated by the Authority. The financial audit shall be conducted by an
29      external auditor with the following qualifications:
30         a.  He  is  a  third  party,  independent  from  the  cooperative  or  any  of  its
31               subsidiary that he is auditing; and
40


1         b.  He is  a member in  good  standing of the  Philippine  Institute  of Certified
2               Public  Accountants   (PICPA)   and  is  accredited  by  both   the  Board  of
3              Accountancy and the Authority.
4                 The social performance audit may be conducted by the audit committee,
5     by  the  internal  auditor  of  the  cooperative,  or  by  an  independent  auditor
6      engaged by the cooperative.
7                ART. 96. Attdit Report. -The complete audit reports shall be submitted
8      to the Board of Directors, which shall be presented to the General Assembly in
9     its next meeting for approval and  adoption.  The  Board of Directors  shall be
10      liable under Article  179 of this Code  should it fail to present such reports to
11       the GeneralAssembly.
12                ART. 97. Non-L€ab€Z€tg/or De/amatzons. -The auditor shall not be held
13      liable  to  any  person  in  an  action  for  defamation  for  acts  done  or  for  any
14      statement made by him/her in good faith in connection with the  conduct of
15      audit of the cooperative.
16                 ART.  98.  Right  to  Examirie.  -  AIl  members  shall  have  the  right  to
17      examine the records of the cooperative under Article 62 of this code at any time
18      during reasonable  hours  of the  operating  days  of the  cooperative:  Proz/I.c!ec!,
19     That the member submits a letter request three (3) days prior to the date of his
20     demand to examine the records and stating therein the purpose of the request.
21                 The  Board  of Directors  shall  consider the  purpose  and  reason for the
22      request  to  examine  the  records  to  determine  its  propriety.  The  Board  of
23     Directors shall have the right to refuse the request after proper consultation
24     with the requesting member.
25                ARI`. 99.  Sa/ecg a/Records. -Every cooperative shall, at its principal
26      office,  keep  and  carefully preserve  the  records  required  by  this  Code  to  be
27     prepared and maintained. The By-laws shall also provide the condition and the
28      accountable  person/s  for the  safekeeping of the  records  in  accordance with
29      applicable  laws  on  data  privacy.  It  shall  take  all  necessary  precautions  to
30      prevent its loss, destruction, or falsification.
31           CIIAPTER XIX. ALLOCATION AND DISTRIBUTION OF NET  SURPLUS
32                 ART.  100.  Ivet  Sttr:pztts.  -  Notwithstanding  the  provisions  of existing
33     laws, the net surplus of cooperatives shall be determined in accordance with
34      its By-laws.  Every cooperative shall determine its net surplus at the close of
35      every fiscal year.
50


1                 Any provision  of law to the contrary notwithstanding,  the  net surplus
2     shall not be construed as profit but as  an excess of payments made by the
3     members for the loans borrowed,  or the  goods  and services  availed by them
4     from  the  cooperative  or  the  difference  of  the  rightful  amount  due  to  the
5      members  for  their  products  sold  or  services  rendered  to  the  cooperative
6     including other inflows  of assets  resulting from its  other operating activities
7     and  which  shall  be  deemed  to  have  been  returned  to  them  if the  same  is
8      distributed as prescribed herein.
9                AR:T.101.  Net Surphas Auocation and Stotwtors| Funds. -rThe nat
10      surplus shall be subject to the allocation of the following statutory funds, which
11      shall be recorded  in  the  books  of account,  for the  cooperative's  growth  and
12      development:
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
a.  The reserve fund which shall be ten per centum (loo/o) of the net surplus
for the stability of the cooperative and to cover net losses in its operation.
The fund shall be included in the books of account of the cooperative and
can be made available for investment: Prat/1.czecz, That the amount is viable
for investment and the purpose of the investment will ensure a return to
the  cooperative's  growth  and  development:  Proujczecz, rfurfher,  That  any
amount  charged  to  the  reserve  fund  shall  be  refunded  to  it:  Prozw.czecz,
firLczzzg,  That  the  utilization  of the  reserve  fund  shall  be  subject  to  the
guidelines formulated by the Authority for the purpose of protecting the
intemal operations of the cooperative. However, for cooperatives in its first
five  (5)  years  of operation,  the  amount  allocated  shall not be less  than
thirty per centum (30°/o) of the net surplus.
Upon   the   dissolution  of  the   cooperative,   the   reserve   fund   shall  be
distributed in accordance with the rules and regulations on liquidation to
be issued by the Authority.
28         b.  The Cooperative Education and Training Fund  (CETF)  in the amount of
29
30
31
32
33
34
35
36
37
38
39
ten per centum  (loo/o)  of the net surplus shall be used for the training,
development and similar other cooperative activities geared towards the
growth of the cooperative movement:
(1) Five  per centum  (50/o)  of the  cooperative  education  and  training fund
annually  shall  be  used  to  provide  for  the  education  and  training
purposes of its officers, members,  and employees; while the other five
per centum (50/o) shall be remitted to a cooperative union in which it is
a member.
Should  the  cooperative  have  multiple  affiliations,  it  shall  have  the
discretion to apportion the cooperative education and training fund to
the union(s) where said cooperative is a member.
51


1              (2) Upon the dissolution of the cooperative, the unexpended balance of the
2                   education  and  training  fund  pertaining  to  the  cooperative  shall  be
3                   utilized within the succeeding fiscal year following its  allocation or at
4                   the  option  of the  cooperative  to  credit  the  same    to  the  cooperative
5                   education and training fund of the union to which it is a member.
6                  The utilization of the education and training fund shall be in accordance
7                   with the policies and guidelines to be promulgated by the Authority.
8         c.  The  Community  Development  Fund  (CDF)  in  the  amount  of  five  per
9               centum  (5°/o)  shall be used for projects  or activities  that will benefit the
10               community where the cooperative operates. However, the cooperative may
11               extend assistance to marginalized communities or affected areas outside
12               its   area   of  operation   in   times   of  calamities,   disaster,   or   national
13                emergency.
14               In  the  case   of  cooperatives  whose   common  bond  of  membership  is
15              institutional,    the   community   refers   to   the   institution   where   the
16                cooperative is operating.
17              The allocation for the CDF for the current year shall be fully utilized in the
18              following year unless the projects or activities as approved by a majority
19              of the members entitled to vote, present and constituting a quorum in a
20              General Assembly meeting, require multi-year utilization.  For multi-year
21               projects/programs, the allocation shall be fully utilized within the period
22               as stated in the plan.
23              The utilization of the community development fund shall be in accordance
24              with the guidelines to be promulgated by the Authority.
25         d.  The optional fund in the amount offive per centum (50/o) shall be used for
26              the  acquisition  of  land  and  construction  of  building,   and  any  other
27               expenses anent to it, Proz#.c!ecz, it is approved by at least three-fourths (3/4)
28              of all members entitled to vote, present and constituting a quorum, which
29               shall be in accordance with the Implementing Rules and Regulations to be
30              promulgated by the Authority.
31         e.  The remaining net surplus shall be made available in full to the members
32              in   the   fomi   of  interest   on   share   capital   following  the   formula  for
33               computation as provided by the Authority: Proz#.czecz, That a majority of the
34              members entitled to vote, present and constituting a quorum, approves.
35         f.   The sum allocated for patronage refunds shall be made available at the
36              same rate to all patrons of the cooperative in proportion to their individual
37                patronage:  Proz/I.czecz, That:
52


(1) In the case of a member patron with paid-up share capital contribution,
his/her  proportionate  amount  of patronage  refund  shall  be  paid  to
him/her unless he agrees to credit the amount to his/her account as
additional share capital contribution;
(2) In the case of a member patron with unpaid share capital contribution,
his/her proportionate amount of patronage refund shall be credited to
his/her  account  until  his/her  account  until  his/her  share  capital
contribution has been fully paid;
(3) In the case of a non-member patron, his/her proportionate amount of
patronage refund shall be set aside in a fund created for the purpose
and  shall  be  allocated  to  individual  non-member patrons  only upon
request   and   presentation   of  evidence   of  the   amount   of  his/her
patronage. The amount so allocated shall be credited to such patrons
toward payment of the minimum capital contribution for membership.
When a sum equal to this amount has accumulated at any time within
two (2) years from the start of his/her patronage, such patron shall be
deemed  and  become  a  member of the  cooperative  if he  so  agrees  or
requests and complies with the provisions of the By-laws for admission
to membership; and
(4) Any non-member patron who has accumulated the sum necessary for
membership but who does not request nor agree to become a member
or falls to comply with the provisions of the By-laws for admission to
membership, the amount so accumulated or credited to their account
together with any part of the general fund for non-member patrons shall
be credited to any of the statutory funds as approved by a majority of
the members entitled to vote, present and constituting a quorum.
27                                 CHAPTER XX. AGRICULTURE COOPERATIVES
28                ART.102.  Derm€tion and cocerage. -This chapter shall apply to all
29     cooperatives  which  are  agricultural-based  economic  enterprises  voluntarily
30      established by persons with their joint investment, joint ownership and ].oint
31      management  for the  purpose  of improving  agricultural production  capacity,
32      agro-industry,  agri-business,  or  services  related  to  agricultural  production.
33     Agriculture   cooperatives   shall   include   agrarian   reform,   dairy,   fishermen,
34      community forestry,  and aquaculture cooperatives,  as well as  multi-purpose
35      cooperatives whose primary business activity is at least fifty per centum (500/o)
36      related  to  agricultural  production,  agro-industry,  agri-business,  or  services
37      related to agricultural production.
53


1                AR:T. ±08. Cooperative Business Activities and Auied Services. -A
2     duly registered agriculture cooperative may engage in all or any of the following
3      activities :
4         a.  Raising and/or culture of plants, high-value crops, animals, fish, poultry,
5              livestock, and other agri-products as source of food, feed, and fiber;
6         b.  Production of salt;
7         c.   Community and social forestry;
8         d.  Provision of credit facilities for marginal farmers and fishermen;
9         e.  Facilitating the procurement and distribution of farm inputs/implements
10                for its members;
11         f.   Processing,   marketing,   and   sale   of  members'   agri-products   and/or
12                produce;
13         g.  Maintenance and management of irrigation systems, water impounding,
14              and other agricultural facilities; and
15         h.  Other allied services such as but not limited to warehousing, cold storage,
16              and  other  post-harvest  services,  hauling,  and  transport  of  members'
17              products/produce and such other similar business services and activities
18              that will reduce cost and/or value addition of output.
19                ART.104.  Regis€ratfon  a/ Agricttztttre  Cooperatft;es.  -Agriculture
20      cooperatives shall file their application for registration with the regional office
21      of  the   Authority   that   has  jurisdiction   over   its   area   of  operation.   The
22      requirements and procedure for registration of agriculture   cooperatives shall
23     be  in  accordance  with  the  rules  and  regulations  to  be  promulgated  by  the
24      Authority.
25                 No fees shall be assessed or charged to any agriculture  cooperative by
26     any government entity, national or local, at any stage of its organization and
27      registration process.
28               AR:I.105. Capital Requirements of Agrieutture cooperatives. -rThe
29      authorized  share  capital  of an  agriculture  cooperative  shall be  stated  in  its
30      Articles of cooperation and that prior to its registration, at least twenty five per
31      centum  (25%)  of the  authorized  share  capital  shall be  subscribed  to  by the
32      members and at least twenty five (250/o) of the subscribed share capital shall
33      be paid-up: ProLJt.c!ed, That the paid-up capitalization requirement for primary
34      cooperatives shall not be less than Fifteen Thousand pesos (P15,000.00).
54


'
1                 ART.   106.   Bond   a/  Mlembershfp.   -  The   bond   of  membership   of
2      agriculture cooperatives shall be any of the following:
3
4
5
6
7
8
9
10
in
12
13
a.  Residential  -  members  are  farmers,  farm  workers,  fisherfolk  who  are
actually and physically residing within the area of operation.
b.  Occupational - members are those who are engage in raising,  culture of
plants,   animals,   as  well  as  those  from  the  technical  and   scientific
communities of the agriculture sector
c.  Associational -members are from registered associations, groups, clubs,
cultural  and  other  similar  aggrupation  of farmers,  farm  workers,  and
fisherfolk.
d.  Institutional -members consist of employees, workers and/or officers of a
particular institution who will undertake or are undertaking agricultural
projects.
14                 ART.    107.   Dttaz   Jifembership.   -   The   By-laws   of   an   agriculture
15      cooperative may provide  for the prohibition of the admission as  members  of
16      those who are already members of an existing agriculture cooperative operating
17      within the same area.
18                AR:T.    108.    Role    Of    Natlonat    Coordinating    Comiwittee    on
19      Coopera€€ttes  DetJezopment.   -  The  Authority  shall  mobilize  the  National
20      Coordinating   Committee   on   Cooperative   Development   (NCC-CD)   for   the
21      promotion    of   the    growth,    viability,    and    development    of   Agriculture
22      Cooperatives.
23                 ART.109. Role a/LGUs. -The Local Government units shall:
24         a.  Create a committee on Agriculture cooperatives Development in the Local
25               Government   Legislative    Council   which   shall   focus   on    addressing
26               legislative concerns on Agriculture cooperatives;
27         b.  Legislate  necessary  ordinances  for  the  promotion  and  development  of
28               agriculture cooperatives ;
29         c.   Disseminate information  to  people  and  facilitate  the  establishment and
30              development    of   the    management    and    operations    of   agriculture
31                cooperatives in their respective localities;
32         d.  Expedite the issuance of the necessary permits for the implementation of
33              programs  and projects  of the Authority and other national government
34               agencies for the benefit of agriculture cooperatives;
55


1
2
3
4
5
6
7
8
e.   Upon written request of the Authority,  assist in the resolution of inter-
cooperative  disputes  among  agriculture  cooperatives  operating  within
their localities;
f.   Facilitate  and  conduct  free  and  regular  seminars,  trainings,   and/or
conferences necessary for the organization, registration, management and
operations of agriculture cooperatives; and
9.  Provide technical assistance and skills training for farmers, farm workers,
and fisherfolk to engage in income-generating activities.
9                ART.110. Role a/CooperatftAe Detiezapment cottnc€ts. -The Authority
10      shall,  in  collaboration  with  the  LGUs  through  the  Municipal  and/or  City
11      Cooperative Development councils and the cooperative Development officers,
12      facilitate    programs    and    policies    affecting    agriculture    cooperatives    in
13      accordance  with  a  Joint  Memorandum  Circular  to  be  promulgated  by  the
14      Authorityand the LGU.
15               AR:T.111. Benefits and privileges of Agriculture cooperati;ves. -An
16      agriculture cooperative shall enjoy the following benefits and privileges:
17          a.  Taxes, Duties, and Liens:
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
(1) All  benefits,  privileges,  and  tax treatments  of cooperatives  as  defined
and enumerated under Chapter X of this Code shall apply to agriculture
cooperatives;
(2) Agriculture cooperatives shall be exempt from customs duties, advance
sales or compensating taxes on their importation and local purchase of
machineries,  equipment,  accessories,  batteries,  and spare  parts used
by them; and
(3) All real  properties owned,  and  those  directly used for the  operations,
management,  and  maintenance  of agriculture  cooperatives  shall  be
exempt from the payment of real property taxes imposed under existing
laws.
b.  Trainings and Conferences -All training and/or conferences necessary for
the   organization,   registration,   management   and   operations   of   an
agriculture  cooperative  shall  be  given  free  of charge,  including costs  of
venue, training materials, speakers and resource persons. The cooperative
development officers shall be primarily responsible for these trainings and
conferences within their respective localities.
35         c.   Loans and Grants:
56


1              (1) All  loans  applied  for  by  agriculture  cooperatives  in  any  government-
2                   owned or -controlled banks  or government financial institutions  shall
3                  enjoy preferential treatment as to the requirements,  rates,  securities,
4                   and collaterals; and
5             (2) The Authority shall coordinate with the Bangko sentral ng pilipinas to
6                   lower the thresholds for all loans applied for and granted to agriculture
7                    cooperatives.
8               AR:T.112. Reportoriat Requirements of Agricutture cooperatives. -
9     All agriculture cooperatives shall submit reports to the Authority as required
10     under this code and to such other government agencies as may be required.
11                AR:T.113. Merger and consoudation of Agrieultwre cooperatives. -
12      Notwithstanding the provisions of this Code, the merger and consolidation of
13      agriculture cooperatives shall be in accordance with the lmplementing Rules
14     and Regulations to be promulgated by the Authority.
15                AR:T.     L14.     Irtter-Cooperative     Arrangernertts     off    AgricutfuLre
16      CooperatitJes.  -Agriculture cooperatives shall be allowed to enter into inter-
17     cooperative  arrangements  with  and  among  other  cooperatives   and  other
18     entities  to  pursue value and  supply chain  solutions  and  other agribusiness
19      development  programs,  subject  to  the  guidelines  to  be  promulgated  by  the
20      Authority.
21                           CHAPTER XXI. AGRARIAN REFORM COOPERATIVES
22                 ART.  115.  Cotierage.  -The provisions  of this  Chapter shall primarily
23      govern agrarian reform cooperatives: ProzJZczecz, That the provisions of the other
24     chapters of this Code shall apply suppletorily except insofar as this  Chapter
25      otherwise provides.
26                ART.116.  De/Enition cnd A.rpose.  -An agrarian reform cooperative
27      refers  to  one  organized  by marginal  farmers  majority  of which  are  agrarian
28      reform  beneficiaries,  duly  registered  with  the  Authority,  for  the  purpose  of
29      developing  an  appropriate  system  of land  tenure,  land  development,  land
30      consolidation or land management in areas covered by agrarian reform. It shall
31       also refer to Agrarian Reform Beneficiaries cooperative (ARE Coop) as defined
32      in DAR Administrative order No. 05, Series of2009.
33                 An agrarian reform cooperative as defined shall be organized for any or
34      all of the following purposes:
35         a.  To develop an appropriate system of land tenure,land development,land
36              consolidation or land management in areas covered by agrarian reform;
57


1
2
3
4
5
6
7
8
9
10
iE.
12
13
14
15
16
17
18
19
20
21
b.  To  coordinate  and  facilitate  the  dissemination  of scientific  methods  of
production,   and   provide   assistance   in   the   storage,   transport,   and
marketing  of fami  products  for  agrarian  reform  beneficiaries  and  their
immediate family, hereinafter referred to as "beneficiaries";
c.  To provide financial facilities to beneficiaries  for provident or productive
purposes at reasonable costs;
d.  To  arrange  and  facilitate  the  expeditious  transfer  of  appropriate  and
suitable  technology to beneficiaries  and marginal farmers  at the lowest
possible cost;
e.  To provide social security benefits,  health, medical and social insurance
benefits and other social and economic benefits that promote the general
welfare of the agrarian reform beneficiaries and marginal farmers;
f.   To   provide   non-formal   education,   vocational/technical   training,   and
livelihood programs to beneficiaries and marginal farmers;
9.  To act as conduits for external assistance and services to the beneficiaries
and marginal farmers;
h.  To undertake  a comprehensive  and  integrated  development  program  in
agrarian  reform  and  resettlement  areas  with  special  concern  for  the
development of agro-based, marine-based, and cottage-based industries;
i.   To  represent  the  beneficiaries  on  any  or  all  matters  that  affect  their
interest; and
22         j.   To undertake such other economic or social activities as may be necessary
23               or incidental in the pursuit of the foregoing purposes.
24                ART.    117.    CooperatitJe   Estate.    -   Cooperative   Estates   refer   to
25     landholdings like plantations,  estates or haciendas acquired by the  State for
26      the  benefit  of the  workers  in  accordance  with  the  Comprehensive  Agrarian
27      Reform program which shall be collectively owned by the worker-beneficiaries
28      under a cooperative set-up.
29               ART.118.  Jn/rast"ctttre. -In agrarian reform and resettlement areas,
30     the  Government  shall  grant  to   agrarian  reform  cooperatives   preferential
31      treatment  in   the   construction,   maintenance   and  management   of  roads,
32      bridges,  canals,  wharves,  ports,  reservoirs,  irrigation  systems,  waterworks
33     systems, and other infrastructures with government funding. For this purpose,
34     the Government shall provide technical assistance, facilities, and equipment to
35      such agrarian reform cooperatives.
58


1                 ART.119. Lease o/PL[bzfc lrdznds. -The Government may lease public
2     lands to any agrarian reform cooperative for a period not exceeding twenty-five
3      (25) years, subject to renewal for another twenty-five (25) years only: Proujc!ec!,
4     That the application for renewal shall be made one (1) year before the expiration
5      of the lease:  Proz/I.czecz, jtrther,  That such lease shall be for the  exclusive use
6     and benefit of the beneficiaries and marginal farmers subject to the provisions
7     of the comprehensive Agrarian Reform program, as amended.
8               ART.120.  Pro/erentiaz Right. -In agrarian reform areas, an agrarian
9     reform  cooperative  shall have the  preferential right in the grant of franchise
10      and certificate of public convenience and necessity for the operation of public
11      utilities and services: Proz/I.czed, That it meets the requirements and conditions
12      imposed  by  the  appropriate  government  agency  granting  the  franchise  or
13      certificate  of public  convenience  and  necessity.  In  cases  where  there  is  an
14     electric service provider in the area, it shall upon the request of an agrarian
15      reform cooperative, immediately provide electric services to the agrarian reform
16      areas.  If the  electric  service  provider  fails  to  provide  the  services  requested
17     within a period of one (1) year, the agrarian reform cooperative concerned may
18     undertake to provide the electric services in the area through its own resources.
19     All   investments   made   by   the   said   agrarian   reform   cooperative   for   the
20     electrification of the agrarian refomi resettlement areas shall be the subject of
21      sale to the electric service provider once it takes on the service.
22                ART.121.  Spec!az priulzegcs. -Subject to such reasonable terms and
23     conditions as the Department of Agrarian Reform (DAR) and the Authority may
24     impose, agrarian reform cooperatives may be given the exclusive right to do any
25     or all of the following economic activities in agrarian reform and resettlement
26      areas;
27
28
29
30
31
32
33
34
35
36
37
a.  Supply  and  distribution  of consumer,  agricultural,  aquacultural,  and
industrial  goods,  production  inputs,  and  raw  materials  and  supplies,
machinery,  equipment, facilities and other services and requirements of
the beneficiaries and marginal farmers at reasonable prices;
b.  Marketing of the products and  services of the beneficiaries in local and
foreign markets ;
c.   Processing of the members' products into finished consumer or industrial
goods for domestic consumption or for export;
d.  Provision  of essential  public  services  at  cost  such  as  power,  irrigation,
potable  water,  passenger  and/or  cargo  transportation  by  land  or  sea,
communication services, and public health and medical care services;
e.  Management,   conservation,   and   commercial   development   of  marine,
forestry,    mineral,   water,   and   other   natural   resources   subject   to
59


1
2
3
4
compliance with the laws and regulations on environmental and ecological
controls; and
f.   Provision  of  financial,  technological,  and  other  services  and  facilities
required by the beneficiaries in their daily lives and livelihood.
5              The  Government  shall  provide  the  necessary  financial  and  technical
6     assistance  to   agrarian  reform   cooperatives  to  enable  tbem   to   discharge
7     effectively their purposes under this chapter. The DAR, the Authority and the
8     Bangko sentral ng pilipinas shall draw up ajoint program for the organization
9     and financing of the agrarian reform cooperatives subject of this chapter. The
10     joint program shall be geared towards the beneficiaries gradual assumption of
11      full ownership and management control of the agrarian reform cooperatives.
12                ART.    122.    Ongcinization   cnd   Reg€strat€on.   -   Agrarian   reform
13      cooperatives   may   be   organized   and   registered   in   accordance   with   the
14      requirements of this Code only upon prior certification by the DAR that said
15      proposed cooperative is needed and that its organization is feasible and will be
16      economically viable in its operations.
17                 The Authority, in consultation with the concerned government agencies
18     and cooperative sector, shall issue appropriate rules and regulations pertaining
19      to the provisions of this chapter.
20
CIIAPTER XXII. COOPERATIVE BANKS
21                AR:I.   128.   Orgardeatton,  Registration,  and  Membership.  -  The
22      organization and membership of a cooperative Bank shall be governed by the
23      following provisions:
24          a.   07igczrizcz€z.ori  -  At  least  fifteen   (15)   cooperatives   duly  established   and
25              registered  under  this  Code  may  register  a  cooperative  bank  with  the
26               Authority.
27         b.  Registroc].on  -  The   application  for  the  registration   of  the  Articles   of
28              Cooperation  and  By-laws,  including its  amendments,  by  a  cooperative
29              bank with the Authority shall be accompanied by a certificate of Authority
30              issued by the Bangko sentral ng pilipinas.
31          c.   Membershtp -Membership in a cooperative bank shall be open to:
(1) cooperatives of all types and categories;
(2) natural persons who are members of a cooperative;
60


I
1               (3)  foreign cooperatives;
2              (4) pre-cooperative organizations established under presidential Decree No.
3                     175; and
4               (5)  individuals.
5                Membership in a cooperative bank is either regular or associate. Regular
6     membership shall be limited to cooperative organizations, individuals who are
7     members   of  a   domestic   cooperative,   or   a  foreign   cooperative.   Associate
8     members shall be pre-cooperative organizations established under presidential
9      Decree No.  175, as well as individuals and other institutions, such as foreign
10      cooperative institutions that have subscribed to preferred shares only.
11                The common shareholdings of a local cooperative shall at all times be at
12      least  sixty  per  centum  (60%)  of the  total  outstanding  voting  shares  of the
13      cooperative bank.
14                Common shares held by individuals who are members of a cooperative,
15      and foreign cooperatives shall not be more than forty per centum (40°/o) of the
16      total outstanding voting shares:  Proz/1.czecz, That the common shareholdings of
17      each individual who is a member of a cooperative shall not be more than five
18      per centum (5°/o) of the total outstanding voting shares.
19               ART.124. Poovers and furictions a/ Cooperat€tJe Banfes. -Cooperative
20     banks shall primarily provide a wide range of financial services to cooperative
21      organizations,  their  members,  and  to  the  public.  A  cooperative  bank  may
22      perform any or all of the following banking services:
23         a.  Extend  loans  and  advances  primarily  for  the  purpose  of  meeting  the
24              normal  credit  needs  of cooperatives  as  well  as  farmers,  farm  workers,
25              fisherfolks,   or   their   families,   merchants,   and   private   and   public
26               employees:  ProL;t.czecz,  That  loans  and  advances  granted  to  cooperatives
27               shall not be subject to individual ceilings on loans to directors,  officers,
28               stockholders, and related interests (DOSRI);
29         b.  Accept savings and time deposits;
30         c.  Act as a correspondent bank of other financial institutions;
31         d.  Discount and Rediscount paper with the Land Bank of the  Philippines,
32              Development  Bank  of the  Philippines  or  any  other  bank,  including  its
33              branches  and  agencies.  Said  banks  shall  specify  the  nature  of  paper
34              deemed acceptable for rediscounting, as well as the rediscount rate to be
35              charged by any of these banks;
36          e.   Act as collection agent;
61


1         f.   Act as a depository bank ofl,ocal Government units and other government
2               agencies or instrumentalities;
3         g.  Acquire readily marketable bonds and other debt securities;
4         h.  Buy and sell foreigri exchange;
5         i.   Act as conduit bank for the disbursement of government funds intended
6               for lending to agriculture, small-medium enterprises (SMEs) and projects
7               for local economic development;
8        j.   Eligible to participate in government program allocations for agricultural
9              lending,   social  housing,   loans  to  rural  micro  enterprises   and  other
10               initiatives towards inclusive growth;
11         k.  Offer financial technology services, such as digital lending and payment,
12              and digital wealth management, among others, subject to prior approval
13               of the Bangko sentral ng pilipinas; and
14         1.   Offer other banking services as provided in section 53 of Republic Act No.
15                    8791.
16                 In addition to the powers granted to cooperative banks by this code and
17     other existing laws, any cooperative bank may perform any or all of the banking
18      services offered by other types  of banks  subject to  the  prior approval of the
19      Bangko sentral ng pilipinas.
20                AR:T.  125.  Estabttshmeat  Of Brcmches  and  Other  Outfaces.  ~  rThe
21      establishment  of  branches,  branch-1ite  units,  or  other  banking  offices  by
22      cooperative banks shall be governed by the rules and regulations of the Bangko
23      Sentral ng Pilipinas. The cooperative bank shall furnish the Authority with a
24      copy of the certificate of Authority issued by the Bangko sentral ng pilipinas.
25               ART.126. jlfanagement a/ Cooperatitie Banks. -The management of
26     the  cooperative  banks  shall be governed by the  rules  and  regulations  to  be
27     promulgated  by  the  Bangko  Sentral  ng  Filipinas,  in  consultation  with  the
28     Authority.   To   maintain   the   quality   of   bank   management   and   accord
29      appropriate  protection  to  depositors  and  the  public  in  general,  the  Bangko
30      Sentral ng Pilipinas  shall prescribe the fit and proper qualifications of bank
31      directors and officers for the purposes of this Article, giving due recognition to
32     the   unique   nature   and   character   of   cooperative   banks.   The   number,
33      composition, and term of the Board of Directors shall be defined in the Articles
34     of Cooperation and By-laws of the cooperative bank,  in accordance with the
35      following guidelines:
62


25
26
27
28
29               disqualifications of the key managemerit officers.
a.  Board  cmc{  Committees.  -  The  cooperative  bank  shall  constitute,  at  a
minimum,   the   Board   of  Directors,   Election   Committee,   and   Audit
Committee.
The Board of Directors shall be composed of at least flve (5) but not more
than  fifteen  (15)  members,  at  least  one  (1)  of whom  is  an  independent
director.  It shall be entrusted with the management of the affairs of the
Cooperative  Bank.  It  shall  be  responsible  for  the  strategic  planning,
direction-setting and policy formulation activities of the cooperative bank.
The members  of the  Board  of Directors  shall be  elected by the  General
Assembly or Representative Assembly.
The  Election  Committee  shall  be  responsible  for  the  formulation  and
implementation  of election  rules  and  guidelines.  It  shall  supervise  the
conduct  of election,  election-related  activities,  canvass  and  certify  the
results of the election, and decide cases relative to such election, except
those involving the committee itself or its members. The members of the
Election   Committee   shall   be   elected   by   the   General   Assembly   or
Representative Assembly.
The  Audit  Committee  is  a  Board-level  committee  whose  composition,
functions  and  responsibilities  shall  be  in  accordance  with  the  existing
regulations   of  the   Bangko   Sentral   ng   Pilipinas.      Other  Board-level
committees may be created as may be directed by the Bangko Sentral ng
Pilipinas.
Other committees may be created by the Board of Directors with powers,
functions, and responsibilities which shall be defined in the By-laws; and
b.  Keg  Mci]tagemerif  Oj7jicers.   -   The   key  management   officers   shall  be
appointed  by  the  Board  and  shall  include  the  President,  Treasurer,
Internal Auditor,  and Compliance Officer, or their equivalent ranks. The
Bangko   Sentral   ng   Filipinas   shall   prescribe   the   qualifications   and
ART.  127.  Vacaricg €ri  the  Committees.  -  In case  of vacancy in  the
committees, the Board of Directors of the cooperative bank, unless otherwise
provided in the By-laws, will appoint a person to fill the same,  subject to the
provision that the person appointed shall serve only for the unexpired portion
of the term.
ART.   128.   Compensatiort  a/  Directors.  -  In  the  absence  of  any
provision  in  the  By-laws  fixing  their  compensation,  the  directors  shall  not
37      receive any compensation except for reasonable per czt.ems: Propt.czecz,  hozt/euer,
38      That the directors and officers shall not be entitled to any per cziem when, in
39      the preceding calendar year, the cooperative bank reported a net loss or had a
40      dividend  rate  less  than  the  official  inflation  rate  for  the  same  year.  Any
63


1      compensation other than per c!t.ems may be granted to directors by a majority
2      vote of the members with voting rights at a regular or special general assembly
3      meeting  specifically  called  for  the  purpose:   ProLJt.c!ecz,   That   no   additional
4      compensation  other  than  per  czt.ems  shall  be  paid  during  the  first  year  of
5      existence of the cooperative Bank.
6                 In no case shall the total yearly compensation of directors exceed ten per
7      centum (10%) of the net income of the cooperative bank during the preceding
8      year.
9               AR:I.   L29.   Dealings  Of  Directors,  Outftcers,   Stoc:khoiders,   and
10     Related  Interests  /DOSRJ7.  -  Dealings  with  directors  and  officers  of  the
11      Cooperative Bank shall comply with the provisions of Section  36  of R.A.  No.
12      8791, otherwise known as General Banking Law (GEL) of 2000.  However, the
13      limits  on  loans  to  dealings  of directors,  officers,  stockholders,  and  related
14     interests shall not apply to loans, other credit accommodations, or guarantees
15      extended by the cooperative bank to its member primary cooperatives.
16                 ART.130. JZzega! Use a/ ConJEdent!az Jri/bi.iirat€on. -The liability of a
17      director or  officer,  or an  associate  of a director or officer,  who,  for his/her
18     benefit  or  advantage  or  that  of  an  associate,  makes  use  of  confidential
19     information that, if generally known, might reasonably be expected to adversely
20     affect the operations and viability of the cooperative bank shall adhere to the
21      provisions of Article 59 of this code.
22               AR:T.181. Bored f or Fatthf iu. Perf ormcmce of Duties and obtlgcrfuons.
23      -The bond for the faithful performance of duties and obligations of accountable
24      officers of the cooperative bank shall adhere to the provisions of Article 66.
25               AR:T.   L82.   QiLorum   Requirerneut   and   Voting   Rights   Of   the
26     Coaperatitie BanJC Board o/Directors. -In meetings of the Board of Directors
27      of the  Cooperative  Bank,  the  same provisions under Article  50  of this  Code
28      shallapply.
29                ART.   133.   Ctomposit!orl  a/ the  Genera{  Assembzg.  -  The  General
30     Assembly shall be composed of regular members who are entitled to vote under
31      the Articles of cooperation and By-laws of the cooperative bank.
32                ART.134. Po"ers a/. the General Assemb!g. -The General Assembly
33      shall  be  the  highest  policy-making  body  of the  cooperative  bank  and  shall
34      exercise the same powers as enumerated in Article 42 of this code.
35                ART.135. Ifeetings. -The conduct of meetings of the General Assembly
36      of cooperative banks  shall adhere to  the provisions  specified  in Article  43  of
37      this code.
64


1                ART.136. quo"m cznd vo££ng systerrL -The quorum requirement for
2     General Assembly meetings of cooperative banks, whether special or regular,
3      shall be  one-half (1/2)  plus  one  (1)  of the  number  of voting  shares  of all  the
4      members entitled to vote.
5                To amend its Articles of cooperation and by-laws, at least three-fourths
6      (3/4)  vote of all the members  with voting rights,  present and  constituting a
7     quorum shall be required. All other voting requirements shall be prescribed by
8     the Bangko sentral ng pilipinas.
9                The voting rights of the members shall be proportionate to the number
10      oftheirpaid-up shares.
11                 The cooperative bank may opt to amend its Articles of cooperation and
12      By-laws through a referendum,  subject to the guidelines to be issued by the
13      Authority. However, the vote requirement shall still be two-thirds (2/3) vote of all
14      the members entitled to vote.
15                ART.   137.   Jnuestment  in  AIZ!ed  Undertafeings.  -   Subject  to  the
16     requirements and restrictions as may be imposed by the Monetary Board under
17     its existing rules and regulations, Cooperative Banks may invest in equities of
18      allied undertakings which may include, but are not limited to the following:
19         a.  Banks, financial institutions and non-bank financial intermediaries;
20         b.  Warehousing and other post-harvest facilities;
21          c.   Fertilizers, agricultural chemicals, and pesticides distribution;
22         d.  Farm equipment distribution;
23         e.  Trucking and transportation of agricultural products;
24         f.   Marketing of agricultural products;
25          g.   Leasing;
26         h.  Automated teller machine (ATM) networks;
27         i.   Public transportation;
28         j.    Financial technology; and
29        k.  Other undertakings as may be determined by the Monetary Board.
30                 ART.   138.   L€m{ta€€ons   on   Lenc!€ng  AtttJiori€g/.   -   Except   as   the
31      Monetary   Board   may   otherwise   prescribe,   the   direct   indebtedness   to
32      Cooperative Barlks of any person, company, corporation, or firm, including the
65


_ _ __'          ---    \,+ \+\,I     |\J
21      augment  the  capitalization  of cooperative  banks,  the  aforementioned  funds
22      collected  or  deducted  by various  cooperative  banks  throughout  the  country
23      from the loan proceeds offarmer borrowers in compliance with p.D.175, which
24     are still floating and outstanding either as active or dormant accounts in the
25      books  of those  banks,  shall be  converted as  capital of the  cooperative bank
26      located in the province where the depository banks of the BSF and BGF` are
27      located.
28
29
30
31
32
indebtedness   of  members   of  a   partnership   and   association,   for  money
borrowed, shall in no time exceed twenty flve per centum (25%) of unimpaired
capital and surplus of the cooperative bank. However, the direct indebtedness
mentionedshallexcludeloanssecuredbyobligationsoftheBangkoSentralng
Pilipinas;  loans  fully  guaranteed  by  the  Government  as  to  the  payment  of
principal  and  interest;  loans  to  the  extent  covered  by  the  hold-out  on,  or
assignment of, deposits maintained in the lending cooperative bank and held
in the Philippines; and other loans or credits as the Monetary Board may, from
time to time, specify non-risk assets.
TF:I.: L±_3_3_. _.Cqpf±a±   Requl.remJeut   fior   Cooperatha   Bankrs.   _   A
cooperative bank shall have a minimum paid-up capital in such amount as
may be required by the Bangko  Sentral ng Pilipinas. The Bangko  Sentral ng
Pilipinas  may  prescribe  rules  and  regulations  on  the  types  of  shares  a
cooperative   bank   may   issue,   including   the   terms   thereof   and   rights
appurtenant  thereto  to  determine  compliance  with  laws  and  regulations
governing capital  and  equity structure  of banks.  ProLJ{.czecz,  That  Cooperative
Banks shall issue par value shares only.
#=..1^40n.^f=\±_a_S_=rn.g_s__Fun_a(B.SF.)£_B_a_rfo_Charauteetwnd(BaF),
C#^Pne.r„Cmrfu:er"DD:ue„b:pAin_e,%±__LOL=r.ru+f.i6PPF),.dr±ir_-rir;;I-ri-=rEe`£;#g
P_::_g_:Tr !`C:MP).  .f tpf i  ofher _funds  crd"indste;ed-i-; -€iri= ;I-g=£:;.Flo
e=.T... 1\,4_:..__SaT=.±=T9  NTTgon  qp`±` Mu.n_±€ipqt. Kattpunan  ng  nga
Samafaang jyagron. - Sanahang Nayon (SN) and Municipal Katipunan ng mga
Samahang  Nayon  (MKSN)  which  held  common  shares  of cooperative  banks
priortotheeffectivityofR.A.No.9520shallapplyforconversiontocooperatives
in order to maintain  their status  as regular members  of cooperative banks:
h__  ._ '  _,       ,   -I
_  _  _Jr  __ ---- '  _    .-+-++^L\,.
33      Propi.c{ed, That the cooperative banks shah exert efforts to inform and assist the
34      SN and MKSN to convert within a period of three (3) years from the effectivity
35      of this code. Upon failure of the sN and MKSN to finallyconvert to a cooperative
36     within said period, the funds held in the name of such sN and MKSN shall be
37     considered as preferred shares and shall remain as capital of the cooperative
38      bank.
pr3:I. 142. Addition.al Sou.roe Of Capital Of the Cooperc.ti:ue Banks. -
The  funds  or  common  shares  in  cooperative  banks  held  in  the  name  of
cooperatives whose Certificates of Registration have already been cancelled by
the Authority and which  failed  to liquidate  such funds  or shares  during its
66


I
1      liquidation  shall  remain  as  capital  in  said  cooperative  banks  and  shall  be
2     treated as preferred shares.
3               AR:T.148. Superviston and Regutatton of cooperative Banks. -AIL
4      cooperative  banks  shall  be under the  supervision  of the  Bangko  Sentral  ng
5      Pilipinas:  Prout.c{ecz,  hotuez/er, that the Authority shall monitor the cooperative
6     banks' compliance with cooperative laws, rules, and regulations. With respect
7     to the governance of the cooperative banks, the provisions of the banking laws,
8      rules,  and  regulations  shall  prevail,  notwithstanding  Section  71  of R.A.  No.
9       8791.
10                ART.   144.  Promtizgat!on  a/ Gttidez€nes.  -  The  Bangko  Sentral  ng
11      Pilipinas and the Authority may formulate guidelines to implement or clarify
12      the provisions of this chapter. Proz#.ded, That the Bangko sentral ng Filipinas,
13      as the regulator of banks, shall be the primary regulator of cooperative banks
14      consistent with the provisions of Republic Act No. 8971 : Proz;1.czecz, rty7ther, That
15     in order to minimize the burden ofdually-regulated entities, the Bangko sentral
16      ng Pilipinas  shall,  in consultation with the Authority,  in its promulgation of
17     rules and regulations, to the extent allowed in banking and other relevant laws,
18      and  insofar  as  consistent with  the  Bangko  Sentral  ng  Pilipinas'  exercise  of
19     supervisory and regulatory powers over banks, in its promulgation ofrules and
20     regulations,  consider  the  requirements  of this  Code  and  the  Authority  for
21      cooperatives in general.
22                ART.   145.  Priutzeges  o/  Cooperat€ue  Banks.  -  Cooperative  banks
23      registered under this code shall have the following privileges and incentives:
24         a.  Those privileges and incentives accorded to cooperatives under this Code
25              and  other prior laws  including exemption  from  all  national,  provincial,
26              city, municipal or barangay taxes, fees,  and charges of whatever nature
27               and  description.  ProLJt.czec!,  hotueLJer,  That  when  a  cooperative  bank  has
28              reached an undivided net savings of more than one Hundred Million pesos
29               (PIOO,000,000.00), transactions to non-members shall be taxable.
30         b.  The foreclosure of mortgages covering loans granted by cooperative banks
31
32
33
34
35
36
37
38
39
40
41
and executions of judgment thereon involving real properties levied upon
by sheriff shall be exempt from the publications in newspapers where the
total amount of loan, excluding interests due and unpaid, does not exceed
One Million Pesos (P1,000,000.00) or such amount as the Monetary Board
may prescribe as may be warranted by prevailing economic conditions. It
shall be deemed sufficient publication in such cases where the notices of
foreclosure and execution of judgment are posted in the most conspicuous
areas such as the municipal building, the municipal public market, the
cooperative  bank,  and  the  barangay hall where  the  land  mortgaged  is
situated during the  period  of sixty  (60)  days  immediately preceding the
public auction or execution of judgment. Proof of publication as required
67


herein  shall  be  accomplished  via  an  affidavit  of the  sheriff  or  officer
conducting  the  foreclosure  sale  or  execution  of judgment  and  shall be
attached with the records of the case;
c.  A  cooperative  bank  shall  be  allowed  to  foreclose  lands  mortgaged  to  it
subject  to  the  provisions  of  Republic  Act  No.  6657,  as  amended.  For
agrarian lands foreclosed by a cooperative bank, the disposal of the same
to  another qualified beneficiary under R.A.  6557,  as  amended,  shall be
made through the same cooperative bank. F\lrther, the amortization of the
beneficiary  in  favor  of  DAR  shall  be   coursed  through   the   servicing
cooperative  bank:  Proz/1.czecz,   hozueuer,  that  cooperative  banks  shall  be
exempt from the landholding limits as prescribed by DAR or any other law
requiring the same.
d.  For cooperative banks granted by the  Bangko  Sentral  ng Pilipinas with
accreditation as Rural Financial Institution (RFI) under Republic Act No.
10000, the following privileges shall be awarded:
( 1) Unrestricted branching rights to set-up agriculture-oriented branches
in     unbanked     municipalities     and     predominantly     agricultural
communities, subject to existing regulations on minimum capitalization
for banks and the size of branch network;
(2) Automatic   eligibility   with   Philippine   Guarantee   Corporation   (with
respect  to  agricultural  credit  guarantee),  Philippine  Crop  Insurance
Corporation   (PCIC),   and   governmental   agencies   providing   services
towards risk-mitigation in the agriculture sector;
(3) Priority  status  as  credit  delivery  partner  or  conduit  of government-
directed   programs   for   agricultural   through   the   Department   of
Agriculture and other government agencies; and
(4) Entitlement to participate free of charge in capability-building activities
in  agriculture lending such  as,  but  not limited to,  exchange  of best-
practice  experiences,  study  tour,  technology  transfer  among  ASEAN
member-states and other fora of international cooperation; and
e.   Notwithstanding the provisions herein, privileges and incentives granted
to rural banks pursuant to Republic Act No.  7353,  or the "Rural Act of
1992'',  shall also be granted to cooperative banks duly registered under
this Act.
CHAPTER XXIII. INSURANCE COOPERATIVES
ART. 146. Jnsttrance Cooperat€tle. - Existing cooperatives may organize
themselves into an insurance cooperative for the purpose of engaging in the
68


`   `  '    1      business ofinsuringlife, non-life, health, and property of cooperatives and their
2      members.
3                ART.147.  7t/pes  a/ Jnsttrance  Proutded.  -Under  the  cooperative
4     insurance program established and formed by the virtue of the provisions of
5     this code, the insurance cooperative shall provide its constituting cooperatives
6     and their members different types of insurance coverage consisting of, but not
7      limited   to,   life   insurance   with   special   group   coverage,   loan   protection,
8     retirement plans,  endowment,  health and accident coverage,  pre-need plans,
9     fire insurance,  marine insurance,  motor vehicle coverage,  bonding,  crop and
10      livestock protection and equipment insurance.
11                 ART.148. App!!cabizitg o/Insurance lrd[us. -The provisions of the
12      Insurance code and all other laws and regulations relative to the organization
13      and operation of an insurance company shall apply to insurance cooperatives
14      organized under this  Code.  The requirements on capitalization,  investments
15      and reserves of insurance firms may be liberally modified upon consultation
16      witn  the  Authority  and  the  cooperative  sector,   but  in  no  case  may  the
17      requirement  be  reduced  to  less  than  half of those  provided  for  under  the
18      Insurance code and other related laws.
19                ART.149. Jmp!ementing Rtt[es. -The Insurance commission and the
20      Authority,  in consultation with the concerned cooperative sector,  shall issue
21      the  appropriate  rules  and  regulations  implementing  the  provisions  of this
22      Chapter.
23             CHAPTER XXIV. COOPERATIVES ENGAGED IN PUBLIC SERVICES
24                 ART.150. Definition and Coverage. -A cooperative engaged in public
25      services refers to one organized to render public services, as authorized under
26      a franchise, certificate of public convenience, certificate of public convenience
27     and necessity,  concession,  or any other appropriate form of authorization or
28     permit duly issued by the appropriate government agency. Such services may
29      include but is not limited to the following:
30         a.  Power generation, transmission, and/or distribution;
31          b.  Ice plants and cold storage services;
32         c.   Communication services including telephone and digital communications;
33         d.  Land,   water,   and  air  transportation  services  for  passengers   and/or
34                cargoes ;
69


1         e.  Public    markets,    slaughterhouses,    management   of   land    transport
2              terminals and ports, and other similar services;
3         f.   Water supply and distribution system services; and
4         g.  Such  other  types  of  public  services  as  may  be  engaged  in  by  any
5               cooperative.
6              Such cooperatives  shall be primarily governed by this  Chapter and the
7     general provisions of this Code insofar as they may be applicable unless they
8      are inconsistent herewith.
9                ART.    151.    Registration   Reqttiremerlts.    -    In    addition   to    the
10      requirements provided under Article  15 of this Code, no cooperative engaged
11      in   public   services   shall   be   registered   unless   it   satisfies   the   following
12      requirements:
13         a.  Its Articles of cooperation and By-laws provide for the membership of the
14              users and/or producers of the service of such cooperatives; and
15         b.  Such  other  requirements  as  may  be  imposed  by  the  other  pertinent
16               government agencies concerned.
17               AR:T. ±52. Regulation of cooperatives Engaged in pubtie services. -
18     The internal affairs of cooperatives engaged in public services such as the rights
19     and  privileges  of  members,  the  rules  and  procedures  for  meetings  of  the
20      General Assembly,  Board  of Directors  and  committees;  for the  election  and
21      qualifications  of officers,  directors,  and  committee  members;  allocation  and
22     distribution of surpluses; and all other matters relating to their internal affairs
23      shallbe governed by this code.
24                 All matters  relating to  the  franchise,  certificate  of public  convenience,
25      certificate  of  public  convenience  and  necessity,   concession,   or  any  other
26     appropriate fomi of authorization or permit of cooperatives engaged in public
27     services such as capitalization and investment requirements, equipment and
28     facilities, frequencies, rate-fixing and such other matters affecting their public
29      service   operations   shall   be   governed   by   the   proper  government   agency
30      concerned.
The Authority together with other concerned government agencies shall
jointly issue rules and regulations necessary to implement this Chapter.
31
32                        CHAPTER XXV. TRANSPORT SERVICE COOPERATIVES
33                 ART.153.  DeJEndtiori and couerage.  -Transport service cooperatives
34      are cooperatives organized to render public services such as land, water, and
70


air  transportation  services  for  the  safe  conveyance  of  passengers  and/or
cargoes.  Transport  service  cooperatives  organized  under  the  provisions  of
Executive  Order No.  898,  series  of 1983  and  by vehicle operators  defined  or
provided for under the  Department of Transportation  Public  Utility Vehicles
Modernization Program (PUVMP) shall be governed by this Chapter.
¥3._._1_54. ^Erg.ag.er:lieut ir  Auled Business  bg  Transport  Service
Cooperat!tJes.  -  Subject  to  pertinent  national  laws  and  local  ordinances,
primary trartsport service  cooperatives including federations  of cooperatives,
may engage ln a business related to transportation service, including but not
limited to:
a.  Importation,   distribution,   and   marketing   of  petroleum   products   in
accordance with existing laws;
:2        b.  :::raagt:°mnen:for ]8aans:I::aenss:a:i::rsifnaaT:°a::t];Voelfs:ervice   Centers'   and
::        C.  ::£:]r±teast,£°£'ddi:tc=::oti9ensJ; marketfng9 and sale of spare parts, automotive
;:        d.  #c%rnksefn£E:::=h:Ce]ec/odmr;V::;;i:::rance policies as an agent or liaison of a
e.  Automotive  maintenance  credit  facilities  for  the  purpose  of extending
loans for the maintenance and repair of public utility vehicles.
2.+.     a__±=:T^._ :_55_:_.5.f9_:rra_i.ton.. R?gu|aflen,__apd saperviston of Transport
22      Sort;I.ce  Coopcrat{ues.  -  The Authority shall have  sole jurisdiction  over the
23     registration, regulation, and supervision of transport service cooperatives  with
24     regard to its organization and management as a cooperative, to the exclusion
25      ofanyother agency.
2^6.      n______PTT..±56..Renew?1   p{.Fran_chase   and   Vehicle   Reg€stratton.   .
27     Renewals  of franchise  and vehicle  registration  shall be granted  to  transport
28      service cooperatives:  ProLrdecz, That such cooperative presents  Certificates of
29      Good  Standing  and  Compliance  with  the  regulations  implemented  by  the
30     Authority and the local government unit concerned as proof of its continuous
31      operation and provision of public transportation services.
32                ART.   157.   Ouers€ght   Committee.   A   multi-sectoral   committee   on
33     transport service cooperatives, composed of representatives from the Authority,
34     the Department of Transportation (DOTr), the Department of the Interior and
35     Local Government (DILG), the Land Transportation Franchising and Regulatory
36     Board   (LTFRB),   the   Land   Transportation   Office   (LTO),   other   concerned
37     government  agencies,  as  may be  necessary,  and  the  federation  of transport
38     service  cooperatives,  the  regional  clustered  organizations,  and  the  national
71


1      alliance of cooperatives, shall be established and thereafter be charged with the
2     monitoring, recommendation of policies and programs affecting the operations
3     of transport service cooperatives, and such other functions.
4                 A  regional  monitoring  committee  shall  likewise  be  established  at  the
5      regional offices of the Authority for the same purpose.
6                The Authority shall spearhead such committees both at the national and
7      regional levels. The functions of the monitoring committees shall be prescribed
8     in the Implementing Rules and Regulations to be promulgated by the Authority.
9                       CHAPTER XXVI. CREDIT AND SAVINGS COOPERATIVES
1 o                                                   AND CREDIT COOPERATIVES
11                  ART.159.  CotJerage.  -This  Chapter shall apply to credit cooperatives
12      and credit and savings cooperatives, including multi-purpose cooperatives and
13      federations.  The  provisions  of the  other  chapters  of this  Code  shall  apply
14      suppletorily except insofar as this chapter otherwise provides.
15                 ART.160.  ntxposes and oky.ectities. -Cooperatives engaged solely in
16      credit  or  in  both  credit  and  savings  services,  owned  and  operated  by  its
17      members, shall have the following purposes and objectives:
18         a.  To encourage savings among its members;
19         b.  To provide loans for productive or provident purposes to its members and
20               related services to enable its members to maximize the benefit from such
21                  loans.
22         c.  To promote the cooperatives engaged in credit and/or credit and savings
23              as preferred financial institutions among Filipinos; and
24         d.  To   promote   the   safe,   sound,   stable,   and   sustainable   operations   of
25              cooperatives  engaged in credit and/or   credit and savings by regulating
26              and supervising their operations and curtailing or preventing any act or
27              practice which  is  prejudicial  to  the  interests  of their members  and  the
28               general public.
29       _      __AR:I..±62. Regulation and saperviston of cooperatives Eingaged in
30     Cred!it and/or Credit and Sclulngs. - Pursuant to its powers, functions, and
31      responsibilities  under  Republic  Act  No.11364,  the  Authority  shall  exercise
32      regulatory  powers  and  supervision  over  the  operations  of  the  cooperatives
33      engaged in credit and/credit and savings.
72


The  Authority  shall,  in  consultation  with  the  concerned  government
agencies  and  cooperative  sector,   issue  appropriate  rules  and  regulations
pertaining to the provisions of this Chapter.
CHAPTER XXVII. ELECTRIC COOPERATIVES
ART.  163.  CotJerage.  -  The  provisions  of this  Code  shall  apply to  all
electric cooperatives  registered with the Authority.  This  shall also cover new
distribution utilities that will register with the Authority.
Electric    cooperatives    may    undertake    power    generation    utilizing
renewable en?rep sources, including hybrid systems, acquisition and operation
of subtransmission or distribution as its primary purposes.
11                 ART.164. Regiscra€£on a/Electric coapera€€ues. -The registration of
12      an electric cooperative with the Authority under this code shall be submitted
13     to  the  members  for  approval  through  a  referendum,  wherein  the  required
14     number of votes for registration with the Authority shall be twenty per centum
15      (20%) of all members entitled to vote.
`A6.      ^ __._`3 _±T:I.1r65.  APPuC?ttons of Fegi_Strouon of Electrie cooperunues. ~
17     Applications for registration as an electric cooperative under this code shall be
18      filed   solely  with   the  Authority,   which   shall   process   the   registration   in
19      accordance with its guidelines.
2^Oj       .   ..  AFT.  166_.  Docurnertts to  be  Subrr.itted fior Registration  with the
21      Atttfroritg.   -   For   purposes   of  registration   with   the   Authority,   electric
22      cooperatives   registered   with   other   regulatory   agencies   shall   submit   the
23      following documents:
a.  Copy of the 13oard Resolution certifying to the result of the vote approved
through a referendum approving the registration of such entities with the
Authority in compliance with Article 164;
b.  Certified copy of the Articles of Cooperation and By-laws as required by
the Authority;
29         c.  Duly audited financial statements for the past two (2) years;
3:        d.  :£oS:r%fsne:=e::£faBn°dara:te°sfteDd±r;;tt°hr: €=:ihee::oan?dresses certifled by the
i:       e.  rj:hin sst¥t:6|emn:notfh:hf:°amu{#:iegistsr££°en;:::t:,:etahs:rse:bsshc:lib::bs¥±:r:
73


`'
1
2
capital of members, and the amount of paid-up share capital received by
the Treasurer;
3         f.   Bonds ofaccountable officers; and
4         g.   Such other requirements under Art.15 of this code.
5^     ^       AFT.167.. Regi?traptor options of Etectric cooperatives. -ELectr±c
6      Cooperatives registered with the National Electrification Administration (NEA)
7     under  Presidential  Decree  No.   269,   as   amended,   shall  register  with  the
8     Authority in order to be entitled to the benefits and privileges under this code.
9                  Should electric service providers  or electric cooperatives opt to register
10     with  the  NEA following  the  conduct  of a  referendum  as  provided  for under
11      Article  164, shall no longer be eligible for registration or accreditation with the
12     Authority. As such, they shall be prohibited from retaining or using the term
13      "cooperative"  or  any  variants  thereof  in  their  business  name.  Any  electric
14      service provider not registered with the Authoritywho misrepresent themselves
15      as electric cooperatives shall be penalized under Article  179 of this code.
16                ART.168. Role a/the Energg Regttzatorg/ Comm€ssion. -All rates and
17      tariffs of electric cooperatives registered under the Authority shall be subject to
18     the rules on application and approval of the Energy Regulatory commission for
19      distribution utilities.
2o               AR:T.169. Efflects of Regtstratton with the Authorrty. -
21
22
23
24
25
26
27
28
29
30
31
32              inconsistent with this chapter are hereby repealed;
::       b.  :gtear:ieecdtnicoc£°£eErft];Vf::rrejgjsnt:r2g,VI2toho:h:hAai,thc°o=tt¥n¥:ht:X:Sbt::g[e°#:
35              terms of such loans until full payment or settlement thereof;
36         c.   Except as provided in the immediately preceding paragraph, the NEA shall
37               no    longer   exercise    regulatory    or    supervisory   powers    on    electric
38               cooperatives duly registered with the Authority;
a.  Upon  the  effectivity  of  this  Code,  electric  cooperatives  that  are  duly
registered with the Authority, and issued a Certificate of Registration, shall
no  longer  be  covered  by  Presidential  Decree  No.  269,  as  amended  by
Presidential   Decree   No.    1645:    Proujczecz,   That   electric   cooperatives
registered with the Authority shall now be covered by the provisions of this
Code  as  well  as  future  rules  and  issuances  of the  Authority:  Proun.czec!,
hozuez/er,   That  the   security   of  tenure   and   the   collective   bargaining
agreement between the cooperative management and the employees shall
be respected, with no diminution of their existing salaries,  emoluments,
ranks and other benefits: Proz/I.decz, Ji7iczzzg, That any other provision of law,
Presidential    Decree,    Executive    Order,    or    rules    and    regulations
74


18               are hereby deemed registered under this code.
1.9^               AP;T. ±7.0..5riare capitaz in the Electrie cooperatives. -The electric
20      cooperatives  shall issue  and  distribute  share  certificates  under the  name  of
21      each  of their members.  Said  share  certificates  shah take  into  consideration,
22     among   others,   the   previous   equity   contributions   and   the   amortization
23      component through the payments made to capital build-up and other capital
24      contributions.
25                 The National Electrification Administration  (NEA)  shall,  within ten (10)
26      days upon final completion of reconciliation of relevant loan accounts with the
27      electric cooperative concerned, issue a certification on the aggregate amount of
28     payments made on the principal component of the amortizations, as the basis
29     for the issuance of equity share certificates by the electric cooperatives to its
30      Member-Customer-Owners (MCOs) on record.
31                  The  Energy  Regulatory  Commission  (ERC)  shall,  within  forty-five  (45)
32      days  from  the  close  of  each  fiscal  year,  issue  a  certificate  to  the  electric
33      cooperative concerned on the total amount collected for capital contributions
34      (Reinvestment Fund for sustainable capex or RFSC) from the MCOs, for such
35      period, as the basis for the electric cooperative's determination of at least ten
36      per  centum  (10%)  that  the  electric  cooperative  will  credit  to  each  individual
37      account of the MCo and for which equity share certificate will be issued.
38                 No share capital certificate shall be issued to a subscriber until the full
39     amount of his/her subscription together with interest and expenses, if any is
d.  Electric   cooperatives   registered   with   the   Authority   are   entitled   to
congressional   allocations,   grants,    subsidiaries   and   other   financial
assistance  for  rural  electrification  which  can  be  coursed  through  the
Department of Energy, the Authority, and/or local government units. The
electric cooperatives registered under this Code can avail of the financial
services   and   technical   assistance   provided   by  government   financial
institutions and technical development agencies on terms respecting their
independence as autonomous cooperatives;
e.  All condoned loans, subsidies, grants, and other assistance shall form part
of the donated capital and funds of the electric cooperatives and, as such,
it shall not be sold, traded, nor be divided into shareholdings at any time.
The  donated  capital/fund  shall  be  valuated  for  the  sole  purpose  of
determining the equity participation of the members: Proz/I.c!ec{, That in the
case of dissolution of the cooperative, said donated capital shall be subject
to escheat; and
f.   Electric cooperatives registered and confirmed with the Authority under
Republic Act No. 6938, Republic Act No. 6939, and Republic Act No. 9520
75


12
due, has been paid. The distribution of share capital certificates shall be done
annually preferably during the General Assembly meeting.
In  case  of  loss  or  destruction,  the  electric  cooperative  may  issue  a
duplicate certificate, if such certificate is proven to have been lost, destroyed,
defaced,  mutilated,  tom  or  is  surrendered  to  the  electric  cooperative  upon
execution and submission by a member of an Affidavit of Loss or such other
documents  evidencing  defacement/mutilation  or  surrender  of  such  share
capital certificate.
ART.  171.  Rtt!es  clnc{ Regtt{atfons.  -The  Authority,  in  consultation
with  the  concerned  government  agencies,  shall  issue  appropriate  rules  and
regulations pertaining to the provisions of this Chapter.
cHAprER xxvlll. FOREIGN pARTNERSHlps
T::I,:.1:3_... FLO_r=}`g_I P`artnership u!i.±h. ho?al Cooperathas. -Fore±grL
cooperatives may be allowed to engage with local cooperatives in the form of
partnership, subject to a partnership agreement entered into by both, with the
subject project strictly in line with the business undertaking and purposes of
the latter as provided in its Articles of Cooperation and By-laws.
Upon approval of the Partnership Agreement in accordance with the guidelines
to  be  promulgated  by  the  Authority,  the  foreign  cooperative  shall  be  liable
under the provisions  of the Anti-Money Laundering Act,  and  other pertinent
laws,  classified  under  the  Philippines'  Foreign  Investment  Negative  List  for
foreign equity restrictions under the Philippine Constitution and specific laws,
and   shall   be   under   the   regulation   of  the   necessary   agencies   for   the
implementation of the subject project.
Foreign cooperatives, including its members, shall be precluded from becoming
members of local cooperatives, except for cooperative banks, and may only act
solely as partners. As such, they shall not interfere, directly or indirectly, in the
management and internal affairs of the local  cooperative in accordance with
the generally accepted cooperative principles of independence and autonomy,
notwithstanding  that  local  cooperatives  shall  be  one  hundred  per  centum
( 100°/o) wholly owned and controlled by Filipinos.
32                                CIIAFTER XXIX. MISCELLANEOUS PROVISIONS
33                 ART.173.  Comp{£ance W!tfr Other rfuttJs. -Cooperatives shall comply
34     with all other pertinent laws and all other social legislations in the course of its
35      existence and operation.
76


±=:`=+L=±L74:L5`=g=_±xp_ .Of Coepera€tv?S.. -  The  Authority  shall  keep  a
registry  which  shall  contain  a  chronological  entry  of  the  name  of  every
cooperative  registered,  suspended,  dissolved,  or  cancelled  under  this  Code
together with its relevant information. The Authority shall publish and post on
its  website  a  list  of  existing  cooperatives,   cooperatives  under  dissolution,
cooperatives  under  suspension,  and  those  whose  registration  are  cancelled
during the year together with such information on each of them,  as may be
prescribed in the rules and regulations.
=:I_.__ 1.|5.  Se.t.tlemert_i. Of Disputes,  Conc±ucrmon,  Mediation,  and
Arbftratfon Proceec!{ngs. - Disputes among members, officers, directors, and
committee members, and intra-cooperative, inter-cooperative, intra-federation
or inter-federation disputes shall, as far as practicable, be settled amicably in
accordance with the conciliation or mediation mechanisms embodied in the By-
laws of cooperatives and in such other applicable laws.
15                 The conciliation-Mediation committee of the cooperative shall facilitate
16      the  amicable  settlement  of  intra-cooperative  disputes  or  disputes  among
17      members, officers, directors, and committee members.
18                 Should  such  conciliation  or  mediation  proceeding fall,  the  party  may
19      settle the dispute through arbitration or adjudication: Prou..c!ecz, hoLueuer, That
20     before any party can validly file a complaint with the Authority for voluntary
21      arbitration   or  adjudication,   it  must  first   secure  a   certification  from  its
22      Conciliation-Mediation    Committee   and   from    the   cooperative    union   or
23      federation to which it is affiliated that despite all efforts to settle the issues, the
24      conciliation-mediation proceeding failed.
25                 Once  the  arbitrators  or the  appropriate  adjudication  division acquires
26     jurisdiction over the case,  it shall have exclusive jurisdiction. The decision of
27     the arbitrator shall be final and executory. For this purpose, the Authority shall
28     create  a  database  of qualified  arbitrators  which  shall  also  be  posted  in  its
29      officialwebsite
30                 Decisions rendered by the Authority in the exercise of its adjudicatory
31      powers  shall  be  appealable  to  the  Court  of Appeals  in  accordance with  the
32      applicable rules.
33                 In  case  of election-related  issues,  the  aggrieved  party may elevate  the
34      case for adjudication to the proper regional office of the Authority in accordance
35     with  the  CDA  Omnibus  Rules  of Procedure  without  undergoing  alternative
36      dispute resolution.
3^7^     ,.___±P:T.|76. :!b}ut €ongressi_onal oversighi cor"ritttee on coopercrmue
38     /uCocq. -There is hereby created a Joint congressional oversight committee
39     composed of the chairperson of the senate committee on cooperatives and the
40      Chairperson of the House committee on cooperatives Development, with four
77


(4)memberseachfrombothHouses.Thesaidmembersshallbedulyappointed
by the Senate President and the Speaker of the House of Representatives from
the members of the respective committee.
The Joint Oversight Committee shall monitor the proper implementation
of the rules and regulations of this Code.
The annual appropriation for the Oversight Committee shall be charged
to  the  budefet  of. hnth  Hniieac±  ^f. r`^ii~+a-f`  ;.  +1_  a_______1   A
budget of both Houses of Congress in the General Appropriations Act
_      _____.___   ~..`^..   L,`~   `~1LL^L6'`J
(GAA).
9n     r..+.:TT: ^±_I::  _]S=_=?Ce.. Of  lf tJ#.n.ctlpe  Re_u_Of on  the  Authori±g.  .  No
10     restraining order or  injunction  shall be  issued  by the  court,  other than  the
11      Court of Appeals or supreme court,  enjoining the Authority from examining
12      and  investigating cooperatives  subject  to  supervision  or examination  by the
13      Authority.
14
i;         :£:s;::s;t:p;2:a:§£o;g;::::I;;:r]:¥::t{E:=e:c;::;:ge:x:cc:r;€±o#,otTh:u¥;e_£:,a{sEe:to~§;,:v§
i:              :Foev£S£:tn:°rity  mayi  m°tu  proprio>  flle  complaints  for  violation  of this
;i     b §e]§:¥;::n::o::S:;:i°!uC;i:i;;7;°±i::::;i7;Lt£:tjf;es;¥:¥¥¥:o:itu:oi!ji:eu;a¥ot::e!ie::;i:i:ii
CHAPTER XXX. FINAL PROVISIONS
ART. 178. Jmpzementfng Rttzes cincz Regtthatfons. -The Authority shall
issue  the  rules  and  regulations  to  implement  those  provisions  of this  Code
which expressly call for the issuance thereof. This paragraph shall not apply to
those  cases  wherein  a  specific  provision  of this  Code  expressly  designates
particular government agencies which shall issue the regulations called for by
any provision of this Code.
ART.  179. Penal Prouts€ons. -The following acts or omissions affecting
cooperatives are hereby prohibited:
a.  The use of the word "cooperative" by any person(s) or organizations that is
not  duly  registered  with  the  Authority  shall  not  be  allowed.  In  case  of
violation, the penalty of imprisonment of not less than two (2) years nor
.__    _   __   _       \\                       ~                 ,  -\
78


than  six  (6)  years  but not  more  than  ten  (10)  years:  ProLJiczecz,  That  the
conviction or acquittal obtained under this Article shall not be a bar to the
filing of a civil suit for the collection of taxes;
c.   Direct or indirect violation or circumvention of the provisions  of Articles
70 and 71 of this Code committed by any public official or employee of any
bureau, office or agen,cy of the government that deprives, diminishes or in
any manner hinders or restricts any duly registered cooperative from the
full enjoyment of the exemption from the payment of the taxes, fees and
charges enumerated therein, shall upon conviction, suffer a penalty of not
less   than   seven   (7)   years   but   not   more   than   twelve    (12)   years
imprisonment  or  a  fine  in  the  amount  of not  less  than  Five  hundred
thousand  pesos  (P500,000.00)  but  not  more  than  One  million  pesos
(P1,000,000.00) or both at the discretion of the court and shall further be
disqualified to hold any other office;
d.  Direct  or  indirect  interference  or  intervention  by  any  public  official  or
employee  in  the  internal  affairs  of a  cooperative  of which  he  is  not  a
member, such as, but not limited to, the following:
( 1)  Influencing the election or appointment of officers, directors, committee
members  and  employees  through  public  or  private  endorsement  or
campaign for or against any person or group of persons;
(2)  Requiring   prior   clearance   for   any   policy   or   decision   within   the
cooperative;
(3) Requesting or demanding for the creation of positions or organizational
units,  or  recommending  any  person  for  appointment,  transfer,  or
removal from his/her position; or
(4) Any other acts inimical or adverse to the autonomy and independence
of cooperatives .
e.  A  director,  officer  or  committee  member who  violated  the  provisions  of
Article 55 on the Liability of Directors, Officers and Committee Members,
Article 58 on the Disloyalty of a Director, and Article 59 on the Illegal Use
of Confidential Information shall upon conviction suffer a fine of not less
than  Five  hundred  thousand  pesos  (P500,000.00)  nor  more  than  One
million  pesos  (P1,OOO,000.00)  or imprisonment  of not  less  than  five  (5)
years but not more than ten (10) years or both at the court's discretion;
f.   The   following   are   considered   offenses   punishable   by   a   penalty   of
imprisonment of not less than one (1) year nor more than five (5) years or
a fine of not more than One hundred  thousand pesos  (P100,000.00)  or
both at the discretion of the court:
79


I.          ,                      ,
1
2
3
4
5
6
7
(1) Omission   or   refusal   to   furnish   any  information,   report   or   other
document that is required under this Code;
(2) Providing information, reports or other documents to the Authority that
are  required under this  Code which  the  person  knows  to  be  false or
misleading;
(3) Omission or refusal to keep a book or registry under this  Code  or to
make the required entry therein;
8             (4) Making an entry required under this code in a book or registry, which
9                   the person knows to be false or misleading;
10              (5) Hindering  an  authorized  person  from  making  an  inspection,  audit,
11                    exalnination or investigation required under this code;
12              (6)  Failure to comply with an order or written instructions issued or given
13                    by the Authority;
14              (7) Violation  of  the  provisions  regarding  transactions  with  a  restricted
15                    party; and
16              (8) Abetting,  counseling,  allowing,  authorizing  or  commanding  another
17                    person to commit an offense punishable by this code: ProzH.czecz, That in
18                   case the violator is a cooperative or juridical person, the penalty shall
19                    be imposed on its directors and officers.
20         g.  Any violation of any provision of this code for which no penalty is imposed
21               shall be  punished by imprisonment of not less than  six  (6)  months nor
22              more than one  (1) year and a fine of not less than Ten thousand pesos
23                (Plo,OOO.00), or both at the discretion of the court.
24               In  case  of  violation  of  any  provision  of  this  Code,  the  individual  or
25     individuals,  and  in  the  case  of  organizations  or  government  agencies,  its
26      officers, and directors shall, upon conviction by a Court, each suffer a penalty
27      of not less than two (2) years but not more than five (5) years imprisonment or
28      a fine in the amount of not less than Fifty thousand pesos (P50,000.00), or both
29      at the discretion of the court.  In the case of a public official or employee, the
30      offender  shall  upon  conviction,  suffer  the  accessory  penalty  of  temporary
31      absolute disqualification.
32                ART.  180.  Admin€strat£Iie  Sanctions.  - The Authority shall  conduct
33      investigations,   file  necessary  charges,   discipline,   suspend  and/or  remove
34      erring officers and members of the cooperative for violation of cooperative laws,
35     rules, regulations, issuances of the Authority, the Articles of cooperation and
36      By-laws,  after due  process,  and  direct  the  General Assembly to  replace  the
37      suspended or removed officers.
80


1                 Any  violations  on  the  procedures  of the  rules  on  adjudication  shall
2     likewise be penalized under this Article.  Such administrative sanctions shall
3     be   implemented   in   accordance   with   the   rules   and   regulations   to   be
4     promulgated by the Authority.
5                ART.181.  Print€rig and Distribution.  -The  National  Printing Office
6     shall publish this code in the official Gazette in full within sixty (60) days from
7      the  date  of  approval  thereof.  Copies  of  this  Code  shall  be  given  to  every
8     department,   agency,   and   instrumentality   of   the   National   Government,
9     including   regional,   provincial   offices,   and   local   governments   including
10      government-owned and controlled corporations.
11                ART.182. Interpretation and Corrst"ction. -In case of doubt as to
12      the  meaning  of  any  provision  in  this  Code  or  the  regulations  issued  in
13      pursuance   thereof,   the   same   shall  be   resolved   liberally   in   favor  of  the
14      cooperatives and their members.
15                 ART.183.  Repeating  Czat.se.  -Except as  expressly provided by this
16      Code,  Presidential  Decree  No.   175,  Republic Act  No.  6938,  Republic  Act  No.
17     9520,  and all other laws, or parts thereof, inconsistent with any provision of
18      this  Code  shall be deemed repealed:  Prozn.c{ec!, That the provisions  of Secs.  3,
19      5,  and  7  of Presidential Decree  No.  1645,  Executive Order No.  623,  series  of
20      2007, See.18 ofRepublicAct No.10531, Revenue Regulation No. 20-2001, and
21      all laws,  decrees,  executive  orders,  implementing rules  and regulations,  BIR
22     circulars,   CDA   memorandum   circulars,   memorandum   orders,   letters   of
23     instruction,  local government  ordinances,  or parts thereof inconsistent with
24     any  of the  provisions  of this  Act  are  hereby  repealed,  amended  or modified
25      accordingly.
26                ART.184. Transitory provisions. -
27         a.  All cooperatives registered with the Authority under Republic Act No. 9520
28               are hereby deemed registered under this code.
29         b.  Registration  of  electric  cooperatives  with  the  Authority  shall  not  be
30
31
32
33
34
35
36
37
considered as a transfer of ownership of its assets and liabilities nor shall
it  constitute  a  change  in  the  nature,   structure,   and   status  of  the
cooperative.  Said  registration  shall  not  result  in  the  revocation  of the
condoned loans under Republic Act No.  9136,  otherwise  known  as  the
Electric Power Industry Reform Act:
Proujczecz, That electric cooperatives with existing loans shall not be subject
to the control and supervision of its creditors and shall only be limited to
the fulfillment of each civil obligations.
81


1
2
3
c.   For cooperatives whose fiscal period does not coincide with the calendar
year, they shall be mandated to amend their Articles of Cooperation and
By-laws to adhere to the fiscal year as defined under this Code.
4                 ART.185. 4}so-Facto czattse. -All privileges, benefits, and exemptions
5      granted to  the cooperatives by prior laws,  including R.  A.  No.  7160,  R.A.  No.
6      6938 as amended, R.A. No. 9520, and other existing laws shall be accorded to
7      cooperatives under this code.
8                ART.  186.  Separabizitg  Czat.se.  -  Should  any  part  of this  Code  be
9     declared  unconstitutional,  the  validity  of  remaining  provision  hereof  shall
10      remain in full effect.
11                 ART.187. E/Tect€uttg czat.se. -This code shall take effect fifteen (15)
12      days from its publication in a newspaper of general circulation.
13                  Approved,,
82