EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
)
SENATE 
Senate Bill No. 2249
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Introduced by Senator FRANCIS N. PANGILINAN
AN ACT
PROVIDING PROTECTION TO COOPERATIVE DEPOSITORS AND 
ESTABLISHING THE PHILIPPINE COOPERATIVE INSURANCE CORPORATION, 
DEFINING ITS POWERS AND FUNCTIONS, APPROPRIATING FUNDS 
THEREFOR, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
The interest for safety of public deposits has motivated governments to provide 
deposit insurance. In the Philippines, government has enacted Republic Act 3591 in 1963 
creating the Philippine Deposit Insurance Corporation (PDIC). PDIC was established to 
promote and safeguard the interests of the depositing public by way of providing 
insurance coverage on all insured deposits. On membership, it is mandatory for all banks 
licensed by the Bangko Sentral ng Pilipinas to be a member of PDIC. According to the 
PDIC website (www.pdic.gov.ph/public-policy) as of 31 December 2017, there are 587 
banks in the Philippine banking system. These consist of 43 commercial banks (including 
branches of foreign banks), 55 thrift banks (savings banks, mortgage banks, stock savings 
and loan associations, and development banks), and 489 rural banks (including 
cooperative banks).
Although cooperative banks are included in the membership of PDIC, other 
savings and credit cooperatives are not. In a policy paper by Dr. Gilberto Llanto (June 
2000)1, he concluded that savings and credit cooperatives have been effective in 
mobilizing millions of pesos of deposits, and these deposits are mostly coming from the 
low-[income] and middle-income classes. Hence, he recommended various measures to 
protect members deposits and one of which is to put a deposit insurance for savings and 
credit cooperative deposits. In the 2019 data of the Cooperative Development Authority, 
it is estimated that more or less 40 percent of the total number of cooperatives are engaged 
in the business of savings and credit.
In view of the foregoing, the immediate passage of this bill is earnestly sought.
GILINAN
FRANCIS N.
1 Llanto G. (2000). Protecting Deposits in Savings and Credit Cooperatives. Philippine Institute for Development 
Studies.


EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES )
Second Regular Session 
)
SENATE 
Senate Bill No. 2249
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INDEX.
Introduced by Senator FRANCIS N. PANGILINAN
AN ACT
PROVIDING PROTECTION TO COOPERATIVE DEPOSITORS AND 
ESTABLISHING THE PHILIPPINE COOPERATIVE INSURANCE CORPORATION, 
DEFINING ITS POWERS AND FUNCTIONS, APPROPRIATING FUNDS 
THEREFOR, AND FOR OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled:
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SECTION 1. Short Title. - This Act shall be known as the "Cooperative Depositors
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Protection Act of 2021."
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SEC. 2. Declaration of Principles and Policies. - Section 1, Article XII of the 1987
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Constitution declares that the state shall promote the viability and growth of cooperatives
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as instruments for social justice and economic development. Towards this end, the
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government must extend all means and mechanisms necessary for the Philippine
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Cooperative Deposit Insurance Corporation to effectively fulfill its vital task of
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promoting and safeguarding the interests of the depositing public by way of providing
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permanent and continuing insurance coverage on all deposits, in order to help develop a
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sound and stable cooperative system at all times.
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SEC. 3. Creation and Nature of the Corporation. - There is hereby created a
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Philippine Cooperative Deposit Insurance Corporation which shall have the status of a
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tax-exempt government corporation attached to the Department of Finance for policy
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coordination and guidance.
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SEC. 4. Powers and PunctioHs. - The Corporation shall have the following powers
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and functions;
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a) 
To provide a deposit insurance scheme for insured cooperatives and to
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receive, liquidate and wind up any cooperative;
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b) 
To formulate and issue rules and regulations for the effective discharge of
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its responsibilities;
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c) 
To organize its office, fix the compensation of an appoint personnel as may
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be deemed necessary upon the recommendation of the president of the
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Corporation;
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d) 
To direct the management and operation of the Corporation;


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e) 
To receive and manage grants, donations, and other forms of assistance;
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f) 
To sue and be sued;
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g) 
To adopt an annual budget for, and authorize such expenditures by the
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Corporation;
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h) 
To perform such other acts as it may deem necessary for the corporation to
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undertake its mandate and functions.
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SEC. 5. The Board of Directors. - The Corporation shall be governed by the Board
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of Directors which shall be composed of five (5) members as follows;
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a) 
The Secretary of Finance who shall be the ex-officio Chairman of the Board
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without compensation.
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b) 
The Chairman of the Cooperative Development Authority, who shall be ex-
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officio member of the Board without compensation.
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c) 
The President of the Corporation, who shall be appointed by the President
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of the Philippines from either the Government or private sector to serve on
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a full-time basis for a term of six (6) years. The President of the Corporation
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shall also serve as Vice Chairman of the Board.
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d) 
Two (2) members from the private sector, to be appointed for a term of six
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(6) years without reappointment by the President of the Philippines:
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Provided, That of those first appointed, the first appointee shall serve for a
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period of two (2) years.
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No person shall be appointed as member of the Board unless he be of good
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moral character and of unquestionable integrity and responsibility, and
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who is of recognized competence in cooperativism, economics, banking and
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finance, law, management administration or insurance, and shall be at least
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thirty-five (35) years of age. For the duration of their tenure or term in office
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and for a period of one year thereafter, the appointive members of the Board
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shall be disqualified from holding any office, position or employment in
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any insured cooperative.
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The Secretary of Finance may designate a representative, whose position
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shall not be lower that an undersecretary or deputy governor respectively,
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to attend such meetings and to vote on behalf of the principal. Whenever
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the Chairman of the Board is unable to attend a meeting of the Board, or in
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the event of a vacancy in the office of the Secretary of Finance, the President
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of the Corporation shall act as Chairman.
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The presence of three (3) members shall constitute a quorum. All decisions
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of the Board of Directors shall require the concurrence of at least three (3)
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members.
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The Secretary of Finance shall fix the rate of per diem for every Board
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meeting attended by the members of the Board of Directors.
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SEC. 6. The President of the Corporation. - The President of the Corporation shall
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be the Chief Executive thereof and his salary shall be fixed by the President of the
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Philippines. The sum total of the salary of the President and allowances and other


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emoluments which the Board of Directors may grant him shall be the ceiling for fixing 
the salary, allowances and other emoluments of all other personnel in the Corporation, 
The power and duties of the President of the Corporation are:
a) 
To prepare the agenda for the meeting of the Board and to submit for the 
consideration of the Board the policies and measures which he believes to 
be necessary to carry out the purposes and provisions of this Act;
b) 
To execute and administer the policies and measures approved by the 
Board;
c) 
To direct and supervise the operations and internal administration of the 
Corporation in accordance with the policies established by the Board. The 
President may delegate certain of his administrative responsibilities to 
other officers of the Corporation, subject to the rules and regulations of the 
Board;
d) 
To represent the Corporation, upon prior authority of the Board, in all 
dealings with other offices, agencies and instrumentalities of the 
government and with all other persons or entities, public or private, 
whether domestic, foreign or international;
e) 
To authorize, with his signature, upon prior authority of the Board, 
contracts entered into by the Corporation, notes and securities issued by the 
Corporation, arid the annual reports, balance sheets, profits and loss 
statements, correspondence and other documents of the Corporation. The 
signature of the President may be in facsimile wherever appropriate;
f) 
To represent the Corporation, either personally or through counsel, in all 
legal proceedings or actions;
g) 
To delegate, with the prior approval of the Board of Directors, his power to 
represent the Corporation, as provided in subsection (d) and (f) of this 
section, to other officers of the Corporations; and
h) 
To exercise such other powers as may be vested in him by the Board.
The President shall be assisted by a Vice President and other officials whose 
appointment and removal for cause shall be approved and whose salary shall be fixed by 
the Board of Directors upon recommendation of the President of the Corporation. During 
the absence or temporary incapacity of the President, or in case a vacancy or permanent 
incapacity and pending the appointment of a new President of the Corporation by the 
President of the Philippines, the Vice President shall act as President and discharge the 
duties and responsibilities thereof.
SEC. 7. Definition of Terms as Used in this Act. -
a)
b)
c)
Board of Directors means the Board of Directors of the Corporation. 
Cooperative shall be synonymous and interchangeable and shall include 
other types and categories of cooperatives that encourages and accept 
savings among its members and the general public.
Receiver includes a receiver, commission, person or other agency charged 
by law1 with the duty to take charge of the assets and liabilities of the 
cooperative which has been forbidden from doing deposit business in the 
Philippines, as well as the duty to gather, preserve and administer such 
assets and liabilities for the benefit of the depositors of said cooperative.


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and to continue into liquidation whenever authorized under this Act or
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other laws, and to dispose of the assets and wind up the affairs of such
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cooperative.
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d) 
Insured Cooperative means any cooperative the deposits of which are
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insured in accordance with the provisions of this Act.
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‘ 
e) 
Non-insured Cooperative means any cooperative the deposits of which are
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not insured.
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f) 
Deposit means the unpaid balance of money or its equivalent received by
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a cooperative in the usual course of savings deposit business and for which
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it has given or is obliged to give credit to a savings, time or thrift account,
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or issued in accordance with Cooperative Development Authority rules
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and regulations, R.A. 9520 and other applicable laws, together with such
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other obligations of a cooperative consistent with cooperative principles
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and practices, the Board of Directors shall determine and prescribe by
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regulations to be deposit liabilities of the cooperative.
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The Corporation shall not pay deposit insurance for the following accounts
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or transaction, whether denominated, documented, recorded or booked as
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deposit by the cooperative:
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1. Investment products such as share capital, fix deposits, bonds and
20 
securities, trust accounts, and other similar instruments;
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2. Deposit accounts or transactions which are unfunded, or that are
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fictitious or fraudulent;
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3. Deposit accounts or transactions constituting, and/or emanating
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from, unsafe and unsound cooperative savings transactions
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practice/s, as determined by the Corporation, in consultation with
26 
the Cooperative Development Authority, after due notice and
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hearing, and publication of a cease and desist order issued by the
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Corporation against such deposit accounts or transactions; and
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4. Deposits that are determined to be the proceeds of an unlawful
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activity as defined under Republic Act 9160, as amended.
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g) Insured Deposit means the amount due to any bona fide depositor for
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legitimate deposits in an insured cooperative net of any obligation of the
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depositor to the insured cooperative as of the date of closure, but not to
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exceed Three Hundred Thousand Pesos (P300,000.00). such net amount
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shall be determined according to such regulations as the Board of Directors
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may prescribe. In determining such amount due to any depositor, there
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shall be added together all deposits in the cooperative maintained in the
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same right and capacity for his benefit either in his own name or in the name
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of others. A joint account regardless of whether the conjunction "and," "or,"
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"and/or" is used, shall be insured separately,from any individually-owned
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deposit account: Provided, That (1) If the account is held jointly by two or
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more natural persons, or by two or more juridical persons or entities, the
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maximum insured deposit shall be divided into as many equal shares as
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there are individuals, juridical persons or entities, unless a different sharing
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is stipulated in the document of deposit, and (2) if the account is hold by a
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juridical person or entity jointly with one or more natural persons, the
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maximum insured deposit shall be presumed to belong entirely to such
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juridical person or entity: Provided, further. That the aggregate of the


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h)
interest of each co-owner over several joint accounts, whether owned by the 
same or different combinations of individuals, juridical persons or entities, 
shall likewise be subject to the maximum insured deposit of Three Hundred 
Thousand Pesos'(P500,000.00): Provided, furthermore. That the provisions 
of any law to the contrary notwithstanding, no owner/holder of any 
negotiable certificate of deposit shall be recognized as a depositor entitled 
to the rights provided in this Act unless his name is registered as 
owner/holder thereof in the books of the issuing cooperative: Provided, 
finally. That, in case of a condition that threatens the monetary and financial 
stability of the financial system that may have systematic consequences, as 
defined in Section 19 hereof, as determined by the Monetary Board, the 
maximum deposit insurance cover may be adjusted in such amount, for 
such a period, and/or for such deposit products, as may be determined by 
a unanimous vote of the Board of Directors in a meeting called for the 
purpose and chaired by the Secretary of Finance, subject to the approval of 
the President of the Philippines.
Transfer Deposit means deposit in an insured cooperative made available 
to a depositor by the Corporation as payment of insured deposit of such 
depositor in a closed cooperative and assumed by another insured 
cooperative.
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SEC. 8. Deposit Insurance Coverage. - The deposit liabilities of any cooperative,
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which is engaged in the business of receiving deposits as herein defined on the effective
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date of this Act, or which thereafter may engage in the business of receiving deposits,
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shall be insured with the Corporation.
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SEC. 9. Assessment of Member Cooperative. -
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a) 
The assessment rate shall be determined by the Board of Directors:
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Provided, That the assessment rate shall not exceed one-fifth (1/5) of one
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percent (1%) per annum. The semi-annual assessment for each insured
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cooperative shall be in the amount of the product of one-half (1/2) the
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assessment rate multiplied by the assessment base but in no case shall it be
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less than Three Thousand pesos (P3,000.00). The assessment base shall be
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the amount of the liability of the cooperative for deposits as defined under
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subsection (f) of section 7 without any deduction for indebtedness of
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depositors.
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b) 
The semi-annual assessment base for one semi-annual period shall be the
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average of the assessment base of the cooperative as of the close of business
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on March thirty-one and June thirty and the semi-annual assessment base
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for the other semi-annual period shall be the average of the assessment base
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or the cooperative savings deposit as of the close of business on September
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thirty cmd December thirty-one: Provided, That when any of said days is a
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non-business day or legal holiday, either national or provincial, the
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preceding business day shall be used. The certified statements required to
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be filed with the Corporation under subsections (b) and (c) of this section
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shall be in such form and set forth such supporting information as the Board
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of Directors shall prescribe. The assessment payments required from the
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insured cooperatives under subsections (b) and (c) of this Section shall be


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made in such manner and at such time or times as the Board of Directors
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shall prescribe, provided the time so prescribed shall not be later than sixty
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(60) days after filing the certified statement setting forth the Eunount of
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assessment,
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c) 
On or before the 31st of July of each year, each insured cooperative shall file
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with the Corporation a certified statement showing for the six months
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ending on the preceding June thirty the amount of the assessment base and
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the amount of the semi-armual assessment due to the Corporation for the
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period ending on the following December thirty-one, determined in
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accordance with subsection (a) of this section, which shall contain or be
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verified by a written declaration that it is made under the penalties of
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perjury. Each insured cooperative shall pay to the Corporation the amount
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of the semi-annual assessment it is required to certify. On or before the 31st
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day of January of each year, each insured cooperative shall file with the
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Corporation a similar certified statement for the six months ending on the
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preceding December thirty one and shall pay to the Corporation the
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amount of the semi-annual assessment for the period ending on the
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following June thirty which it is required to certify.
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d) 
Each cooperative which becomes an insured cooperative shall not be
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required to file any certified statement or pay any assessment for the semi-
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annual period in which it becomes an insured cooperative. On the
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expiration of such period, each such cooperative shall comply with the
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provisions of subsection (b) of this Section except that the semi-annual
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assessment base for its first certified statement shall be the assessment base
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of the cooperative as of the close of business on the proceeding June thirty
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or December thirty-one, whichever is applicable, determined in accordance
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with subsection (a) of this Section, If such cooperative has assumed the
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liabilities for deposits of another cooperative, it shall include such liabilities
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in its assessment base. The first certified statement shall show as the amount
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of the first semi-annual assessment due to the Corporation, an amount
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equal to the product of one-half of the annual assessment rate multiplied by
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such assessment base,
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e) 
All assessment collections and income from operations after expenses and
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charges shall be added to the Deposit Insurance Fund under this Section.
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Such expenses and charges are: (1) the operating costs and expenses of the
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Corporation for the calendar year; (2) additions to reserve to provide for
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insurance and financial assistance losses, net of recoverable amounts from
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applicable assets and collaterals, during the calendar year; and (3) the net
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insurance and financial assistance losses sustained in said calendar year,
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f) 
The Corporation (1) may refund to an insured cooperative any payment of
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assessment in excess of the amount due to the Corporation or (2) may credit
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such excess toward the payment of the assessment next becoming due from
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such cooperative and upon succeeding assessments until the credit in
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exhausted.
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g) 
Any insured cooperative which fails to file any certified statement required
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to be filed by it in connection with determining the amount of any
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assessment payable by the cooperative to the Corporation may be
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compelled to file such statement by mandatory injunction or other


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appropriate remedy in a suit brought for such purpose by the Corporation
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against the cooperative and any officer or officers thereof in any court of the
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Philippines of competent jurisdiction in which such cooperative is located.
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h) 
The Corporation, in a suit brought in any court of competent jurisdiction,
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shall be entitled to recover from any insured cooperative the amount of any
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unpaid assessment lawfully payable by such insured cooperative to the
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Corporation, whether or not such cooperative shall have filed any such
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certified statement and whether or not suit shall have been brought to
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compel the cooperative to file any such statement. No action or proceeding
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shall be brought for recovery of any assessment due to the Corporation or
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for the recovering of any amount paid to the Corporation in excess of the
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amount due to it, unless such action or proceeding shall have been brought
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within five years after the right accrued for which the claim is made, except
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where the insured cooperative has made or filed with the Corporation a
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false or fraudulent certified statement with the intent to evade, in whole or
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in part, the payment of assessment, in which case the claim shall not have
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been deemed to have accrued until the discovery by the Corporation, that
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the certified statement is false or fraudulent.
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i) 
The Corporation shall not terminate the insured status of any cooperative
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which continues to operate or receive deposits. Should any insured
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cooperative fail or refuse to pay any assessment required to be paid by such
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cooperative under any provision of this Act, and should the cooperative not
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correct such failure or refusal within thirty (30) days after written notice has
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been given by the Corporation to an officer of the cooperative citing this
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subsection, and stating that the cooperative has failed or refused to pay as
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required by the law, the Corporation may, at its discretion, file a case for
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collection before the appropriate court without prejudice to the imposition
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of administrative sanctions allowed under the provisions of this law on the
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cooperative officials responsible for the non-payment of assessment fees.
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SEC. 10. Sanctions Against Unsafe and Unsound Cooperative Practices. -
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a) Whenever upon examination by the Corporation into the condition of any
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insured cooperative, it shall be disclosed that an insured cooperative or its
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directors or agents have committed, are committing or about to commit
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unsafe or unsound practices in conducting the savings deposit business of
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the cooperative or have violated, are violating or about to violate any
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provisions of any law or regulation to which the insured cooperative is
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subject, the Board of Directors shall submit the report of the examination to
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the Cooperative Development Authority to secure corrective action
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thereon. If no such corrective action is taken by the Cooperative
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Development Authority within forty-five (45) days from the submission of
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the report, the Board of Directors shall, motu propio, institute corrective
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action which it deems necessary. The Board of Directors may thereafter
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issue a cease and desist order, and require the cooperative or its directors
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or agents concerned to correct the practices or violations within forty-five
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(45) days. However, if the practice or violations is likely to cause insolvency
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or substantial dissipation of assets or earnings of the cooperative, or is likely
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to seriously weaken the condition of the cooperative or otherwise seriously


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prejudice the interests of its depositors and the cooperative, the period to
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take corrective action shall not be more than fifteen (15) days. The order
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may also include the imposition of fines provided in Section 22 (f) hereof
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The Board of Directors shall duly inform the Cooperative Development
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Authority of action it has taken under this subsection with respect to such
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practices or violations.
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b) 
The actions and proceedings provided in the preceding subsection may be
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undertaken by the Corporation if, in its opinion, an insured cooperative or
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its directors or agents have violated, or violating or about to violate any
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provision of this Act or any order, rule or instruction issued by the
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Corporation or any written condition imposed by the Corporation in
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connection with any transaction with or grant by the Corporation.
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c) 
The Corporation shall not terminate the insured status of any cooperative
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which continues to operate or receive deposits. Should any insured
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cooperative fail or refuse to pay any assessment required to be paid by such
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cooperative under any provision of this Act, and should the cooperative not
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correct such failure or refusal within thirty (30) days after written notice has
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been given by the Corporation to an officer of the cooperative citing this
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subsection, and stating that the cooperative has failed or refused to pay as
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required by the law, the Corporation may, at its discretion, file a case for
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collection before the appropriate court without prejudice to the imposition
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of administrative sanctions allowed under the provisions of this law on the
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cooperative officials responsible for the non-payment of assessment fees.
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SEC. 11. Powers, Responsibilities, and Prohibitions. -
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a) 
The Board of Directors shall administer the affairs of the Corporation fairly
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and impartially and without discrimination.
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b) 
The Board of Directors shall appoint examiners who shall have power, on
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behalf of the Corporation to examine any insured cooperative. Each such
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examiner shall have the power to make a thorough examination of all
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savings of the cooperative and in doing so, he shall have the power to
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administer oaths, to examine and take and preserve the testimony of any of
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the officers and agents, thereof, and, to compel the presentation of books,
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documents, papers, or records necessary in his judgement to ascertain the
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facts relative to the condition of the cooperative; and shall make full and
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detailed report of the condition of the cooperative to the Corporation. The
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Board of Directors in like manner shall appoint claim agents who shall have
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the power to investigate and examine all claims for insured deposits and
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transferred deposits. Each claim agent shall have the power to administer
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oaths and to examine under oath and take and preserve testimony of any
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person relating to such claim.
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The investigators appointed by the Board of Directors shall have the power 
on behalf of the Corporation to conduct investigations on frauds, 
irregularities and anomalies in relation to saving transaction committed in 
cooperatives, based on reports of examination conducted by the 
Corporation and Cooperative Development Authority or complaints from 
depositors or from other government agency. Each investigator shall have


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the power to administer oaths, and examine and take and preserve the
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testimony of any person relating to the subject of investigation.
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c) 
Each insured cooperative shall make to the Corporation reports of
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condition in such form and at such times as the Board of Directors may
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require such reports to be published in such manner, not inconsistent with
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any applicable law, as it may direct. Every such cooperative which fails to
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make or publish any such report within such time, not less than five days,
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as the Board of Directors may require, shall be subject to a penalty of not
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more than PlOO for each day of such failure recoverable by the Corporation
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for its use.
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d) 
The Corporation shall have access to reports of examination made by, and
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reports of condition made to the Cooperative Development Authority or its
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appropriate supervising agencies.
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e) 
Each insured cooperative shall keep and maintain a true and accurate
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record or statement of its daily deposit transactions consistent with the
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standards set by the Cooperative Development Authority and the
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Corporation. Compliance with such standards shall be duly certified by the
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Chairman/President of the cooperative or the compliance officer: Provided,
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That refusal or willful failure to issue the required certification shall
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constitute a violation of this section and shall subject such officers of the
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cooperative to the sanctions provided for under Section 22 (f) of this Act.
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f) 
Personnel of the Corporation are hereby prohibited from:
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1. being an officer, director, consultant, employee or member, directly
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or indirectly, of any cooperative;
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2. receiving any gift or thing of value from any officer, director or
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employee thereof;
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3. revealing in any manner, except as provided in this Act or under
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order of the court, information relating to the condition or business
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of any such cooperative. This prohibition shall not apply to the
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giving of information to the Board of Directors, the President of the
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Corporation, Congress, any agency of government authorized by
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law, or to any person authorized by either of them in writing to
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receive such information.
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g) 
The Corporation shall underwrite or advance litigation costs and expenses,
35 
including legal fees and other expenses of external counsel, or provide legal
36 
assistance to, directors, officers, employees or agents of the Corporation in
37 
connection with any civil, criminal, administrative or any other action or
38 
proceeding, to which such director, officer, employee or agent is made a
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party by reason of, or in cormection with, the exercise of authority or
40 
performance of functions and duties under this Act: Provided, That such
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legal protection shall not apply to any civil, criminal, administrative or any
42 
action or proceeding that may be initiated by the Corporation, in whatever
43 
capacity, against such director, officer, employee or agent: Provided,
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further. That directors, officers, employees or agents who shall resign,
45 
retire, transfer to another agency or be separated from the service, shall
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continue to be provided with such legal protection in connection with any
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act done or omitted to be done by them in good faith during their tenure or
48 
employment with the Corporation: Provided, finally That in the event of a


1 
settlement or compromise, indemiiificiation shall be provided only in
2 
connection with such matters covered by the settlement as to which the
3 
Corporation is advised by counsel that the persons to be indemnified did
4 
not commit any negligence or misconduct.
5 
h) The costs and expenses incurred in defending the aforementioned action,
6 
suit or proceeding may be paid by the Corporation in advance of the final
7 
disposition of such action, suit or proceeding upon receipt of an
8 
undertaking by or on behalf of the director, officer, employee or agent to
9 
repay the amount advanced should it ultimately be determined by the
10 
Board of Directors that he is not entitled to be indemnified as provided in
11 
this subsection.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Unless the actions of the Corporation or any of its officers and employees 
are found to be in willfull violation of this Act, performed in bad faith, with 
malice and/or gross negligence, the Corporation, its directors, officers, 
employees and agents are held free and harmless to the fullest extent 
permitted by law from any liability, and they shall be indemnified for any 
and 11 liabilities, losses, claims, demands, damages, deficiencies, costs and 
expenses of whatsoever kind cuid nature that may arise in connection with 
the performance of their functions, without prejudice to any criminal 
liability under existing laws.
Legal assistance shall include the grant or advance of reasonable legal fees 
as determined by the Board of Directors to enable the concerned directors, 
officers, employees or agent to engage counsel of his choice, subject to 
approval by the Board of Directors.
Notwithstanding the provisions of this Section and Sections 4 and 5, 
members of the Board of Directors and personnel of the Corporation may 
become directors and officers of any cooperative in connection with 
financial assistance extended by the Corporation to such institution and 
when, in the opinion of the Board, it is appropriate to make such 
designation to protect the interest of the Corporation.
31 
SEC. 12. Receivership and Liquidation. -
32 
a) 
The provisions of other laws, general or special, to the contrary
33 
notwithstanding, whenever it shall be appropriate for the Cooperative
34 
Development Authority to appoint a receiver of any cooperative pursuant
35 
to existing laws, the Cooperative Development Authority shall give prior
36 
notice and appoint the Corporation as receiver.
37 
b) 
The Corporation as receiver shall control, manage and administer the
38 
. affairs of the closed cooperative. Effective immediately upon takeover as
39 
receiver of such cooperative, the powers, functions and duties, as well as all
40 
allowances, remunerations and perquisites of the directors, officers, and
41 
shareholders of such cooperative are suspended, and the relevant
42 
provisions of the Articles of Cooperation and By-laws of the closed
43 
cooperative are likewise deemed suspended.
10


1 
c) 
The assets of the closed cooperative under receivership shall be deemed in
2 
custodia legis in the hands of the receiver. From the time the closed
3 
cooperative is placed under such receivership, its assets shall not be subject
4 
to attachment, garnishment, execution, levy or any other court processes.
5 
d) 
In addition to the powers of the receiver pursuant to existing laws, the
6 
Corporation is empowered to:
7 
1. bring suits to enforce liabilities to or recoveries of the closed
8 
cooperative;
9 
2. appoint and hire persons or entities of recognized competence in
10 
cooperativism as its deputies and assistants, to perform such powers
11 
and functions of the Corporation as receiver or liquidator of the
12 
closed cooperative;
13 
3. suspend or terminate the employment of officers and employees of
14 
the closed cooperative: Provided, that payment of separation pay or
15 
benefits shall be made only after the closed cooperative has been
16 
placed under liquidation and that such payment shall be made from
17 
available funds of 
the cooperative after deducting reasonable
18 
expenses for receivership and liquidation;
19 
4. pay accrued utilities, rentals and salaries of persormel of the closed
20 
cooperative for a period not exceeding three (3) months, from
21 
available funds of the closed cooperative;
22 
5. collect loans and other claims of the closed cooperative, and for the
23 
purpose, modify, compromise or restructure the terms and
24 
conditions of such loans or claims as may be deemed advantageous
25 
to the interest of 
the creditors and, claimants of the closed
26 
cooperative;
27 
6. hire or retain private counsels as may be necessary;
28 
7. borrow or obtain a loan, or mortgage, pledge or encumber any asset
29 
of the closed cooperative, when necessary, to preserve or prevent
30 
dissipation of the assets, or to redeem foreclosed assets of the closed
31 
cooperative, or to minimize losses to the depositors and creditors;
32 
8. if the stipulated interest on deposits is unusually high compared
33 
with the prevailing applicable interest rate, the Corporation as
34 
receiver may exercise such powers which may include a reduction
35 
of the interest rate to a reasonable rate: Provided, that any
36 
modification or reduction shall apply only to unpaid interest; and
37 
9. exercise such other powers as are inherent and necessary for the
38 
effective discharge of the duties of the Corporation as a receiver.
39
40
41
The Board of Directors shall adopt such policies and guidelines as may be 
necessary for the performemce of the above powers by personnel, deputies 
and agents of the Corporation.
42 
SEC. 13. Court Fees and Other Fees. - In all cases or actions filed by the Corporation
43 
as receiver for the recovery of, or involving any assets of the closed cooperative, payment
44 
of all docket and other court fees shall be free.
11


1 
SEC. 14. Receivership Expenses. - Before any distribution of the assets of the closed
2 
cooperative in accordance with the preference established by Philippine Cooperative
3 
Code and other laws, the Corporation shall periodically charge against said assets
4 
reasonable receivership expenses and subject to approval by the proper court, reasonable
5 
liquidation expenses, it has inctirred as part of the cost pf receivership/liquidation
6 
proceedings and collect payment therefore from available assets.
7 
After the payment of all liabilities and claims against the closed cooperative, the
8 
Corporation shall pay any surplus dividends at the legal rate of interest from date of
9 
takeover to date of distribution, to creditors and claimants of the closed cooperative in
10 
accordance with legal priority before distribution to the shareholders of the closed
11 
cooperative.
12 
SEC. 15. Permanent Insurance Funds. - To carry out the purposes of this Act, the
13 
permanent insurance fund shall be Five Hundred million pesos (P500,000,000.00).
14 
The Deposit Insurance Fund shall be the capital account of the Corporation and
15 
shall principally consist of the following: (i) the Permanent Insurance Fund; (ii)
16 
assessment collection, subject to the charges enumerated in Section 6 (d); (iii) reserves for
17 
insurance and financial assistance losses; and (iv) retained earnings: Provided, That the
18 
reserves for insurance and financial assistance losses and retained earnings shall be
19 
maintained at a reasonable level to ensure capital adequacy: Provided, further. That the
20 
Corporation may, within two (2) years from the passage of this Act, and every five (5)
21 
years thereafter, conduct a study on the need to adjust the amount of the Permanent
22 
Insurance Fund, insurance cover, assessment rate and assessment base, and thereafter
23 
make the necessary recommendation to Congress. For this purpose, the Corporation may
24 
hire the services of actuarial consultants to determine, among others, the affordability of
25 
assessment rates, analysis and evaluation of insurance risk, and advisability of imposing
26 
varying assessment rates or insurance cover of different cooperatives.
27 
SEC. 16. Payment of Insured Deposits. - Whenever an insured cooperative shall
28 
have been closed by the Cooperative Development Authority, payment of the insured
29 
deposits on such closed cooperative shall be made by the Corporation as soon as possible
30 
either (1) by cash or (2) by making available to each depositor a transferred deposit in
31 
another insured cooperative in an amount equal to insured deposit of such depositor.
32 
Provided, however. That the Corporation, in its discretion, may require proof of claims
33 
to be filed before paying the insured deposits, and that in any case where the Corporation
34 
in not satisfied as to the viability of a claim for an insured deposit, it may require final
35 
determination of a court of competent jiuisdiction before paying such claim: Provided,
36 
further. That failure to settle the claim, within six (6) months from the date of filing of
37 
claim for insured deposit, where such failure was due to grave abuse of discretion, gross
38 
negligence, bad faith, or malice, shall, upon conviction, subject to directors, officers or
39 
employees of the Corporation responsible for the delay, to imprisonment from six (6)
40 
months to one (1) year: Provided, furthermore. That the period shall not apply if the
41 
validity of the claim requires the resolution of issues of facts and or law by another office,
42 
body or agency including the case mentioned in the first proviso or by the Corporation
43 
together with such other office, body or agency.
12


1 
SEC. 17. Subrogation. - The Corporation upon payment of any depositor, shall be
2 
subrogated to all rights of the depositor against the closed cooperative to the extent of
3 
such payment. Such subrogation shall include the right on the part of the Corporation to
4 
receive the same payments from the proceeds of the assets of such closed cooperative and
5 
recoveries on account of cooperatives debtors as would have been payable to the
6 
depositor on a claim for the insured deposits but, such depositor shall retain his claim for
7 
any uninsured portion of his deposit. All payments by the Corporation of insured
8 
deposits in closed cooperatives partake of the nature of public funds, and as such, must
9 
be considered a preferred credit similar to taxes due to the national government in the
10 
order of preference under Article 2244 of the New Civil Code.
11 
SEC. 18. Determination of Insured Deposits. -
12 
a) 
The Corporation shall commence the determination of insure deposits due
13 
the depositors of a closed cooperative upon its actual takeover of the closed
14 
cooperative. The Corporation shall give notice to the depositors of the
15 
closed cooperative of the insured deposits due them by whatever means
16 
deemed appropriate by the Board of Directors: Provided, That the
17 
Corporation shall publish the notice once a week for at least three (3)
18 
consecutive weeks in a newspaper of general circulation or, when
19 
appropriate, in a newspaper circulated in the community or communities
20 
where the closed cooperative or its branches are located and post the same
21 
in the office of the cooperative.
22 
b) 
Payment of an insured deposit to any person by the Corporation shall
23 
discharge the Corporation, and payment of transferred deposit to any
24 
person by the new cooperative or by an insured cooperative in which a
25 
transferred deposit has been made available shall discharge the
26 
Corporation and such new cooperative or other insured cooperative, to the
27 
same extent that payment to such person by the closed cooperative would
28 
have discharged it from liability for the insured deposit.
29 
c) 
Except as otherwise prescribed by the Board of Directors, neither the
30 
Corporation nor such other insured cooperative shall be required to
31 
recognize as the owner of any portion of a deposit appearing on the records
32 
of the closed cooperative under a name other than that of the claimant, any
33 
person whose name or interest as such owner is not disclosed on the records
34 
of such closed cooperative as part owner of said deposit, if such recognition
35 
would increase the aggregate amount of the insured deposits in such closed
36 
cooperative.
37 
d) 
The Corporation may withhold payment of such portion of the insured
38 
deposit of any depositor in a closed cooperative as may be required to
39 
provide for the payment of any liability of such depositor as a shareholder
40 
of the closed cooperative, or of any liability of such depositor to the closed
41 
cooperative or its receiver, which is not offset against a claim due from such
42 
cooperative, pending the determination and payment of such liability by
43 
such depositor or any other liable therefor.
44 
e) 
Unless otherwise waived by the Corporation, if the depositor in the closed
45 
cooperative shall fail to claim his insured deposits with the Corporation
46 
within two (2) years from actual takeover of the closed cooperative by the
47 
receiver, or does not enforce his claim filed with the corporation within two
13


1
2
3
4
5
6 
7
(2) years after the two-year period to file a claim as mentioned hereinabove, 
all rights of the depositor against the Corporation with respect to the 
insured deposit shall be barred; however, all rights of the depositor against 
the closed cooperative or the receivership estate to which the Corporation 
may have become subrogated, shall thereupon revert to the depositor. 
Thereafter, the Corporation shall be discharged from any liability on the 
insured deposit.
8 
SEC. 19. Corporate funds and financial assistance. -
9 
a) 
Money of the Corporation not otherwise employed shall be invested in
10 
obligation of the Republic of the Philippines or in obligations guaranteed as
11 
to principal and interest by the Republic of the Philippines.
12 
b) 
The banking or checking accounts of the Corporation shall be kept with the
13 
Bangko Sentral ng Pilipinas, with the Land Bank of the Philippines, or with
14 
any other bank designated as depository or fiscal agent of the Philippine
15 
government.
16 
c) 
It is hereby declared to be the policy of the state that the Deposit Insurance
17 
Fund of the Corporation shall be preserved and maintained at all times.
18 
Provided, That, the Corporation shall be exempt from income tax, final
19 
withholding tax, value-added tax on assessments collected from member
20 
cooperatives, and local taxes.
21 
d) 
When the Corporation has determined that an insured cooperative is in
22 
danger of closing, in order to prevent such closing, the Corporation, in the
23 
discretion of its Board of Directors, is authorized to make loans to, or
24 
purchase the assets of or assume liabilities of, or make deposits in, such
25 
insured cooperative, upon such terms and condition as the Board of
26 
Directors may prescribe, when in the opinion of the Board of Directors, the
27 
continued operation of such cooperative is essential to provide adequate
28 
cooperative saving service in the community or maintain financial stability
29 
in the economy.
30 
The authority of the Corporation under the foregoing paragraph to extend
31 
financial assistance to, assume liabilities of purchase the assets of an insured
32 
cooperative may also be exercised in the case of a closed insured
33 
cooperative if the Corporation finds that the resumption of operations of
34 
such cooperative is vital to the interests of the community: Provided, That
35 
the reopening and resumption of operations of the closed cooperative shall
36 
be subject to the prior approval of the Cooperative Development Authority.
37 
The Corporation may provide any corporation acquiring control of,
38 
merging or consolidating with or acquiring the assets of an insured
39 
cooperative danger of closing in order to prevent such closing or of a closed
40 
insured cooperative in order to restore to normal operations, with such
41 
financial assistance as it could provide an insured cooperative under this
42 
subsection: Provided, That, within sbcty (60) days from date of assistance
43 
the Corporation shall submit a report thereof to the Cooperative
44 
Development Authority.
14


1
2
3
4
5
6
7
8 
9
10
11
The Corporation, prior to the exercise of the powers under this section, shall 
determine that actual payoff and liquidation thereof will be more expensive 
than the exercise of this power: Provided, That when the Cooperative 
Development Authority has determined that there are systemic 
consequences of a probable failure or closure of an insured cooperative, the 
Corporation may grant financial assistance to such insured cooperative in 
such amount as may be necessary to prevent its failure or closure and/or 
restore the insured cooperative to viable operations, under such terms and 
conditions as may be deemed necessary by the Board of Directors, subject 
to concurrence by the Cooperative Development Authority and without 
additional cost to the Deposit Insurance Fund.
12 
SEC. 20. Authority to Borrow. - The Corporation is authorized to borrow from the
13 
Bangko Sentral ng Pilipinas and the Bangko Sentral is authorized to lend the Corporation
,14 
on such terms as may be agreed upon by the Corporation and the Bangko Sentral, such
15 
funds as in the judgement of the Board of Directors of the Corporation are from time to
16 
time required for insurance purpose and financial assistance provided for in Section 19
17 
(d) of this Act: Provided, That any such loan as may be granted by the Bangko Sentral
18 
shall be consistent with monetary policy; Provided, further. That the rate of interest
19 
thereon shall be fixed by the Monetary Board but shall not exceed the treasury bill rate.
20 
When in judgement of the Board of Directors the funds of the Corporation are not
21 
sufficient to provide for an emergency or urgent need to attain the purposes of this Act,
22 
the Corporation is likewise authorized to borrow money, obtain loans or arrange credit
23 
lines or other credit accommodations from any bank designated as depository or fiscal
24 
agent of the Philippine Government: Provided, that such loan shall be short-term
25 
duration.
26 
SEC. 21. Reports and Audit.-
27 
a) 
The Corporation shall annually make a report of its operations to the
28 
Congress as soon as practicable after the first day of January of each year.
29 
b) 
The financial transactions of the Corporation shall be audited by the
30 
Commission on Audit in accordance with the principles and procedures
31 
applicable to commercial corporate transactions and under such rules and
32 
regulations as may be prescribed by the Commission on Audit, the audit
33 
shall be conducted at the place or places where accounts of the Corporation
34 
are normally kept. Except as to matters relating to the function of the
35 
Corporation as receiver which shall be subject to visitorial audit only, the
36 
representatives of the Commission on Audit shall have access to all books,
37 
accounts, records, reports, files and all other papers, things, or property
38 
belongings to or in use by the Corporation pertaining to its financial
39 
transactions and necessary to facilitate the audit, and they shall be afforded
40 
full facilities for verifying transactions with the balances or securities held
41 
by depositories, fiscal agents, and custodians. All such books, accounts,
42 
records, reports, files, papers, and property of the Corporation shall remain
43 
in possession and custody of the Corporation.
44 
c) 
A report of the Audit for each fiscal year ending on June 30 shall be made
45 
by the Auditor General to the Congress not later than January 15 following
15


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3
4
5
6
7
8 
9
10
11
12
13 '
14
15
16
the dose of such fiscal year. On or before December 15 following such fiscal 
year, the Auditor General shall furnish the Corporation a short form report 
showing the financial position of the Corporation at the close of fiscal year. 
The report to Congress shall set forth the scope of the audit emd shall 
include a statement of assets and liabilities and surplus or deficit; a 
statement of surplus or deficit analysis; a statement of income and expenses; 
a statement of sources and application of funds and such comments and 
information as may be deemed necessary to inform Congress of the 
financial operations and condition of the Corporation, together with such 
recommendations with respect thereto as the Auditor General may deem 
advisable. The report shall also show specifically any program, 
expenditure, or other financial transactions or undertaking observed in the 
course of the audit, which in the opinion of the Auditor General, has been 
carried on or made without authority of law. A copy of each report shall be 
furnished to the President of the Philippines, to the Governor of the Bangko 
Sentral ng Pilipinas, and the Corporation at the time submitted to Congress.
17 
SEC. 22. Penalties. -
18 
a) 
Every insured cooperative shall display at each place of business
19 
maintained by it a sign or signs, and shall include a statement in all its
20 
advertisements to the effect that its deposits are insured by the Corporation.
21 
b) 
No insured cooperative shall pay any dividend on its share capital or
22 
distribute any of its capital assets while it remains in default in the payment
23 
of any assessment due to the Corporation: Provided, that if such default is
24 
due to a dispute between the insured cooperative and the Corporation over
25 
the amount of such assessment, this subsection shall not apply if such
26 
cooperative shall deposit security satisfactory to the Corporation for
27 
payment upon final determination of the issue.
28 
c) 
Without prior written consent by the Corporation, no insured cooperative
29 
shall (1) merge or consolidate with any cooperative or (2) assume liability
30 
to pay any deposits made in, or similar liabilities of, any cooperative or (3)
31 
transfer assets to any cooperative in consideration of the assumption of
32 
liabilities for any portion of the deposits made in such insured cooperative.
33 ' 
d) 
The Corporation may require an insured cooperative to provide protection
34 
and indemnity against burglary, defalcation, losses arising from discharge
35 
of duties by, or particular acts of defaults of its directors, officers, or
36 
employees, and other similar insurable losses. The Board of Directors in
37 
consultation with the Cooperative Development Authority, shall determine
38 
the bonding requirement as it refers to directors, officers and employers of
39 
the insured cooperative as well as the form and amount of the bond.
40 
Whenever any insured cooperative refuses to comply with any such
41 
requirement the Corporation may contract for such protection and add the
42 
cost thereof to the assessment otherwise payable by such cooperative.
43 
e) 
Any assessment payable by an insured cooperative under this Act shall be
44 
subject to payment of interest computed from the date such assessment
45 
became due and payable and at the legal rate for loans as prescribed by law
46 
or appropriate authority and in case of willful failure or refusal! to pay such
47 
assessment and interest thereon, there shall be added a penalty equivalent
16


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2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
4.
5.
to twice the amount of interest payable as computed herein for each day 
such violations continue, which the interest and penalty the Corporation 
may recover for its use: Provided, That the penalty shall not be applicable 
under the circumstances stated in the provisions of subsection (b) of this 
section.
If the penalty of prison mayor or a fine of not less than Fifty thousand pesos 
(P50,000.00) but not more than Two million pesos (P2,000,000.00), or both, 
at the discretion of the court, shall be imposed upon any director, officer, 
employee or agent of a cooperative.
1. for any willful refusal to submit reports as required by law, 
rules and regulations;
2. any unjustified refusal to permit examination and audit of the 
deposit records or the affairs of the cooperative;
3. any willful making of a false statement or entry in any 
cooperative report or document required by the Corporation; 
submission of false material information in connection with 
or in relation to any financial assistance of the Corporation 
extended to the cooperative;
splitting of deposits or creation of fictitious loans or deposit 
accounts.
Splitting of deposits occurs whenever a deposit account with 
an outstanding balance of more than the statutory maximum 
amount of insured deposit maintained under the name of 
natural or juridical persons is broken down and transferred in 
two (2) or more accounts in the name/ s of natural or juridical 
persons or entities who have no beneficial ownership on 
transferred deposits in their names within one hundred 
twenty (120) days immediately preceding or during a 
cooperative declared holiday, or immediately preceding a 
closure order issued by the Cooperative Development 
Authority for the purpose of availing of the maximum deposit 
insurance coverage;
6. refusal to allow the Corporation to take over a closed 
cooperative placed under its receivership or obstructing such 
action of the Corporation;
7. refusal to turn over or destroying or tampering cooperative 
records;
fraudulent disposal, transfer or concealment of any assets, 
property or liability of the closed cooperative imder the 
receivership of the Corporation;
violation of, or causing any person to violate, the exemption 
from garnishment, levy, attachment or execution.
10. Any willful failure ore refusal to comply with, or violation of 
any provision of this Act, or commission of any other 
irregularities, and/or conducting business in an unsafe or 
unsound manner as may be determined by the Board of 
Directors.
8.
9.
17


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2
3
4
5
6
7
8 
9
The Board of Directors is hereby authorized to impose administrative fines 
for any act or omission enumerated in the preceding subsection, and for violation 
of any order, instruction, rule or regulation issued by the Corporation, against a 
cooperative and/or any of its directors, officers or agents responsible for such act, 
omission, or violation, in amounts as it may be determined to be appropriate, but 
in no case to exceed three times the amount of the damages or costs caused by the 
transaction for each day that the violation subsists, taking into consideration the 
attendant circumstances, such as the nature and gravity of the violation or 
irregularity and the assets of the cooperative.
10 
SEC. 23. Separability Clause. - If any provision or section of this Act or the
11 
application thereof to any person or circumstances is held invalid, the other provisions
12 
or sections of this Act, in the application of such provision or section to other persons or
13 
circumstances, shall not be affected thereby.
14 
SEC. 24. Repealing Clause. - All acts or parts of acts and executive orders,
15 
administrative orders, or parts thereof which are inconsistent with the provisions of this
16 
Act are hereby repealed.
17 
SEC. 25. Effectivity Clause. - This Act shall take effect fifteen (15) days following
18 
the completion of its publication in the Official Gazette or in two (2) newspapers of
19 
general circulation.
Approved,
18