epublica Bhjlippines Gaugress of the Philippines (Astros Manila Bosstoentl Congress Second RegulerSession Begun end held in Mateo Manis, on Monday, the owenty-cighth day of July, two thousend eight = [RerusuicActNo. 9520] AN ACT AMENDING THE COOPERATIVE CODE OF THE PHILIPPINES TO RE KNOWN AS THE “PHILIPPINE COOPERATIVE CODE OF 2008" Be ff enacted by the Senate and House of Representatives of the Piilippines in Congress aszenbled: SECTION 1. Aiticles 1, 2. 5, 4 and § of Chapter I on General Concepts and Principles of Repablic Act No. 6938, cothervise known as the "Cocporative Cote af the Philippines” are hereby amended to read as follows: CHAPTER T GENERAL ConcEprs «nm PrinerpLes “ARTICLE 1 Title — This Aat shall be iznown as the "Phillppine Cooperative Cole of 2008"“ARI. 2. Declaration of Policy. ~ It i8 the deslatod poligy of the Siate to fester the creation and ‘growth of cooperatives as a practical vehicle ior ‘promoting selitrelianee and harnessing people power towards the attainment of economic development and social justice. The State shall encourage the private sector to undertake the actual formation and organization of epoperatives and shall create an atmosphere that is conducive t the growth and development of these cioperatives. “Toward this end, the Government and all its branches, aubdivisions, instrumentalities and agencies shall ensure the provision of technical ‘guidance, financial assistance and other sorvicen to enable said cooperatives to develop into viable and rorponsive economic enterprises and thereby bring atout a strong cooperative movement that is free from any conditions that might infringe upon the autonomy or organizational integrity of eooperetives, "Purther, the State recognizes the principle of subsidiarity under which the cooperative sector wall ‘ate and regulate within its own ranks the promotion and organization, training and research, ‘sudit and aupport eorvicos relating to eaaperatives with government assistance where necassary. “ART. 3. General Concepts. — A cooperative is. an autonomons and duly registered association of persous, with a common bend of interest, who have voluntarily joined together ta achieve ther eaeial economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their producis and services and, accepting 2 fair share of the risks and benafits of the undertaking im accordance with universally accepted cooperative principles. "ART. 4. Cooperative Principles. — Every cooperative ehall conduct ite affairs in accordance ‘with Filipino culture, good values and experience ard the univermally acvepted prinaples of eaperation which include, but are not limited to, the fallowiny:“@) Voluntary and Open Membership — Cooperatives are voluntary organizations, open to alll persone able to use their sorviess and willing to accept the responsibilities of membership, without gender, oocial, racial, cultural, political or religious iscrimination “@) Democratic Member Control — Cosperstives are democratic organizations that are controlled by their members who actively participate in setting their policies and making decisions. Men and women serving as elecied representatives, directors or officers are accountable to the membership. Ia primary cooperatives, members have equal voting rights of one-member, one-vote. Coopecatives at other levels are organized in the same democratic manner. “@)_Member Economie Participation — Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is the common property of the ‘Cooperative. They shall receive limited compensation limited interest, if any, on capital subscribed and. as a condition of membership. Membe: allocate surpluses for any or all of the following purpoces: developing the cooperative by eotting up reserves, part of which should at least be indivisible; benefitting mombera in proportion te their patronage of the cooperative's business; and, supporting other stivitice approved by the mombership. “() Autonomy ond Independenes — ‘Cooperatives are autcnamous, self-help organisations: controlled by their members. Tf they enier into agreements with other organizations, including ‘government, or raise eapital from external sources, they shall do so on terms that ensure democratic control of their members and maintain their cooperative autonoiny. “@) Education, Troining and Information — Cooperatives shall provide education and training tortheir members, clocted and appointed representatives, managers, end employees, so thet they can contmbute effectively and efficiently to the development of their cooperatives, “(8) Cooperation Among Cooperatives — Cooperatives serve their members most effectively. and strengthen the cooperative movement by working together through local, national, regional: and international structures. "GO Comearn for Cannmunity — Cooperatives work for the sustainable development of their communities through policies approved by their ‘members. “ART. §. Definition of Terms. ~The following terme shall meen: “C) Member includes 4 person either natural ‘or jusidical who, adhering lo the principles set forth ‘n this Code and m the articles af cooperation, has ‘been admitted by the cooperative as member; “(2) Geieral Assembly chall mean te full membership of the cooperative duly assembled for the purpose of oxercising all tho rights and performing all the obligations pertaining to toaperatives, as provided by this Coda, ite articles of cooperation and bylaws: Provided, That for cooperatives with numerous and. dispersed membership, the generel assembly may be composed of delegates elected by exch auctor, chapter or diateict of the cooperative in eccordanee with the rules and regulations of the Cooperative Development ‘Authority: (8) Boorel of Directors shall mean thet body entrust! with the management of the affairs of the fpgteratve winder ste atten of eroperation andshall refer to any body specific functions and responsibilities under the bylaws or resolution of the general acserably or the board of divactors; “(G) Articles of Cooperation moans the axtisles of cooperation registered under this Code and includes s registered amendment thereof, “"(@) Bylaws means the bylaws registered under this Code and includes any registered amendment “(7) Registration means tha epsrative act granting juridical personality to a proposed cooperative and is evidenced by x certificate of ‘registration; "@) Cooperative Develepmant Authority refese to the government agency in charge of the registration and regulstion ef cooperatives as such, hereinafter referred to as the Authority; "@) Universally Accepted Principles mean that body of cooperative principles adhered to worldwide by cooperatives; “(10) Represeniotive Assembly means the fall membership of a body of representatives elected by each of the sccters, chapter or district of the cooperative duly assembled for the purpose of exercising such powers lawhlly delegated unto them by the general aseembly in eocordance with ita sylaws; "(LD Officers of the Cooperatives shall include the members of the board of directors, members of the different commitiess created by the general assembly, general manager or chief executive officer, secretary. treasurer and members holding other positions os may be provided for in their bylaws;02) Sccial Audit is 2 procedure wherein the cooperative essesses its social impact and ethical ‘periormance vis-t-vs ita stated mission, vison, goals land code of eoeial roeponsibility for exepaxatives to be established by the Authority in consultation with the cocperative sector. It enables the cooperatives to iievelop a process whereby it can account for its social performance and avaluate its impact in the community and be sevountable for is decisions and actions to its regular members “€3) Performance Audit shall refer to an audit on the efficiency end effectiveness of the ‘conperative as a whole; 1ts management. and officers: and its various responsibility centers as besis for umpreving in¢ividual, teem or overell periarmence ond fer objectively informing the general membership on such performance, “(14) A Single-line or Single-purpose Cooperative shall inelude cooperative undertaking activities which are related to its main line of business or purpose; (15) Service Choperatines are those which provide any type of servior to its members, including but not limited to, transport, information and ‘communication, instirancs, housing, electric, health services, educstion, banking, and savings and credit; “(8) Subsidiory Cooperative relers to any organization all or majority of whose membership or shereholders come from @ cooperative, organized for any other purpose different fram that of, and reveives technical, managerial and financial ‘assistance? from, a cboperative, in accordance with the rules and regulations of she Authority; and “Q7) Pederotion. of Cooperatives refers to three of more primary cooperatives, doing the same line of business, organized at the municipsl, provincial, ity, special metropolitan political subllivision, o* ‘scoromic zones created by lav, registered with the‘Authority to undertake business activities in aupport of its member-cooperatives.” SHC, 2. Articles 6, 7) 9, 10, 11, 12, 13, 14, 16, 17, 28, 20, 21, 93, 24 and 25 of Chapter IT on Organization ‘and agin oO ns Gate ‘ae Srey, sone 9 sea as follows: CHAPTER IT ORGANTZATION AND REGISTRATION “ART. 6, Purposes of Cooperatives. ~ A cooperative may he organized and registered for any or all of the following purposes: “@) To encourage thrift and savings mobilization among tho mambers; *@) To generats funds and extend credit to the members for productive and provident parpores; °@) To encowwage among members systematic production and marketing; *(4) To provide goods and services and other requirements te the members; "(G) To develop expertise and skills among its members; “(6) To acquire lands and provide housing benefits for the members; “(1 To insure against losses of the members; *(8) To promote and advance the economic, social and educational status of the members; “(9) To establish, awn, lease or operate ‘cooperative banks, cooperative wholesale and retail complesas, insurance ané agricultural/ndustrial processing enterprises, and pubbe maricets;“(0) To coordinate and facilitate the activities of cooperatives; “(11) To advocate for the cause of the cooperative movement; (02) To ensure the visbility of cooperatives shrough the utilization of new technologies, *8) To encourage and promote selthely or self-employment as an engine for economic growth and poverty alleviation; and “(14) To undertake any and all other activities ‘for the effective and efficient implementation of the ‘provisions ef this Code. “ART. 7. Objectives and Goals of a Cooperative, ~ The primary objective of every cooperative is in help improve the quality of life of its members, Towards this exd, the cooperative shall aim to “a Provide goods and services to its members to enable the t allaia increased income, savings, investments, productivity, and purchasing power, and promets among themeclves equitable distribution of net strplus through maximum utilization of economics of saale, eost-charing and viskesharings “(b) Provide optimum social and economic onefits to its members; “(o) Teach them efficient ways of doing things jn e cooperative manner; "(@) Propagete cooperative practices and new ‘ideas in business and management; Jess prinieged“(®) Cooperate with the government, other cooperatives and people-onented organizations to further the attainment of any of the foregoing objectives. “ART. 8. Cooperatives Not in Restraint of ‘Trade. — No eoeporative or method or act thereat ‘which complies with this Code shell be deemed a conspiracy or combination in restraint of trade or an illegal monopoly, or am attempt to lessen competition or fix prices arbitrarily in violation of any of the laws of the Philippines. “ART. 9. Cooperctive Powers and Capecitios. = A conperative registered under this Code shall have the following powers, vights and capacitios: “(1) To the exclusive use of ite regictered name, to sue and be sued; “© OF succession “(g) To amend its articles of cooperation in accordance with the provisions of this Code; "(4) To adopt bylaws not contrary to law, morale or public policy, and to amend and repeal the same in accoréanes with this Code; “(To purchase, receive, take or grant, hold, convey, soll, late, pledge, mortgage, and otherwise deal with stich real and personal property as the vaneaction of the lawful affairs of the cooperative may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution; “46) To enter into division, merger or consolidation, ar provided m this Code; (7) To form subsitsary cooperatives and join federations or unions, os provided in this Code;(8) To avail of loans, bo entitled to credit and to accept and receive grants, donations end assistance from foreign and damestic sources, subject to the conditions of said loans, credits, grants, donations or assistance that will not undermine the autonomy of the cooperative, The Authority, upon ‘written request, shall provide necessary assistance in the documentary requirements for the loans, credit, grants, donations and other financial suppart: (9) To evail of preferential rights granted to cooperatives tmnder Rapublic Act No. 7160, otherwise Known as the Local Government Code, end other lows, particularly those in the grant of franchises to establish, construc:, operate and maintain ferries, wharves, markets or slaughterhouses and to leace public utilities, including access to extension and on-site research services and faci ‘agriculture and fishery activities, *(10) To organize and operate schools in secordance with Republic Act No. 9155, Governance of Basic Bducation Act of 2001 and other pertinent ews; and “CY To exercise such other powers granted by this Code or necessary to carry ont its purpose or purposes as stated in its articles of cooperation. “ART, 10. Organizing a Primary Cooperative. = Fiftzen (15) or more natural persons who are Filipino citizens, of legal age, iaving a common vond of interest and are actally’ residing or working in the intended area of operation, may organize a primary cooperative under this Code: Provided, ‘That a prospective member of a primary cooperative ‘must have completed a Pre-Membership Eduestion Seminar (PMES). ‘Any newly organized primary cooperative may be registered 2s multipurpose cooperstive only after compliance with the minumum requirements for mmulupurpose cooperatives to he eet by the Authority.Assingle-purpose scoperative may transform into a multipurpose or may create subsidiaries only after Shicnst to @) yeste of operations. “ARM, 11, Beonomic Survey, — Every group of individuals or cooperatives intending to form a ‘coperative under this Code shell submit to the Authority a generel statement describing, among othoxe the structure and purposes of the proposed. cooperative: Provided, Taat the structure and actual staffing paltern of the cooperative shall include a bookkeeper: Provided, further, That they ‘shall not be allowed to operate withous the nevessary personel aad shall alo submit an economic auzvey, indicating there the area of operation, the size of membership, and other pertinent data in a format, provided by the Authority. “ART. 12, Liability. — A cooperative duly vogittered under this Code shall have limited ability. “ART, 18. Term. — A cooperative shall exist for a period not exceeding fifty (60) years ftom the date of registration unless sooner dissolved or unless ‘seid period 13 extended. The cooperative term, 2s ‘originally atated in the articles of cooperation, may bbe extenvted for periods not exceeding fity (60) years in any single instanes by an amendment of the arteles of cooperation, in acsordanse with this Cede: Provided, That no extension can be made earlier than five (5) years prior to the original or subsoquent expiry dateldates unless there are justifiable reasons for an earlier extension as may bbe determined by the Authority. “ART. 14. Articles of Cooperation. ~ (1) All cooperatives applying far cegitration sal) Sle wit the Authority the articles of cooperation which shall: be signed by each of the organizers end acknowledged by them if natural persons, and by the chairpersons or eeeretaries, if juridical persons, before @ notary pubic.“@) The articles of cooperation shall set forth: fa) The name of the cooperative which shall include the word ‘cooperative! “(@) The purpose or purposes and soope of business for which the cooperative is to be registered; “(e) The term of existence of the cooperative; *@ The area of operation and the postal address of its principal cffice: “(@) The names, nationality, and the postal addresees of the registranto; “() The common bond of memberahip; *(g) The list of names of the directors who stall manege the cooperative, and “(h) The amount of its share capital, the names and residences of its contributcrs and a statement of whether the cuoperative is primary, secondary or tartiary in eceardance with Article 98 "(Q) The artictos of cooperation: may: cleo eontain any other provisions act inconeistent with this Code or any related law. "(4) Four (4) copies each of the proposed articles of cooperation, bylaws, and the general statement required under Article 11 of this Code. shall be subsitéed to the Authority *(9) Mo cooperative, other than a cooperative union a8 described under Article 25 hereof, shall he registered unless the articles of covperation is accompanied with the bonds of the acsountable officers and a sworn statement of the treaaurer elected by the subscribers showing that at leasttwenty-five per centum (25%) of the authotived share capital has been subscribed and at least twenty-five per centum (6%) of the total subseription hes been pad: Provided, That in no cage shall the peid-up share capital be less than, Vifteen thousand peso: (P15,000.00), “The Authority shall periodically assess the required peid-up share capital and may increase it every five (6) years whea necessary upon consultation with the cooperative sector and the National Economie and Development Authority EDA). “ART. 15, Bylaws. ~ (1) Rach cooperative to be registered under this Code shall adopt bylaws not inconsistent with the provisions of this Code. The bylaws shall be fled at the same time as the artides of cooperation. *(@) ‘The bylaws of each cooperative shall (a) The qualifications for admission to ‘membership and the payment t be made or interest ‘to be acquired as a condition for the exercise of the right of membership; “@) The rights and Hebilitioe of mombership; “(c) ‘The circumstances under whieh membership is acquired, maintained and Inst; “@)__ The procedure to be fatlowed in cases of tamination of membership; “@)_ The conditions under which the transfer of a share or interest of the members eball be permitted: "(The niles and procedures on the agenda, time, place and manner of calling, convening, conducting meetings, quorum requirements, votingsystems, and other matters relative tp the business aifsire of the general assembly, board of directors, and committees; “(@) The general conduct of the affairs of the ‘cooperative, including: the powers and duties ef the general assembly, the board of direviors, committees and the officers, and their qualifications and isqualifications, “(h) The manner in which the capital may be raised and the purposes for which it can be utilized: “G) The mode of custody and of investment of not Burplus; °G] The accounting and auditing eystomo; “(k) ‘The manor of loaning and borrowing, ‘including limitations thereof, "Q) The inethod of distaibution of net surplus; (a) The menner of adopting, amending, repealing, and abrogating hylaws; “(i) A conciliation or mediation mechanicm for the amicable settlomont of dicputes among members, direccors, officers and committee members of the cooperative; and “(o)_ Othor matters incident to the purposes aud activities of the cooperative. “ART. 18, Registration. ~ A cooperative formed or organized uncer this Code acquires juridical personality from the date the Authority issues a certificate of registration under its official seal. All applications for registration shall be finally disposed. of by the Authority within a panied of sixty (60) days from the fling thereef, ctherwise the application is ‘deemed approved, unless the cause of the delay is attributable to the spplieamt: Provided, That in easeof a denial of the application for registration, an appeal shell lie with the Office of the President within ninety (99) days from receipt of actice of such denial: Provided, further, That failure of the Office of the President to act on the appeal within ninsty (G0) days from the ling thereof shall mean: approval of said application. “ART. 17. Certificate of Registration. — A certificate of regisiration issued hy the Authority ‘under its official seal shall be conclusive evidence: thet the cooperative therein mentioned ie duly registered unlees it is proved that the registration thereaf has been cancelled. CART. 18. Amendment of Articles of Cooperation and Bylaws, — Unless otherwise prescribed by this Coda and for legitimate purposes, any provision or matier stated in the articles of cooperation and bylaws may he amended Ly two-thirds (2/3) vote of all the members with voting rights, without prejudice to the right of the dissenting members to exercise ‘their night to withdraw thelr membership under Article 30. “Both the original and mended articles andlor bylaws shall eontain all provisions required by law to be set out in the erticles of cooperation end bylaws. Amendments shall be indicated by ‘undertcoring or otherwise appropmataly indiesting the change or changes made and a copy of the amenéad articles or amended bylaws duly certified under oath by the couperetive scerstary and a majority of the directors stating the fact that said amendment or amendments to the articles of ‘cooperation andior bylaws have been duly approved by the required vote of the members. All amendments to the articles cf cooperation and/or bylaws shell be submitted to the Authority, ‘The amendments shall take effect. upon its approval by the Authority or within thirty (80) days from the date of filing thereof if not acted upon by theAuthority for a cause not attributable to the cooperative, “ART. 19. Controcts Executed Prior to Registration and Effects ‘Pherao/. ~ Contracts ‘executed between private persons and cooperatives prior to the registzation of the cooperative shall remain valid and binding between the parties and ‘upon registration of the cooperative. A formal written contract shall be adopted and made in the cooperatives name or on its behalf prior to its registration. “ART. 20, Division of Cooperatives. — Any registered cooperative may, by a resolution approved by a vote of thros-fourthe (8/4) ef all the members ‘with voting rights, present and constituting @ wortun, resolve to divide itself into two (2) or more ‘cooperatives, The procedure for such division shall be praceribed in the regulations of the Authority, ‘The new cooperatives shall become legally establishes upon registration with the Authority: Provided, ‘That all the requiremenis set forth in this Code have been complied with by the new cooperatives: Provided, furtier, Taat na division of a couperative in fraud of creditors shell be valid. “ART, 21, Merger and Consolidation of Cooperatives. — (1) Two (2) ox more cooperatives ‘may merge into a single cooperative which shall either be one af the constitient cooperatives ov the consolidated cooperative, “@) No.merger or consolidation shall be valid unless approved by a three-fourths @id) vote of all the membere with voting rights, present and constituting a quorum of each of the constituent cooperatives at separate general essembly meetings. ‘The dissenting members shall have the ment to exercine their right to withdraw their membecship pursuant to Article 30,*(9) The Authority shall isane the guidolines governing the procedure of merger or consolidation of cooperatives. In any case, the merger ot ‘consolidation shall be effective upon the issuance of the cortficate of merger or consolidation by the ‘Authority. “ART. 22. Effects of Merger Consolidation. ~The merger or consolidation of cooperatives shall have the following effects: “(Q) The constituent eoaperativos chall become fa single cooperative which, in case of merger, shall be the surviving cooperative, and, in case of ‘consolidation, shall be the consolidated cooperative; “(@) The separate existence of the constituent, ‘cooperatives shall cease, except that of the surviving or the consolidated cooperative; “(@) The, surviving or the consolidated ‘eooperativa shall possess sll the nights, privilezes immunities and powers and shall be subject to all ‘the duties and liabilities of a cooperative crganized under this Code; “(4) Tha eurviving or the consolidated cooperative shall possess all the asseis, nights, privileges, immunities and franchises of each of the constituent couperatives; and “(G) The surviving or the consolidated cooperative shall he responsible for all the uakilines ‘and obligations of each of the constitment cooperatives in the same manner ae if such surviving or consolidated cooperative had itsalf incurzed such abilities or obligations. Any claim, action or proceeding pending by or against any such ‘constituent cooperatives may be prosecuted. by or fagaiaet tho surviving or conselidated cooperative, a8 the case may be. Neither the rights of ereditors noc aby lien spon the property of ary of such constituent ‘cooperatives shall be impaired by such merger or consolidation,“ART. 28. Types and Categories of Cooperatives. ~ (1) Tapes of Cooperaiives ~ Cooperatives may fall under any of the following types "(@) Credit Cooperative is one that promotes and undertalee aevings and lending services among its members, It generates @ common pool of funds in order to provide financial essistance and other related financial services to iis members for ‘productive and provident purponss; “G) Consumers Cooperative is one the primary purpose of which is to procure and distribute commodities to members and non-members: “(@) Producers Cooperative is one that undertakes joint production whether agricultural or industrial. It 19 formed and operated by its ‘mombere to underiale the profuction and processing of raw materials or goods produced by its mambers into finished or precegsed predusts for male by the ‘cuoperative (o its members and nonmembers. Any and product or its derivative arising from the raw materials produced by its members, sold in the ‘name and for the account of the cooperative, shall bbe decmed a product of the cooperative and ite members: *(@)_ Marketing Cooperative is ont which engages in the supply of production inputs to members and markets their products; “G@) Service Cooperative is one which enzages in medical and dental care, hosp:talization, ransportation, insurance, housing, labor, electric light and power, communication, professional and other services; “€) Multipurpose Cooperative is one which combines two (2) or more of the business activitias of these different types of cuoperatives,“(g) Advocacy Cooperative is e primary cooperative which promotes and advocates cooperativiem among its members and the public ‘through cocially-criented projects, education and training, research and communication, and other similar activities to feach out to its mtended beneficiaries; "(a) Agrarian Reform Cooperative io one organized by marginal farmers majcrity of which are agrarian reform bencficieries for the purpose of developing an appropriate eystem of land tenure, laad development, lend consolidation or land management in areas covered by agrarian reform; "@) Cooperative Bank is one organized for the primary purpose of providing 2 wide renge of Gnandal servioes to cooperstives and their members; "@)_ Dairy Cooperative is one whose members fare engaged in the production of fresh milk which nay be processed and/or marketed as dairy products; “(k) Bdlucation Cooperative ie one oxganized. for the primary purpose of owning and operating: Loensed educational inatitationa, robwithstanding the provisions of Republic Act No. 9185, otherwise mown az the Governance of Basic Education Act of 2002; "q) Blectriz Cooperative is one organized for the primary purpose of undertaking power generation, uilizing renewable energy sources, ineduding hybrid systems, acquisition and operation of subtzanamision or cntetoution to He Douschold members: “(m) _ Financial Service Cooperative is one organized fer the primary purpose of engaging in savings and credit services and other financial sarviens;“(n) Fishermen Cooperative is one organized by marginalized fishermen in localities whose products are marketad cither as frosh or processed: products; “(o) Health Services Cooperative is one organized for the primary purpose of providing medical, dental and other health services; “(p) Housing Cooperative is one organized to ‘assist or provirle acress to housing for the benefit of its regular members who actively participate in ‘the savings program for housing. It is co-owned ani controlled by its members; "(@) Jnourance Gooperative is one engaged in the business of insuring life and property of ‘cooperatives and their members; “@) Transport Cooperative is one whieh includes land and sea transportation, Limived to small vessela, a8 defined oy classified umder tha Philippine maritime laws, organized under the provisions of thin Code: “(@) Water Service Cooperative ia one organized to own, operaic and manage water ‘sysems for the provision and cistnbution of potable water for its members and their household; 't) Workers Cooperative ie one organized by ‘workers, inelucing the self-employed, who are at the same time the members and owners of the ‘enterprise, [ts principal purpose is to provide employment and business opportunities ta ite members and menage it in accordance with cooperative prinaiples; and “(a) Other types of cooperative as may be determined by the Authority. *@) Categories of Ceoperatives ~ Cooperatives shall be categorized according to membership. and tervitorial considerations 2 followa:‘@)_In terms of membership, cooperative shall be categorized into: °@ Primary — The members of which axe natural persons; "Gi) Secondary ~The members of which are primanes; and “(ai) Tertiary ~The members of which are sveondary eooparatives; and °() In terms of torvtory, cooperatives shall be categorized aezording vo areas of operations which may or may not coincide with the political ‘subdivisions of the country. CART, 24, Functions of @ Federation of Cooperatives. — A federation of cooperatives shall undertake the following functione: “(@) To carry on any cooperative enterprise authorized under Article 6 that complements, ‘augments, or supplements but dcos not conflict, compete with, nor supplant the business or economic astivities of its members; '(b) To carry on, encourage, and assist educational and advisory work relating to i ‘member cooperatives: "(¢) To vender services designed to encourage simplicity, efficiency, and economy in the conduct af the business of its member cooperatives and to {facilitate the implementation of thair beolskeoping, secounting, and other eystems and procedures; “(@) To print, publish, and circulste any newepaper or other publication in the interest of iis member voaperatives and enterprises; “© To coordinate and facilitate the activities of its member cooperatives:°@ To enter into joint ventures with mation] onal cooperatives of other countzies in the manufachize and sale of producis and/or services in “(g) To perform such other functions as may be necessary to attain its objectives. “A jederatioa of cooperatives may be registered. by earying ove the ‘ormalitie for segieceation of cooperative, “Registered cooperatives may organize a federation according to the type of business ectivity ‘ongaged in by the cooperatives, "ART. 25. Cooperative Unions. — Registered. cooperatives and fecerations at the apsroprate levels may organize or join coonerative unione to represent the interest end welfare of all types of cooperatives at the provincial, city, regional, and nationel levala, (Cooperative unions may have the following purposes: “(@) To represent its member organizations; “@) To scquire, analyse, and disseminate economia, statistical, and other information relating to ite membars and to all types of cooperatives within its aree of operation: “(To sponsor studies in the economic, legal, financial, social and other phases of cooperation and publish the results therect; ‘{@ To promote the Imowledge of cooperative principles and practices; Ye) To develop the cooperative movement in their respective jurisdictions, “d) To advise the appropriate authorities on all questions relating to cooperatives:"@ To rise funds throagh membership fees, ues and contributions, danetions, and subsidies from local and foreign sources whether private or government; and "@) To do and perform such other non- business activities as may be necessaxy to attain the foregoing chjectives. “Cooperative unions may astist the nstional and local governments in the latier’s development ‘activities in their respective jurisdictions” SEC. 3. Articles 26, 27, 28, 29, 80, 31 and 52 of Chapter TIL on Membership of the same Code are hereby renumbered ‘and amended to read, as follows: CHAPTER I ‘Mmanensirp *ART. 26. Kinds of Membership. — A cooperative may have two (2) kinds of members, to ‘wit: () regular members and. (2) asdosiate members. "A sogular member is one who has complied ‘with all the membership requirements and entitled to all the rights and priviloges of membership. An associate member is one who has ao right to vote, nor be voted upon and shall be entitled only to suctt rights and privileges as the bylaws may provide: Provided, That an associate member who meets the woinimum requirements of reguler membership, continues to patronize the cooperative for two (2) ‘years, and significe hislher intention to remain a member shall be considered 2 regular member. “A cooperative organized by minors shall be considered a laboratory cooperative and must be affliated with a registered cooperative, A laboratory sooperative shall he gouerned by special guidelines to be promulgated by the Auihoriy.RT 27. Government Officers ond Bmployecs, ~ (1) Any officer or employee of the Authority shall be disqualifiad to be elected or appointed to any position in a cooperative. Provided, That the disqualification does not extend 0 @ cooperative organized by the officers or employees of the Authority. “(@) All elective officials of the Government ‘hall be ineligible to become officers and directors Gf cooperatives: Provided, Thet the disqualification oes not extend to a party list representative being ‘en officer of a cooperative he or she represenis, and “() Any government employee or official may, in the discharge of his duties os member in the cooperative, be ellowed by the head of office concerned to use official time for attendance at the general assembly, board and committee meetings of cooperatives. 28 well 28 cooperative sersinare, conferences, workshops, tachnical meetings, and ‘tweining courses locally or abroad: Provided, ‘That the operations of the office concerned are not adversely effected. “ART, 28. Application. — An applicant for membership shall be deemed a member after approval of his membership by the board of directons and shall exercise the rights of member after having made such payments to the cooperative in sespest ta membership or acqvired interest in the cooperative es may be prescribed in the bylaws, In case membership 1s refused or denied hy the board of directora, an oppeal may be made to the general ascembly and the latter's decision shall be final. For thie purpose, the general aosembly may opt w create an appeal and grievence commsties, the members of which, shall verve fer a period of one (2) year and shall decide appeals on membership application within thirty (0) daye upon receipt ‘thereof. If the committee fails to decade within the presenbed period, the appeal is deemed approved in favor of the applicanc,“ART, 29. Liability of Members. — A member shall be Liable for the debts of the cooperative to the extent of his contribution to the share capital of the cooperative, “ART. 80. Terminotion of Membership. — (1) ‘A member of 2 cooperative may. for any valid reason, withdrew hic membership from the ‘cooperative by giving 2 sixty (60) day notize to the board of directors. Subject to the bylawe of the cooperative, the withdrewing member shell be entitled to a'refund of his share capitel contribution ‘and all other interests in the cooperative: Provided, ‘That such refund chall not be made if upon such, peyment the value of she assets of the cooperative would be less than the aggregate amount of its debis and liabilities exdusive of his shere capital contribution, “() The death or insanity of a member in a primary cooperative, and the insolvency or dissolution of 2 member in a secondary or terliary cooperative may be considered valid grounds for termination of membership: Provided, however, That in case of death or insanity of an agra beneficiary-member of a cooperative, the nextofkin may assume the duties and responsibilities of the original member. "iQ) Membership in the cooperative may be terminated by a vote of the majority of all the maetabers of the bomd of directors for eny of the following eauses: “@) When a member has not patronized any services of the cooperative for an unreasonable period of time as may be previously determined by the board of directors; “(o) When a member has continuously failed to comply with his obligations, “(o) When @ member has ecied in violation of the bylaws and the rules of the cooperative; and“(d) For any act or omission injurious ot prejudicial to the interest or the welfare of the cooperative. A membar whose menibership the board of directors may wish to terminate shall be informed of sch intended action in writing and shall be given an opportunity to be heard before the said board makes its decision. The decision of the basrd shall be in writing and shall be communicated in ‘person or by registered mall to said member and hall ke appealeble within thirty (80) deys from receipt thereof to the general assembly whose desision shall be final. Tho goneral asccubly may create an appeal ang grievance commit whose members shall cerve for a period of one (3) year and shall decide appeals on membership terminetion. "The committee is given thirty (90) daye from receipt thereof to decide on the appeal. Pailure wo decide within the prescribed period, the appeal is deemed approved in favor of the member. Tending a decision by the general assembly, the membership yemains in force. "ART. 31. Refund of Interesia. — All suns computed in accordance with the bylaws to be due from a cooperative to 2 former member shall be paid tp him either by the cooperative or by the approved tranaferes, 28 the cose may be, in azcordanca with this Cole SEC. 4. Articles 83, 54, 36, 96, 37, 88, 39, 40, 42, 42, 43, 44, 45, 46, 47, 48,49. 50 and 1 of Chapter IV on Administration of te same Code are hereby renumbered and amended to read, as follows: CHAPTER IV ADMUNISTRATION “ART. 92, Composition of the General Assonbly. ~ The general assembly shall be composed of such members who are entitled to voteunder the articles of cooperation and bylaws of the cooperative. "ARM 99, Powers of the General Assembly. — ‘The general assembly shall be the highest policy maleng body of the cooperative and shall exercise such powers as are stated in this Code, in the articles of eoopsration and in the bylaws of the cooperative. The generel assembly shall have the following exelusive powers which cannot be delegated: “C1 To dotermino and approve amendments to the erticles of cooperation and bylaws; "@) To elect or appoint the members of the board af directors, and 9 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 its bylaws or election guidelines of such electric cooperative; end “(@) To approve developmental plans of the vogperative. “Subject co such other provisions of this Code ‘and only for purposes of prompt anit intelligent. decision-making, the general assembly may, by a three-fourths (4/4) vote of all its members with ‘voting rights, present and constituting a quorum, delegate some of its powers to a smaller body of the cooperative. These powers shall be enumerated under the bylaws of the cooperative. “ART. 34. Meetings. ~ (1) A regular meeting shall be held snnually by the general assembly on a date fixed im the bylaws, or if not so fised, on any date within ninety (90) days after tha close of each fiscal year. Provided, Thal, notice of regular meetings shall be sent in uniting, by posting of publication, or through other electronic means to all members of record:“@) Whenever necessary, a special meeting of the general assembly may be called at any time by 8 majority vote of the board of directore or a3 provided for in the bylewe: Provided, That a notice in writing shell be sent one (1) week prior to the maceting to all members who are ontitied to vate. ‘However, a special meeting shall be called by the ‘oard of diresiore after compliance with tho required ‘notice within one (1) month after reeetpt of a request in writing from at least ten per centum (10%) of the iotal members who ate entitled to vote 10 ‘transact apenific business covered by the call. “If the board fails to call a regular or a special meeting within the given period, the Authority, upon petition of ten per cenium (10%) of all the members of the cooperative who are enlitled 9 vote, and for good cause shown, shall issue an order to the petitioners directing them to call meeting of the general ascembly by giving proner noties a8 required in this Code or in the bylaws; =@) Tn the case of a newly spproved cooperative, a special general assembly shall be called. as far as practioahie, within ninaty (90) days from such approval; “() The Authority may call a special meeting of the cooperative for tae purpose of reporting to the members the result of any examination, cr other investigation of the cooperative affairs; and “(@) Notice of any meeting may be waned, exprisaly or impliedly, by any member. “ARD. $5. Guorum, — A quorum shall eoncist of at Teast twenty-five per centum (25%) of all the members entitled to vote. Tn the case of cooperative banks, the quorum shall be as provided in Article 99 of this Code. In the case of electric cacperatives registered under this Cede, a quorum, unless otherwise provided in the bylaws, shall consist of five por centim (6%) of all the members entitled to vote.“ART. 96, Voting System, — Bach member of a primary cooperative shall have only one (1) vote, In the case of membere of scoondary or tertiary cooperatives, they shell have one (1) basic vote and a2 many incentive votes as provided for in the bylaws but not to exceed five (6) vates. The voies cast hy the delegates shall be deamed es votes cast by the members thereof “However, the bylaws of a cooperative other than a primary may provide for voting by proxy. Voting by proxy means allowing e delegate of a ‘couperative to represent o vote in behalf of anotker delegate of the same cooperative, “Ann. 37. Composition and Term of the Beard of Directors. ~ Unless otherwise provided in the ‘ylawe, the diroction and management of the affairs af a cooperative shall be yested in a board of directors which shall be composed of not less than five () nor more than fifteen (18) members elected thy the general assembly for @ term fixed in the bylaws bat not exceeding a terra of two (2) years and shail hold ofitce until their successors are duly lected and qualified, er until duly removed for ‘cause. “AN. 38, Powers of the Boord of Direcvors. ~The board of directors shall be responsible for the straiogic planning, direction-setting and policy: formulation aclivitios of the cooperatives. “ART. 39, Directors. — (1) Any member of ‘cooperative who, under the bylaws of the exoperative, hhas the right to vote and who possesses all the qualifications and none of the disqualifications provided in the laws or the bylaws shall be eligible fbr clection ag director. *@) The cooperative may, by resolution of its board of directors, admit as director, or comm: ‘member one appeintod by any finsnsing institution from which the cooperative received financialassistance solely to provide technical mowledge not available within ite membership. Such dizector or committee member need not be a member of the cooperative and ahell hove no powers, rights nor responsibilities except to provide technival assistance fas required by the cooperate. “@) The members of the board of director shall not hold any other posision directly involved in the day to day operation and mansgement of the cooperative. “(4) Any person engaged in a business similar ta that of the cooperative or who im any way has a conflict of interest with it, is disqualified from election as @ director of said cooperative. “ART. 40. Meeting of the Board and Quorum Requirement. — (1) In tho cave of primary, cooperatives, regular meetings of the board of directors shall be held at leset once a mouth, "@) Spatial meotings of the board of directors may be held at any time upon the call of the chairperson or a majority of the members of the Loard, Provided, That written notices of the meeting speciiving the acends of the special meeting shall ‘be given to all members of the board at least ons (1) weeks before the said meeting. “(@) A majority of the members of the board shail constitute a quorum for the conduct of ueinges, unless the bylaws provide otherwise. “@) Ditectors cannot attend or vote by proxy at board meatings “ART. 41. Vacancy in the Board of Directors. = Any vacangy in the board of directors, other than by expiration of term, may be filled by the vote of ft leseb a misiosity of the remaining direciors, if fill constituting «| quorum: otherwise the vacancy rust bs filled by the general assembly in ¢ regular ‘or special meeting called for the purpese. A dieotor0 elected to Gill 2 vacancy chall sows only the unexpired term of his predesessor in office. “ARE, 42, Officers of the Cooperative. — The ‘board of divectors shall elect from among themselves: the chairperson and vice-chainpercon, and elect or appoint other officers of the cooperative from outside of the board in accordance with their bylaws. All officers shall serve during good behavior and shall not be removed except for cause efter due hearing. Lass of confidence shall not be a valid ground for causing loss of confidence in the honesty and Integrity of euch officer. No two 2) or more persons with relationships up to the shird civil degree of consanguinity or affinity nor shall any person engaged in a business similar to that of the cooperative nor who in any other manner has interests in conflict. with the cooperative shall serve ‘as an appointive officer. “ART. 43. Committees of Cooperatives. ~ (1) ‘The bylaws may croate an executive committee to be appointed by the board of directors with such powara and duties a2 may be delegated to it in the bylaws or by @ majority vote of all the members of the hoard of directors “(2) The bylawa shall provide for the creation of an audit, election, mediation and conciliation, ethics, and auch other committees as may be necessary for the conduct of the affairs of the cooperative. The members of both the audit and election committees shall be elected by the general assembly and the rest shall be appointed by the board. The audit committee shall be directly ‘sccountable and respoasible to the general essembiy. Te shall have the power and duty to continuously monitor the sdequacy and effectiveness of the cooperatives manegoment control sysiom and audit the performance of the cooperative and its various sogponsibility contors,“Unless otherwise provided in the bylaws, the board, in case of a Vacancy in the committees, may all an election to fill tho vacsney or appoint person to fill the same subject to the provision that ‘the person elected or appointed shall serve only far ‘the unexpired portion of the tenn. “ART, 44, Functions, Responsibilisies ond Training Requirements of Directors, Officers and Commitiee Members. ~ The fanctions and responsibilities of the directors, officers and commistee members, as well as their training quirements, shall be in crordance with the rales and regulations issued by the Authority, “ART. 48. Liability of Directors, Officers and Committee Members. ~ Directors, officers and comaittce members, who willfully and lenowingly ‘vous for or assent to patently unlawful acts or who era guilty of gross negligence or bad faith in ‘Gecting the aflirs of the cooperative or aoquire any ‘personal or pecuniary interest in conflict with their uty as such directors, officers or committee members shall be liable joinily and severally for all damages or profits resulting therefrom to the cooperative, members and other persons. “When a director, officer or committee member settompie acquire of acquires, in violation of his duty, any interest or equity adverse to the ‘cooperative in reepact to any matter which hao been yeposed in hin in confidence, he shell as a trustee for ths cooperative, be Hable for damages and shall be accountable for double the profits which otherwise would have accrued to the cooperative “Ant. 46, Compensation, ~ (1) Tn, the: absence of any provision in the bylaws fixing their compensation, the directors shall not receive any compensation excep! for reasonable per diems: Provided, however, That the directors and officers shall not be entitled to any por diem when, in the receding calendar year, the cooperative reported ainet loss of had a dividend rate less than the oftiial inflation rate for the same year. Any compensation other than per diems may be grented to directore by a majority vote of the members with voting rights at o regular or epocial general assembly esting specifically called for the purpose: Provided, ‘That no additional compencation other than per dems shall be paid during the frst year of existence of any cooperative. "@) The compensation of officers of the cooperative as well as the members of the committees created pursuant to this Code or its bylaws may be fixed in the bylaws, "@) Unless already fixed in the bylaws, the compensation of all other employees shall be determined by the board of directors, "ART. 47. Dealings of Directors, Ojfizers oF Commitiee Members. — A contract entered into by the cooperative with one (1) oF moze of ite directors, officers, and committee members is voidable, at the option of the cooperative, unless all the following ‘conditions are present: *(1) That the presence of such dinector in the board meeting wherein the contract was approved wae act neceveary to constitute a quoram for exch meeting; (2) That the vote of such director was not ‘accsssaxy for the approval of the contcact; “(@) That the contract ig fair and reasonable under the ciroumstances; and “(4) That in the case of an officer or committee member, the contract with the officer or committee member has bera previously authorized by the general assembly or by the board of directors:“Where any of the firet two conditions set forth in the preceding paragraph is absent, in the case of a contract with a director, such contract may hie vatiied by a thresfourths (4) vote of all the members with voting rights, present and constituting 8 quorum in a meeting celled for the purpose: Provided, That full disclosure of the adverse interest of the directors involved is made at ‘such meeting, end that the contract is fir and reasonable under the circumstances. “ART, 48. Disloyelty of o Director. ~ A directo: who, by virtue of his office, acquires for ‘himeel! an opportunity which should bolong to the ‘cooperative shall be Hable for damages and must acsount for double the profits that otherwise would have accrued to the cooperative by refunding the same, unless bis act has been ratified by a three- Fourths (8/4) vole of all the members with voting Fights, present and constituting @ quorum. This provision shall be applicable, notwithetending the fact that the director used his own funds in the venture. ‘ART. 49. Illegol Use of Confidential Information. — (1) A dizector or officer, or an astoaiate of a director or officer, who, for his benefit, or advantage or thet of an associate, makes use of confidential information that, if generally known, ‘might reasonably be expected to adversely affect the Sngration and winbiity ofthe eoperative, all be hel Ya) Liable to compensate the cooperative for the dizect Insses suffered by the cooperative as a ‘eoult of the illegal use of information; and “{b) Accountable to the cooperative for any direct benefit or advantage received or yet to be ‘received by hin or his associate, ae ¢ rasult of the transaction.*(2) The cooperative shall take the necessary stops to enforce the liabilitios described in subsection @. “ART. 80. Removal. ~ All complaints for the removal cf any elected officer shall be files with the board of directors. Such officer shall be given the opportunity to he heard. Majority of the board of directors may place the officer concerned under ‘preventive suspension pending the resolution of the investigation. Upon Binding of a prima fasie evidence of guilf, the beard shall present its recommendation for removal to the general acsombly. “An elective officer may be removed by three- fourths (3/4) votes of the regular members preseut fand conotituting a quorum, in @ regular or special general assembly meeting ‘called for the purpose. ‘The officer concerned shail be given an opportunity to be heard at said assembly.” SEC. 8. Articles 52, 59, 54, 55, 66, 57, 58, 59, 80, Gl, 62 and 68 of Chepter V on Responsibilities, Rights and Privileges of Cooperstives of the same Code are hereby renumbered and amended to read, as follows: CHAPTER V RESPONSIBILINES, RIGHTS aND PRiviLscDs ‘oF CooPamartvEs “ART, 51, Address. — Every enoperative shall have an official postal address 1o which all notic ‘and communications shall he sent. Such address and. every change therecf shall be registered with the Authority. “ART. 52. Hooks to be Kept Open. ~ (1) Every ‘cooperative shall have the following dos yeady and accessible to ite members and representatives of the Authority for inspection during reasonable fice hours at its officiel address:(2) A copy of this Code and all other laves pertuining t0 cooperatives; “(b) A copy of the regulations of the Authority; “(@) A copy of the articles of cooperation and bylaws of the cooperative; "(@) A vegister of members; () The books of the minutes of the mestings of the general assembly, board of directors and committees; *(® Share books, where applicable; “(@) Financial statements; and “(a) Such other documents as may be prescribed by laws or the bylaws, "Q) The secountant or the bookkeeper of the cooperative shill be respousible fbr the maintenance the boa ‘and safekeeping of ks and records of account of the cooperative in accordance with generally accepted accounting practices. He shall also be reaponsible for the production of the same at the time of audit or inspection. “The audit committee shall be responsible for the continuous and poricdic review of the book and records of account to enctire that these are ia accordance with the cooperative principles and genecally avcepted accounting practices. “(3) Bach cooperative shall maintain records of accounts such that the true and esrrect condition and the results of the operation of the cooperative may be ascertained therefrom at any time. ‘The financial statements, audited according to generally accspted auditing standards, principles end practice, shall be published cnually and shal be kept postedJin @ conspicuous place in tho principal office of the: ‘cooperative. “(A) Subject to the pertinent provisions of the National Internal Revenue Code and other laws, a cooperative may digpcoe by way of buming or oiler ‘method of complete destruction any document, resord or book pertaining to its fimanciel and nonfiaancial operations which are alreedy more than five (5) years old axcopt those relating to transactions which are the subject of civil, criminal, and administrative proceedings, An inventory of the audited deeuments, records, and books to be disposed of shall be drawn up and certified to by the board secretary and the chairman of the audit commitice and presented to the board of dizectors which may thereunon approve the disposition of said records. “ant, 58, Reporte. — (1) Bvery cooperative shall draw wo regular reports of it program of Sctivities, inckding thoes in pursuance of thoir sodio-civic undertakings, showing their progress and achiavemeate at tho ond of avery fiscal year. The reports shall be made accessible to its members, and ‘copies thereof shall be furnished to all is mambers ‘of record, These reports shall be fled with the ‘Authority within one hundred twenty (20) days from the end of the calendar year. The form and contents of the reports shall be as prescribed by the rules of the Authority. Failure to fle the requived yeports shall subject the socountable officers to fines ‘and penalties as may be preecsibed by the Authority, ‘and shell be ground for the revocation of authority of the cooperative to eperate as such. The Gseal year of every cooperative shall be the calendar year, ‘exeopt as may be otherwise provided in the aylawe (2) Ifa exeperative fails to make, publish and file the reports required herein, or feils to include {herein any matter required by this Code, the Authority shell, within fifteen (15) days fom the expiration of the prescribed period, send such cooperative «© weilten notice, stating its non-compliance and the commencurete fines and Penelies that willbe imposed unl such tie tat ‘the cosperstive has complied with the requirements, “ART Bd. Register of Members os Prime Faria Buidence. ~ Any register or ist of membors or ‘shares Kept by any registered cooperative shall be prima facie evidence of the following particulars entered therein: “() ‘The date on which the name of any person ‘was ealered in ouch rogiater or list ab member, and "@) Tho date on which any cuch person coasod w be a member. “ART. 96. Probative Volue of Certified Copies of Entries. ~ (1) A copy of any entry in any book, register or list regularly kept in the course of ‘business in the possession of a ccoperative shall, if duly certified in accordance with the rules of evidence, be admissible as evidence of the existence of the eniry and prima facie evidence of the matters ‘ond transactions therein recordad. "(@2) No person or a cooperative in possession of the books of euch cooperative shall, in any legal: proogedings to which the cooperative 12 not a party, be compelled to produce any of the books of the ‘conperative, the contents of which can be proved and ‘the matters, transactions and accounts therein recorded, unless by order of a competent court, “ART. 66. Bonding of Accountable Officers. Exery director, officer, and employee hendling funds, sezurities or property on behalf of any cooperative shall be covered by a surety bond to be issued by duly registered insurance ox bonding company for ‘the faithful performance of their respective duties and obligations. The board of directors ohsll determine the adequacy of such bonds,“Upon the filing of the application for registration of 2 cooperative, the bonds of the accountable officers shall be zequired by the ‘Authority. Sach bonde shall be renewed annually and the Authority shall accordingly be informed of such renewal “apr. 67. Preference of Claims. — (1) Notwithstanding the provisions of existing Jaws, rules and regulations to the contrary, but subjact to the prior claim of the Authenity, any debt due {tp the cooperative from a member shall constitite @ Grst lien upon aay raw materials, production inputs, and products produced; or any land, busting, fecdities, equipinent, goods or services acqmmred and held, hy such member through the proceeds of the Joan or credit granted by the cooperative to him for as long 68 the same is aot fully paid. (2) No property or interest om property which ie eubject-to a lien winder paragraph (1) ehall be sold por conveyed to third parties without the prior permizcion of the cooperative, The lien upon the properly or interest shall continue to exist even after the gale ov conveyance thereof until such lien has ‘heen duly extinguished. “(@) Notwithstanding the provisions of any lew to the contrary, any sale or conveyance mado in Contravention of paragraph (2) herect shall be void. “ant. 58: Instrument for Salary or Wage Deduction. ~ (2) A member of a cooperative mey, notwithstanding the provisions of ex'sting laws to ‘the contrary, execute an instrument in favor of the cooperative authorizing his employer to deduct from: lisher sélary or wages, commutation of leave eredits and any other monetary benefits payable to jim by the employer and remit such amount as nay be specified in satisfaction of a debt or other demand due from the member to the cooperative.2) Uipan the execution of such instrument and 2 may be required by the cooperative concained an g written request, the employer shall make the eduction in accordance with the agrecmant and remit forthwith the amount s0 deducted within ton GD) days after the end of the payroll menth to the cooperative, The employer shell make the deduction for as long as such debt or other demand remaine ‘unpaid ly the employee. "(9) The term ‘employer’ as used in thie article shall ineiurle all private firms and the national and Jocsl governments and government-owned o: controlled corparations who have under their employ fs ayember of a cooperative and have agreed to camry out the terme of the instrument mentioned in ‘poragrapha (1) and (2) of this article. "(d) Phe provisions of this articlo shall aprly to all similar egreements referred to in paragraph (J) and wore enforced prior to the approval of this Code. “6) Notwithstanding the provisions of existing Taw to tho contrary, the reqonsbities of he senplayes a ated in prngrag C) and @) of article shall be mandatory: Provided. That in the cae of o private omployer, the setuel and reasonable costs of deducting and remitting may be ‘lleetad. “ART 59. Primary Lion. — Notwithstanding the provisions of any law to the contrary, @ cooperative shall have @ primary liea upon the capital, deposfts or interest of a member for any debt die to the cooperative from such # member. “ART. 60. Tox Traatment af Cooperatives, — Duly registered coaperatives under this Code which do not transact any business with non-members or ‘the general public shall not be subject to any taxes and fees imposed under the internal revenue laws,and other tax laws. Cooperatives not falling unc this article shall be governed by the succeeding section. “ART. 61. Tox and Other Exemptions. — Cooperatives transacting busineca with both members and non-members shall not be subject 2 tax on their tronscctions with members. In relation to this, the transactions of members with the cooperative shal! not be eubject to any taxes and fees, including but not limited to final taxes on members’ deposits and documentary tax. Notwithstanding the provisions of any lew or regulation to the contrary, such cooperatives dealing ‘with nonmembers shell enjoy the following tax ‘exemptions: (2) Cooperatives with accumulated reserves: and undivided net savings of not more than ‘Ton rilllon pesos (P10,000,000.00) shall be exempt from all national, city, provincial, municipal or barangay taxes of whatever aame and nature, Such cooperstives shall be exempt from custome duties, advance sales or compensating taxes on their portation of machineries, equipment and spare parts used by them and which are not available locally a8 certified by the Department of Trade and Taduetry (DT). All tex-free impertatione shall not de sold nor the beneficial ownership thereof be transferred to any percon until after five (6) yeara, otherwise, the cooperative and the transferee cr astignes shall be solidarily lable to pay twice the amount of the imposed tax andor duties. “@) Cooperatives with accumulated reserves and undivided net savings of more than ‘Ten million 2008 (P.10,000,000.00) shall vay the following taxes at the full rate: “(@) Income Tax — On the amount allocated for interest on capitals: Provided, That the same tax is not consequently imposed on interest individually reveived Ly members: Provided, jurther,‘That ccoperatives, regardless of claseifieation, are exempt from income tax from the date of registration with the Authority: "(i) Value-Added Tax ~ On transsetions with non-members: Provided, however, That cooperatives duly registered with the Authority, aze exerapt fom ‘the peyment of value-edded tas, subject to Section 109, subsections L. M and N of Republic Act No. 9887, the Netional Internal Revenue Code, as amended: Provided, That the exempt transaction under Section 108 (L) chall include sales made by cooperatives duly registered with the Authority ergaaized and operated by ite mombore to undertake ‘the production and processing of raw matencls or of goods producnd by ite mambaro into iniahed or processed products for sale by the cooperative to its ‘mombers and non-mesabers: Provided, further, That ‘any processed product or its derivative arising from the raw materiols produced hy its members, seld in the name and for the account of the cooperative, shall be deemed a product of the cocperative: Provided, finally, That at least twenty-five per centurn (25%) of the net income of the cooperatives je returned to the mombers in the form of interest and/or patronage refunds; *@ All other taxes unless otherwise provided herein; and *(@) Donations to charitable, research and educational institutions end reinvestment to socioeconomic projects within the area ef operation of the cooperative may be tax deductible. *(@) All cooperatives, zegarilless of the amount of accumulated reserves and undivided net savings ‘hall be exempt from payment of local taxes and taxes on transactions with banks and msurance companice: Provided, That all sales or services rendered for non-members shail be subject to the applicable percentage taxes except sales made ky producers, marketing of service cooperatives:Provided, further, That nothing in this article shall preclude the exainination of the books of accounts or other accounting records of the ccoperative by duiy authorized internal revenue officers for internal rovenuo tax purposes only, after previoua ‘authorization by the Authority. 2G) In areas where there are no available notaries public, th exercising his ex officio capacity as notary public, shall render eervice, free of charge, to any person or group of persons, requiring the administration of oath or the acknowledgment of articles of cooperation and instruments of laen from cooperatives not exceeding, ‘Hive hundred thousand pesos (P500,000.00). “(8) Any remter of deeds chall accep: for rogistmation, fee of charga, eny inotrument relative, to @ loan made under this Cole which does not exceed Two hundred fifty thousand pesos 250,000.00) or the deeds of title of any property nequired by the cooperative or any paper or document drawn in connection with any action, brought by the cooperative or with any court judgment rendered in its favor or aay instrument relative to a bond of any accountable officer of ‘cooperative for the faithful performance of his duties and obligations. “@ Cooperatives shall be exempt from the payment of all court and cheriffs feos payable to the Philippine Government fer and in connection with all actions brought under this Code, or where such actions is brought by the Authority before the court, to enforce the payment of obligations contracted in favor of the cooperative. “(7) All cooperatives shall be exempt from putting up a bond for bringong an appeal against the decision of an inferior court or for seeking to set aside any third pariy claim: Provided, That a Sevfication of the Authority chowing that the net ‘assets of the cooperative are in excess of the amountof the bond required by the court in similar cases shall be accepied by the court ss a sufficient bond. “(6) Any security issued by cooperatives shall ‘be exempt from the provisions of the Securities Act provided such security shall not be speculative. “ANT, 62, Privileges of Cooperatives. — Cooperatives vogistered under thie Cede shall, notwithstanding the provisions of any law to the contsary, be also accorded the following privileges: “() Gooperatives shall eniey the privilege of depositing their sealed cash boxes or containers, documents or any valuable papers an the safes of the municipal or city treasurers and other government offices free of charge, and the custodian oF such articles ahall sue a receipt acknowledging the articles received duly witnessed by another parson: “(@) Cooperatives organised among goveriinent employees, nobvithstanding any law or regulation 20 the contraty, shall enjoy the fren nse of any available space in slr agency, whether owned or rented by e Government *(@) Cooperatives rendering special types of services and facilities auch a3 cold siorege, ice plant, electricity, transportation, and similer services and facilitice shall cocare « franchise therefor, and such cooperatives, shall opan their membership to all porsons qualified in their aroas of operation; *() In areas whore appropriate eoeperatives the preferential right to supply government institutions and agencies Tice, com and other grains, fish and other marine products, meat, egus, milk, Vegetables, tobacco and other sgricultural ‘commodities produced ty their membete shall be granted to the cooperatives concerned;(9) Preferential treatment in the ellucation of ‘fertilizers, including seeds. and other agricultural inputs and implements, and in rice distribution shall ba granted to cooperatives by the appropriate government agencies; “(@) Preferential and equitable treatment in the allocation or control of bottonmies of commercial shipping veevela in connection with the shipment af ‘goods and products of cooperatives; “() Cooperatives and their federations, such as farm and fishery producers snd suppliers, market vendors and such other cooperatives, which have for their primary purpose the produstion endlor the taarketing of products from agriculture, Gsheries and mall entrepreneurial indushies and federations thereof, shall have preferential rights in the ‘management of public markets andior lease of puible market facilities, stalls or apacce: Provided, That these rights shall only be utilized exclusively by cooperatives: Provided, further, That ro cooparasive forming a joint vencure, partnership or any other ‘arrangoment with a non-cooperative ontily cam utilize these rights: “@), Cooperatives engayed in credit services aniifor fecerations shall he entitled to loans, credit ines, rediscounting of their Ioan aotes, and other eligible papers with the Development Bank of the Philippines, the Land Bank of the Philippines and other financial institutions except the Bangko Sentral ng Pilipinas (BSP); “The Philippine Deposit Inswranes Corporation (DIC) and other government agencies, government ‘owned and controlled corporations and government financial institutions shell provide technical assistance to ragistered national federstions and unions of cooperatives which have significant ‘engagement in savings and credit operations in order for these federations end unions to establish and/orstrengthen thelr own @utonemous cooperative deposit insurance systems: “(9) A public transport service cooperative may be entitled to financing eupport for the acquisition and/or maintenance of land and sea transport Cquipment, facilities and parts through the program ‘of the government Ginancial institutions, Tt shell Jhave the preferential vight to the management and operation of public terminals and ports whether land or sea transyort whore the cooperative operates and oa securing @ franchise for active or potential routes far the pubke traneport "(10) Cooperatives transacting business with the Government of the Philippines or any of its political subdivisions or any of its agencies oF instrumentalitics, including government-owned and controlled corporations shall be exempt from prequalification bidding requirements, notwithstanding the provisions of Repitblic Act No. 184, otherwise known as, the Government Procurement Ast; “Q2) Cooperatives shall enjoy the privilege of eing represontad by the provincial or city fiscal or the Office of the Solicitor General, free of charge, exeent when the adverse party is the Republic of the Philippines: (12) Cooperatives organized by faculty members and employees of educational institutions: ‘hall have the preferential eight in the menagement of the canteen and other services related to the ‘poration of the educational institution whore they are employed: Provided, That such services are ‘operated within the premiose of the said educational institution; and "€a) The sppropriate housing agencies and government finsneial institutions shall ereate a special window for financing housing projects ‘undertaken by cnoperativee, with interest rates and.terms equel to, or better than these given for socialized housing projects. ‘This financing shall be in the form af blanket loans or long-term wholesale Joans 10 qualified cooperatives, without need for individual processing. “The Authority, in consultstion with the appropriate government agencies and concerned eibgatatie eestor, shal eve rues tnd sepula on all matters concerning housing cooperatives BEC. 6. Article 64 of Chapter VI on Insolvency of Conperatives of the same Code is hereby renumbered and ‘emended to read, as follows: CHAPTER VI INSOLVENCY OF CoOrERATIVES: “aur. 63. Proceedings Upon Insotuency. ~ In cate 2 ecoperstive is unable to fill its obligations ‘tw creditors due to insolvency, such cooperative may apply for such remedies as it may deem fit undar the provisions of Act No. 1960, as amended, otherwise Inown as the Insolveney Law. “Nothing in this article, however, precludes creditors from secking protection from said sneolvency Jaw." SEC. 7. Articles 65, 66, 67, 68, 69, 70 and 71 of Chapter ‘VIL on Dizeohution of Cooperatives of the came Code are hereby yenuumbered and amended to read, as follows: CHAPTER VII DissoLvriow a# CoopsextivEs “ATT. 64. Voluntary Dissolution Where no Creditors are Affected. ~ If the dissolution of = cooperative does not prejudice the rights of any creditor having a claim ageinst it, the dissolution may be effected by a majority vote of the board of Girectors, and by a cesolution duly adopted by theaffirmative vote of at least three-fourths (8!) of all the members with voting rights, present and constituting 2 quorum ats meeting t9 bo held ‘upon: call of the dizestors: Provided, That the notice of time, place and abject of the meeting shall be published for thyee (9) consecutive weeks in a newspaper published in the place where the principal office of said cooperative is located, or if no newspaper is published in such place, in a ‘nowepapcr of general sircslosion in the Philippines: Provided, further, That the notice of such meeting is sent to each member of vocord eithar by registered mail or by persmal delivery at least thirty (20) days prior to said meeting. A copy of the resolution authorizing the dissolution ehall be certified to by a majority of the beard of director Sod countersguad by the board secretary. the Authority shall thereupon iasue the certificate of Sissalution.| “ART. 65, Voluntary Dissolution Where Creditors Are Affected. — Where the dissolution of @ cooperative may projadice the righte of any creditor, the petition for dissolution shall be filed with the Authority, Tho petition chall be signed by ‘@ mojority of sts hoard of directors or other officers ‘managing its affairs, verified by its chaixperson ot board secretary or oue of tts directors and ehall set forth all claims and demands sgainat it and that its dissolution was resolved upon by the aifirmative vote of at least three-fourths (9/4) of all the members with voting rights, present and constituting. quorum st a mesting called for that pmpose, “If the petition is sufficient in form and substance, the Authority shall issue an order ‘ociting the purpose of the petition and shall fix a Gate which shall not be less shan thirty (0) nor more thaa sixty (60) days after the entry of the rer. Before such date, a copy of the order shall hhe published at least once a wool: for three (3) gonseeutive weeks in a newspaper of generalcirculation published in the municipality or city where the principal office of the cooperative is situated, or in the absence of such local newspaper, in a mewopaper of generel circulation in the Philippines, and 2 copy shall likewise be posted for Bares @) consecutive weeks n thoes () publi paces in the municipality or city where the cooperative’: office is located. “Upon expiry of the five (6)-day notice to file objections, the Authority shall proceed to hear the ‘petition and try any issue raised in the objection filed; and if the objection is sufficient end the ‘material allegations of tha petition are proven, it ‘shall issue an arder to dissolye the coaperative and direct the dispoartion of its assets in azoordance with existing rules and regulations. The order of dissolution shall set forch therein: “(1) The aveets and Uabilities of the cooperatives "(2) The claim of any creditor: “(B) ‘The number of members: and “(4 "The nature and extent of the interests of ‘the members of the ccoperative. *ART. 86. Involuntory Diesolution, — A cooperctive may be dissolved ly arder of a competent. court after dus hoaring on the grounds of "@) Violation of any law, regulation or provisions of its bylaws; or “@)_ Insolvency. “ART. 67. Dissolution by Order of the “Authority, — The Authority may anspend or revoke, ‘after due noticz ond hearing, the certificate of ‘registration of a cooperative on any of the foUowing grounds:“(1) Having obtained ite registration by frauds “(2) Existing for an legal purpose; despite notice by the ions of this Code or its “() Willful failure to operate on a cooporative asi; and “@) Failure to meet the required minimum. number of members in the cooperative, “ART. 68. Dissolution by Failure to Orgonize ‘and Operaie. ~ If « cooperative has not commenced business and its operation withia two (2) years after ‘the issuance ofits certificate of registration or has Rot cazmied on its business for two (2) coasezutive ‘years, the Authority shall send a formal notice to the said cooperative to chow cause as to. its failure to operate. Failure of the cooperative to promptly provide justifiable cause for its failure to operate shall warrant the Authority to delete ite name from the roster of registered cooperatives and shall be deemed dissolved. “ART. 69. Liquidation of @ Cooperative. ~ Every cooperative whose charter expires by its own Limitation or whose existance is terminated by voluntary dissolution or through an appropriate judicial procesding shall nevartheless: continue to ‘sist for three (3) years after the time it 1s dissolved, ‘Rot to continue the business for which it was established but for the purpose of prosecuting and defending suits by or against ‘it; settlement and closure of its affairs; disposition, conveyance and distribution of its properties and assets, “At any time during the seid three (3) vears, the cooperative is authorized and empowered to convay all cf its properties to trustees for the benefitof its members, creditors and other persons in interest. From and after any such conveyance, all interests which the cooperative had in the ‘proporties are terminated. “Upon the winding up of the cooperative affairs, any asset distributable to any creditor, shareholder or member who is unknown or cannot he found shall be given to the federation or union to which the cooperstive is affiliated with. "A cooperative shell only distribute ite assots or proparbes upon lewful dissolution and after payment of all its debts and Liabilities, except in ‘the ‘case of decrease of share capital of the cooperative and as otherwise allowed by this Code. “ART. 70. Rules and Regulations on Liquidation, — ‘The Authority shall issue the appropriate implementing guidelines for the Liquidation of cooperatives.” SEO. 8, Articles 72, 73, 74, 75, 76, 77, 78, 79 and 80 of Chepter VIII on Capital, Property, and Funds of the same Code are hereby renumbered and amended to read, as Zollows: CHAPTER VIIT CAPITAL, PROPERTY, AND FUNDS “ART. 71. Capital. — The capits ition of ‘cooperatives and the accounting procedures shall be governed by the provisions of this Code and the regulations which shal) be issued. “ART. 72. Capitol Sources. ~ Cooperatives yegistered under this Code may derive their capital from any or all of the folloving sourees: ““(1) Members’ share capital; (2) Loans and borrowings including deposits;“@) Revolving capital which consists of the deferred payment of patronage refunds, or interast on share capital; end. “@) Subsidizs, donations, legaciso, grants, aids and such other oasistance fom any’ Jocel oF fersiga institution whether public or prival ided, That capital coming from such subsidies donations, legacies, grants, aids and other assistance ghall not be divided into individual share capital holdings at any time but chall instead form part of ‘he donated capital or fand of the cooperative, Upon dissatution, such dencted capital shell ‘he subject to ercheat, FART. 75. Limitation on Share Capital Holdings. — No member of a primary cooperative thar than a couperttve fen? shall’ owa or hold mere then ten per centum (10%) of the share capital of the cooperative, Where a member of a cooperative dies; his hair shall bo entitled to the shares of the decetionts Frovided, That the total share holding of the hei, does not oxceed ton per centum (10%) of the shane capital of the cooperative: Provided, further, That the heir qualify and is admitted as member of the peoperative: Provided, finally, That where the heir fails to qualify as a momber or where hig total share holding exceeds ten per centum (10%) of the share capital, the sharo or shares ia excess will overt to the cooperative upon payment to thy heir of the value of such shares, ‘ART. 74, Assignment of Share Capital Contribution or Interest. ~ Subject to the provisic of this Code, no member shall transfor his shares: (oF interoat in the cooperative or any part thereof unless:“Q) He has held such share capital contribution or interest for not less than one (1) year; *Q) The assignment is made to the cnoperative or to a member of the cooperative or to a person sho falls within the feld of membership of the Cooperative; and “@) ‘The boord of directore bas approved such assignment, “ART. 75, Capital Build-Up. - The bylaws of very cooperative shall provide for a reasonable and realistic member cspital build-up progzam to llow the continuing growth of the members’ investment in their cooperative as their own economic conditions ‘continue £0 improve. “ART, 76, Shares. — The term ‘share’ refers to @ unit of capital in a primary eooporative the par value of which may be fixed at any figure not more than One thousand pesos (1,000.00). The share capital of a cooperative is the money paid or requized to be paid for the operations of the cooperative. The method for the issuance of share corticates shall be preseribed in its bylaws. “ART. 77, Hines. —'The bylaws of a cooperative may prescribe a fine on unpaid subscribed share capital: Provided, That such fine is fair and reasonable under the circumstances, “ART. 78. Investment of Capital. — A cooperative may invest its capital im any of the following: *(@) In shares or dcbentures or sveurities of any other ecoperative: “(@) In any reputable bante in the Jocality, or any cooperative;“(© In securities issued or guaranteed by the: Government; “@) In real estate primarily for the use of the ‘sooperative or iss members: o “(e) In any other manner authorized in the bylaws. “ART. 79. Revolving Capital. — The general assembly of any coaperative may authorize the board of directors io raise a revolving capital to strengthen its capital structure by deferring the payment of pattonege refunds and interest on ahare capital or y the authorized deduction of a percentage stom the proteeids of products sold o- serviscg rendered, oF per unit of product er services handled. The ‘board of directors shall issue revolving capital certificates with serial number, name, amount aid rate of interest to be paid and shall’ distinctly eet forth the time of retirement of euch certificates and the amounts to be returned” SEC. ©. Articles &1, 82, 83, 84 and 85 of Chapter IX on Audit, Inquiry and Members! Right to Exaznine of the same Code ‘are hereby renumbered and amended to read, as flies CHAPTER 1X Aubin, INQUIRY AND MEMBERS RIGHT 10 Examne “ART. 80. Annual Audit. — Cooperatives ‘registered undor this Code shall be subjec: to an annual financial, performance and soial audit. "Tae financial audit chall bo conducted by an externa! auditor who satisfies all the following qualifications: “Q) He is independent of the cooperative or any of ite subsidiary that he ie auditing: aad “@) He ts 2 member in good standing of the Ebilippine Institute of Certified Public ICRA) and is accredited by both the Board of Accountancy and the Authority.“The social audit shall be conducted by an independent social auditor accredited by tho Authority, “Performance end social audit reports which contain the findings and rocommendstions of the: auditor shall be submatted to the board of “The Authority, in consultation with the eeoperative sector, shall promulgate the rules and standards for the social eudit of cooperatives. TART. 81, Audit Report, ~ The auditor shall: oubmit to the board of directors and to the audit committee the financial aucit report which shall be in acgordance with the generally accepted auditing standards for cooperatives as jcintly promulgated by the Philippine Institute of Certified Public “Accountants (PIOPA) and the Authe “Thoreaftar, tho board of divectors shall present the complete audit report to the general assembly in ite next mecting. “An. 82, Nonliobility for Dejamation. ~ The auditor is not liable to any persoa in an action for defamation based on any act done, or any statement made by him in good faith in connection with any ‘matter he is authorized or required to do pursuant to this Code. FART. 89. Right to Bromine. — A mombor shell have the right to examine the records required to be kept by the cocperative under Article 52 of this Code during reasonable hours on business days and he may demand, ia writing, for a copy of excerpts from said records without charge except the cost of reproduction. “Any officer of the cooperative who shall refuse +p allow any member of the cooperstive to examine and copy excerpis irom: its records shall be liable to such member for damages and shall be guilty offan offense which shall be punishable under Attic U0 of this Code: Provided, That if cud satioal purmuant to @ resolution or order of the board of rectors, the liability under this article ahuall be imposed upon the disectors who voted for such refusal: Provided, further, That it shall be a defense fo any action under this artiele that, the member demanding to examine and copy excerpts from the cooperative records hae improperly used any information secured through eny prior examination of the records of such cooperative or was not acting jn good faith or for a legitimate purpose in malting ‘his demand. “ART. 84. Safety of Records. - Every cocparative shall, at its principal office, keep and carefully preserve the renorda roquired by this Coce to bs prepared end maintained. Tt shall take all nne«essary precaution to prevent its loss, destruction, or falsification” SEC. 10. Articles 86 and 87 of Chapter X on Allocation and Distribution of Nez Surplus of the same Code are hereby. renumbered and amendod to read, aa follo CHAPTER X ALLOCATION AND DISTRIBUTION oF Net Suartus “ART. 85. Net Surplus, ~ Notwithstanding the provisions of existing laws, the net eurplue of cooperstives chall be determined in accordance with its bylaws. Every cooperative shall determine sts net surplus at the dose of every fiscal year and at push other times as may be preseribed by the yews, “Any provision of law to the contrary notwithstanding, the net surplus shall no: be construed as profit but as an excvee of Payments: made by the members for the loans borrowed. or the goods and services availed hy thom from the cooperative or the difference of che rightful amountve to the members for their products cold or ervicos rendered to the cooperative inclading other inflows of assets resulting from its othor operating ‘cdvities and which shall be deemed to have been returned to them if the same ie distributed as prescribed herein. “ART, 86, Order of Distribution, ~ The net mates et res, cooparative shall be distributed as ian “() An amount for the reserve fund which shall be at least ten per confum (1036) of net surplus: Provided, That, in the first five (5) years of operation aftor registration, this amount, shall not he Tese than {ity per center (60%) of the net surplas: fa) ‘The reserve fund shall be used for the stability of the coperative and to mect net losses in its operations. The general assembly may ectease the amount ellocated to the reserve fund when the rereree fund already exceeds the share capit “Any gum recovered on items previously iad oti curve Mn hal be credited to such cn ‘) The reserve fimd shall not be utilized for investment, other than those allowed in this Code. Such cum of the reserve fund in exoess of the share ‘capital may be used ai anytime for any project that ‘would expand the operations of the cooperative upon the resolution of the general assembly. *(@, Upon the dissolution of the cooperative, the reserve fund shall not be distributed among Hie members, The general assembly may resolve: “(To establish a usufructuary trust fimd for the benefit of aay federation or union to which the cooperative is affiliated: and"G3) To donate, conteibute, or otherwise dispose of the amount for the benefit of the community ‘whore the cooperative operaies. If the members ‘cannot decide upen the disrosal of the reserve fund, the same shall go to the federation or union to which the cooperative is affiiated. “@) An amount for the education and trainit fund, shall not be mare than ten per centum (10H) ‘of the net surplus, The bylaws may provide that ceriain fees or a portion thereof be eredited to auch fund. The fund shall provide for the training, development and similar other cooperative activities Geared towards the growth of the cooperative ‘movement’ “(a) Half of the amounts transfereed to the eduction and training fund annaally under this subsection shall be spent by the ccoperative for edueation and training purposes; while the other half may be remitted to a union or federation chosen by the cooperative or of which it is member, The said union or federation shall submit to the Authority and to its contaibuting scoperasives the fellowing schedules: "@ List of cooperatives which have remitted their respective Cooperative Education and Tyaising Fonds (CRTF); Gi) Business consultancy assistance to include ‘the nature and cost; and “(ii) Other training activities undertaken ‘specifying therein the nature, partivigants and cost. of each setivity. “W) Upon the dissclution af the cooperative, che {mexpended balance of the education and training: find appertaining to the cooperative shall be credited to the cooperative education and ‘training fund of the chosen union or federation.(9) An amount for the community {development find, which shall not be Jess than three ‘por centum (3%) of the net surplus. The communsty Gevelopment fund shall be used for projacta or ‘activitiee that will benefit the community where the cooperative operates. (4) An optional fund, 0 land ond building, ‘end any other necessary fund the total of which shall not exosed seven per centum (7%). *(§) The remaining vet surplus shall be made available to the members in the form of interest on hare capital not to oxesed the normal rate of return on investments and patronage phe Pravitled, ‘That eny smount remaining after the allowable anterest and the patronage refund have been deducted shall be credited to the reserve fand. “The sum alloented for patronage refunds shall ‘be made available at the eame rate to all patrons ‘of the cooperative in proportion to their individual patronage: Provided, That: "@) In the case of a member patcon with paid-up shere capital contribution, his proportionate amount of patronage reflind shall be ‘paid to him unless he agrees wo credit the amount. fo his account es additional share capital ‘contribution; “(b) In the case of a member patron with unpaid capital contribution, his proportionate amount of patronage refund shall be credited to his ‘account tnfil his share capital contmbution has been fully paid: “(© In the case of « non-member patron, his ‘proportionate amount of patronage refund shall be Ee auide ia a general fund for such patrons and shall be allocated to individual non-member patrons only upon request and presentation of evidence of the amount of his patronage. The amount 20Allocated shall be credited to such patron toward peymeat of the minimum capital contrioution for ‘membership. When a sum oqual to this amount hac accumulated at any time within a period specified in the bylaws, such patron shall be doomed and become a member of the ecoperative if he eo agrees ‘or requests and complies with the provisions of the bylaws for admission to membership; and "@) If within any period of time specified in the bylaws, any subscriber who has not fully paid his subscribed share capital or any non-member patton who hes accumulated the atm necessary for membership but whe dose not request nor agree to "e member or fails to comply with the provisions of the bylaws for admiseion to ‘membership, the amount so accumulated or credited to thelr account together with any part of the general fund for nonmember patrons shall be edited to the reserve fund or to the edueation and ‘training find of the cooperative, at the optioa of the cooperative” SEO, 11. Articles 88, 89, 90, 91, 92, 93, 94 and 95 of Chapter XI on the Special Provisions Relating to Agrarian Refm Cooperatives of the same Code are hereby renumbered, retitled and amended to zead, as follows: CHAPTER XI AGRARIAN REFORM CooPeRaTivEs TAR. 87, Coverage: ~The provisions of this Chapter shall primarily govern agrarian refoem ‘cooperatives: Provided, That the provisions of the other chapters of this Code shall apply suppletorily except insofar as this Chapter otherwise provides "ARM. 88. Definition end Purpose, ~ An agrarian reform cooperative is one organized by marginal farmers, majority of which are agrazien sefarm beneficiaries, far the purpose of developing an apprepriate system of land tena, land developmentjané consolidation or land management in areas covered by agrarian reform. _ “An agrarian reform cooperative as defined ‘shall be organized for any or all of the following purposes: “1 To develop an appropriate system of land tenure, land development, land consolidation or land management in areas covered by agrarian reform; 2) To coordinate and facilitate the dissemination of scientific mothods of production, and provide assistance in the storage, transport, ond marketing of farm products for agrarian reform beneficiaries and their immediate family, hereinafter raferrod to as ‘beneficianie: “(3) To provide financial facilities to bendficiaries for provident or productive purposes st ‘reasonable costs; “(4) To arrange and facilitate the expeditious transfer of appropriate and auitable technology to beneficiaries and marginal farmers at the lowest possible cost; (8) To provide social security benefits, health, medical end social insurance benefite and other Social and economic benefits that promote the general ‘welfare of the agrarian reform beneficiariea and marginal farmers; “(8) To provide non-formal education, vorational/technicel training, and livelibood programs to beneficicries and marginal farmers; “(2) TTo act as conduits for external assistance and services to the beneficiaries and marginal farmers; “(@) To undertake a comprehensive and integrated development program in agrarian reform and resettlement areas with special concern for thedevelopment of agro-basod, marine-baeed, and cottagebased industries; “(9) To represent the beneficieries on any or all matters that affect their interast: and (10) To undertake such cther economic or sotial activities as may be necessary or incidental in the pursuit of the foregcing purposes. “ART. 89. Cooperative Estotes. ~ Landholdings like plantations, estates or haciendas acquired by the Staie for the benefit of the workers in acecrdance ‘with the Comprehersivo Agrarian Reform Program ‘which shall be collectively owned by the worker- beneficiaries under « cooperative est-up. “ART. 90. Infrastructure. — In agrarian reform end resettlement areas, the Goverament shall grant to agrarian reform cooperatives preferential treatment in the consiruchon, maintenance and management of roads, bridges, canals, wharves, Ports, reservoirs, irrigation systems, waterworks systems, and other infrastructures with government finding. For this purpose, the Government shall ‘provide technical assistance, facilities and equisment ‘tp such agrarian reform cooperatives “ART, 91. Lease of Public Lands. — The Government may lease public lands fo any agrarian reform cooperative for @ period not excseding twenty five (25) yeaze, subject to renewal for another twenty-five (25) years only: Provided, That the application for renewal shall be mode one (1) year ‘before the expiration of the lease: Provided, further, ‘That such lease shall be for the exclusive woe and benefit of the beneficiaries and marginal farmers ‘subject to the provisions of the Comprehensive Agrarian Reform Program, “ARE. 92. Proferential Right. — In agrarian ‘reform areas, an agrarian reform cocparative shall ‘have the preferential right in the grant of franchiseand certificate of public convenience and necessity for the operation of public utilities and services: Provided, Tht it mects the requirements and ‘conditions imposed by the appropriate government gency granting the frenchise or certificate of publi convenience and necessity. If there ie an electric: Service provider in the area, it shell, upon the yequest of an agrarian reform cooperative, immediately provide electric servxes to the agrarian ‘reform areas. Ifthe clectric service provider fails to ‘provide the servibes requested within & persed of one: TY) year, the agrarian roform cooperative concerned ‘may undertake to provide the electric servises in the Ges through ite own resources. All investments made by the said agrarian reform cooperative for the electrification of the agrarian reform resettlement areas shall be the subject of sale to the flectrie service provider ones it takes on the service. “ART, 93. Privileges. - Subject to such ‘reasonable ierme and conditions as the Department of Agrarian Reform (DAR) and the Authority mey impose, agrarian seform cooperatives may be given the exclusive right to do any or all of the following @conomic activities in agrarian reform and resettlement areas: “() Supply and distribution of consumer, agricultural, aqua-caltural, and industrial goods, production inputs, and raw materials and supplies, machinery, equipment, facilities end other services and requirements of the beneficiaries and marginal fermozs at reasonable prices; “@) Marketing of the products anc services of the bebodearies ir lecal end foreign markets *(@) Processing of the members! products into finished consumer Or industrial goods for domestic ‘consumption or for export; +) Provision of sscontial public services at eost such a8 power, irrigation, potable water,passenger and/or cargo transportation by land or 4368, communication sarvieve, and public health and medical care services; ‘“9) Management, conservation, and commercial development of farrine, forsetzy, auineral, water end other natural resources subject to compliance with the laws and regulations on environmental and ecological controls, and "(@) Provision of financial, techadlogical, and other services and facilities required by the ‘bonoficiarioa in their daily lives ond livelihood. “The Governmont shall provide the nevessary ‘anal an techie asstace to aprarn foes ‘cooperatives to enable them to dicehasgo effectively sheir purposes under this article. ‘Ths DAR, the Authority and the BS? shall draw wp a joiat program for the organization and financing of the agrarian reform cooperatives subject af this Chapter. The joint program shall ke geared towards the beneficiaries’ gredual assumption of full ownership and management cotrol ef the agrarian reform ‘cooperatives, “ART. 94, Organization and Registration, — Agrarian reform cooperatives may be orgenized and segistere] under this Code only upon prior written verification hy the DAR to the effect that the same js needed and desived by the beneficiaries; results| of a study that has been conducted fairly indicate ‘the economic feasibility of organizing the same and that it will be economically viable in its operations; and that the ame may now be organized and registered in accordance with the requirements of this Code. “The Authority, in consultation with the concerned government agencigs and cooperative sector, shall issue appropriate rules and regulations pertaining to the provisions of this Chapter65 SEC 12. Articles 96, 87 and 98 of Chapter XII on the Special Provisions on Public Service Cooperatives of the samme Code are hereby transferred to another chapter. Chapter XIT fas amended shall now read, as follows: CHAPTER X11 CoopERATIVe BANKS: “Ann, 06, Covering Lave. - The provisions of this Chapter shell primarily govern cooperative banks sogistored under thie Code and the ther yrovisions of this Cade shall apply to them only insofar se they are not inconsistent with the provisions ecntained in this Chapter. “ART, 96. Supervision. - The cooperative banks registered wnder this Code shall be under the supervision of the BSP. The BSP, upon consultation with the Authority and the concernad cooperative sector, shall formalate guidelines regarding the ‘operations and the governance of ccoperative banks. ‘These guidelines ehall give due rocegnition to the unique nature and character of cooperative banks, To this end, cooperative banks shall provide financial and banking servites to its members “ART. 97. Organization, Membership ond Establishment of a Cooperative Bank. ~ (1) Cooperative oxgaiizations duly established and registered under this Code may organize & cooperative bank, which shall Hhewise be considered ‘a cooperative registrable under the provistons of this Code subject to the requirements and requisite authorization from the BSP. Only one cooperative hank may be establiched in cach province: Provided, ‘That an additional cooperative bank may be established in the same province to cater to the needa of the locality cenending on the economic ‘conditions of the province as may be datermined by ‘the BSP: Provided, further, That the additional: eaoperctive bank shall be leested in the city ormunicipality other than the city or municipality where the frst cooperative bank is located. “@) Membership in a cooperative bank shall either be regular or associate, Regular membership hall be limited to cooperative organizations which are holders of common shares of the bank, Ascoriate members are those subscribing and holding preferred shares of the bank, which may imehide but are not limited to the following: “ia) Individual members of the bank's member-primary cooperatives; and “b) Samaheng Neyon and Municipal Xatpanen ng mga Samahang Nayen (MKSN) which ‘held common shares of cooperative banks prior to the effecuvity of this Act shall apply for conversion to full edged cooperatives in order to maintain their status as regular members of cooperative banks: Provided, That they shall notify the coopsraive bank concerned of their intention to convert within perioil of ninety (80) dayo from the effectivity of this Act, Samahang Neyon and MKSN are hereby fiven a period of one (I) year from the effectivity of thie Act to complete their conversion as cooperatives. Cooperative banks shall exert ressnable erie to inform their member Samuhang Neyon and MKSN to finalty convert or ta give the notice of conversion within the prescribed period. Upon the failure of the Samahang Nayon and MKSN to Sinally convert fo a full-fledged cooperative within the maximum period of one (1) year, the cooperative bank concerned may convert the cosiman shares held by such associations to preferred shares. “@) The articles of cooperation and bylews of 42 cooperative bank, or any amendment thereto, hall be registered with the Authority only when accompanied by 2 certifieate of authority ieoued by. the BSP, under its official seal.“aRe, 98. Adrtinistration of Cooperative Banks. — To maintain the quality of bank ‘management ani accord apprepriats protaction te depositors and the public in general, the BSP shall ‘prescribe the fit and proper qualifications of bank Hbectors and officers lor the purposes of this arte, igving due recognition to the unique nature and sharacter of cooperative banks. “Notwithstanding the provisions of this Code, the number, composition and term of the board of Girectors shall be defined ia the articles of cooperation and bylaws of che conperative bank. “Ann, 99. Quorum and Voting Rights, ~ ‘The: quorum requirement for genecel assembly meetings, ‘whether epecial or regular, shall be one-nalf plas one of the number of voting shares of oll the members in good standing. In the mectings of the board of directors, whether special or regular, the quarum requirement shall be one-half plus one of all the members of the board of directors. Rach director shall only have one vote. “Notwithstanding the provisions of this Code to the contrary, the quorum requirement for amendments of articles of cooperation and bylaws ‘shall bo three-fourths (8/4) vote of all che members with voting rights, present and constituting « quorum. All otker voting requirements shall be 25 prescribed by the BSP. “The voting rights of members shall be ‘proportionate to the number of their paii-up shares. “pT. 100. Powers, Functions and Allied Undertakings of Cooperative Banks. — 4 cooperative ‘bank shall prmanly provide financial, banking end tredit servioce to cooperative organizations and thelr members. However, the BSP may prescribe Eppropriate guidelines, ceilings and conditions onborrowings of cooperative organization from a cooperative hank. “The powers and functions of a cooperative bank shall be subject to such mules and rezulations as may be promulgated by the ESP. “In addition to the powers granted by this Code and other existing laws, any cooperative bank may perform any ot all of the banking serviose offered by othor typos of banks subject to the prior approval of the BSP. “ART. 101, Capital Requirements of Cooperative Banks. — (1) A cooperative bank shell have a stinimum pait-up capital in such amount as may he required by the BSP, “The BSP may prescribe rules ond regulations on the types cf shares @ cooperative bank may issus, including the terms themof and rights sppurtenant thereto to determine compliance with. jaws and regulations governing capital and squity structure of banks: Provided, That cooperative banks shall issue per value shares only. “@) The Barrio Savings Fund (BSF) and Barrio Guarantee Fund (BGF) collected/deducted by various banks throughout the country fom the loan proceeds of farmer-berrowars who were mombers of cooperatives and Samahang Nayon in compliance ‘with Presidential Deceee No. 175 and accompanying letters of instruction, which are still floating and outstanding either 8 active or dormant deposit accounts in the books of those banks, shall be deposited to the cooperative bank located in the ‘province where the depository banks of the BSF and BOP are located, or if there is no enoperative bank in the province, to the cooperative bank nearest to the province. The BSP, in coordination with the Authority, shall come tp with the amplementing guidelines on how to eredit the owners of the funds‘Thode funds whose owners could not be located or identified shall be subject to escheat. “ART. 102. Privileges and Incentives of Cooperative Ranks. — The cooperative banks ‘under this Code shall be given the same privileges and incentives granted te the rural banks, private development banks, commercial banks, and fl other banks to rediscount notes with the BSP, the Land Bank of the Philippines, and other rovernment banks without affecting in any way the ‘provisions of thio Code. “"2) Subject to the approval of the BSP, 2 cooperative bank shall publish a stetement of its nancial condition, including thos of its subsidiaries ‘and affthates, in such terms understandable to the Jayman and in such frequency as may be prescribed by the BSP, in Bnglish or Filipino, at least once every quarter in ¢ newspaper of local coulation in ‘the tity of province where the principal oflice is located or, if no newspaper is publshed in the same province, then in a newspaper published in the heerest ily or province or in a newspaper of general circulation, The BSP, however, mey allow the posting of the financial staxements of she cooperative bank in conspicuous places it may determine in lieu of the publication requixed in the preceding eontence when warranted by the carcumsiances. lowever, in cases of foredosure of mortgages covering loans granted by a cooperative bank, and the execution of judgments thereon involving real properties and levied upon by a sherif, 1¢ shall be exempt from publication requirement where the total amount of the loan, excluding interest and other’ charges due and unpaid, does not oxcced Two ‘huncred fifty thousand pesos (P250,000.00) or such amount as the BSP may prescribe, ac mey be warranted by the prevailing economic conditions and by the nature and character of the cooperative banks. It shall be sufficient publication in suchease if the notice of foreclosure and execution of judgment are posted in conspicuous areas of the ‘cooperative bank's premices, the municipal ball, the ‘municipal public market, the barangay hall, ot the +barangay public markot, if there be any, where the property imorigaged is sittated, within a period of Sixty (60) days immediately preseding the public suction or the execution of judgment, Proof of publication as required herein shall be accomplished by an affidavit of the sheriff or officer conducting the foreclosure sale or execution of judgment, and shall be attachod to tho record of the case. “(2) A cooperative banle shall be allowed to foreclose lands mortgaged to it subject to the rovisions of Republic Act No, 6857, otherwise Known asthe Comprehensive Agvanan Rete a of 1986, TART, 103, Assistance to Ceoperative Banke. ~ In accordance with existing policies, government agencies, government-owned o* controlled corporations and financial institutions shall provide assistance, technical or otherwise, to cooperative banks to permit them to grow, develop and perorm thelr role in countryside development towards a sustainable national economist development, Whenever a cvoperative bank organized under this Code is in a state of continuing inability or unwillingness ‘o maintain a period of liquidity, the BS? may designate one of its officials or a person of recopnizal competence, preferably with experience in cooperative banking and finance, as conservator of the said bank pursuant to the appropriate provisions of existing banking laws. “Aer, 104, Applicability of Banking Laue and Regulations. — With respect to the provisions and governance of the cooperative banks, the provisions of the banking lawe, rulea and regulations shall rrevail, notwithstanding Section 71 of Republic Act No. B71, othoroioo incor ag tha Concral Decking ‘Act of 2000.“The BSP and the Authority, in consultation with the concerned cooperative sector, shall issue appropriate rules and regulations pertaining to the provisions of this Chapter.” SEC. 15. Articles 99, 100, 101, 102, 103, 104, 105, 106, 107, 108 and 109 of Chapter XIII on Spe: ial Provisions: Relating to Cooperative Banks of the same Code are hereby ‘to another chapter. Chapter XII as amended hall now read, as follows: (CHAPTER XU Iysurancs COOPERATIVE “Ano, 108. Cooperative Insurance Societies, ~ Existing cooperatives may organize themselves into ‘a cooperative insurance entity for the purpose af engaging in the business of insuring life and property of cooperatives and their members. “ART. 108. Types of Inaurance Provided. — ‘Under the enoperaiive insurance program established ‘and formed by virtue of the provisions of this Code, the cooperative insurance societies shall provide 3 fing mombers different types of insurance coverage consisting of, but not limited to, life fnowrance with special group coverage, loan protection, retirement plans, endowment with health tnd aceidont coverage, fre insurance, motor vehicle ‘coverage, honding, crop are livesteck protection and equipment insurance. “Any. 107. Applicability of insurance Laws. = The provisions of the Insurance Code and all other Jaws and regulations relative to the organization and ‘operation of an jasurance corapany shall apply to cooperative insurance entities organized under

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